Jose Najarro Stocks on $NOW (Oct 28, 2026)
NOW beat on revenue (up 21% year-over-year) and raised its target by $700 million with free cash flow margin up to 36%, yet fell double digits after missing EPS by 2 cents; the speaker sees nothing in the print to explain the selloff, though the whisper number was higher and gross profit growth of 10% is the slowest on record. He takes no side on owning it.
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Uh Service Now is a big one. We'll take a look at that as well.
Service Now, I don't have the numbers yet. Service Now, still don't have the numbers,
Service Now is taking one of the biggest beatings we've seen in the past few months. They only missed EPS by 2% aka 2 cents. They beat on revenue. Revenue is up 21% year-over-year.
EPS is up 4% year-over-year. Service Now is down 14% after hours. I do not know what they said for the street to be this mad.
Service Now guys, I have nothing for you to explain why this is getting hit. They raised their fiscal year guide. Bill McDermott, our AI momentum continues to build with AI net new ACV exceeding expectations, enabling us to raise our year-end target for the second time this year from a billion to now 1.7.
That's a $700 million increase. Importantly, we are capturing the significant opportunity with a capital efficient model, reducing capex, and raising our fullear free cash flow margin by 100 basis points to 36%.
I mean, I don't know what the street's freaking out about, but Forinet and Service Now, both of them with triple beats. I mean, I maybe Service Now, yeah, Service Now double beat instead of a triple beat because they missed by 2% on EPS, but still.
Is the CFO leaving or something? Yeah, there's got to be something deeper here. I don't have a reason for Fordinet or Service Now. There's nothing obvious in the print.
Service Now, I have no idea. If anyone in the chat knows why they think Service Now and Forinet are down 14 and 20%. I'd love to hear.
I don't have an answer for people on Service Now or um Forinet. I really don't. I'll be trying to get some notes from their call. I think their call is happening at the same time with Google to get some reasoning.
service now down 20 is kind of crazy. Uh if you know they triple beat and raise guidance by $700 million, but nonetheless there's something the street's upset about.
Yes, Service Now did miss by two cents on EPS. Yeah, I don't know if 20% is enough to justify that, but that's what you're seeing here. Yeah, I I saw from uh AI or I asked AI, they said that the whisper number was even higher that they really did miss EPS for for Service Now.
Yeah, for Service Now. But in and if you include today's 3% selloff, we're down over 20%. That's wild.
So, let's let's talk service now. Tanner, I know you've been a bit more on the side of uh software is dead. I know you have a couple of your software names that you you really like like a Palanteer, but I don't know if this is the reason Service Now reported 10% gross profit growth in Q3.
It's slowest growth rate on record. They missed EPS by about 2 cents. It's a little bit more versus the Vis whisper number, but from September 18th, September 2018 I should say, it was at 41% growth.
It's now at 10. So obviously the rate of growth on their gross profits and as you mature as a company, it has to slow down. But in a world of AI and the whole commoditization narrative of software, do you think that's what's weighing on the stock here, Tanner, or do you think it's kind of like Google of just algos being dumb and 20%
I genuinely don't know. I don't know much about Service Now. Um I'm not invested in this company. I'm not really on the camp of uh software as dead as much as I'm just way more uncertain about that name.
So it kind or or software. So, they go into the too hard bucket for me that I'm just not willing to invest in them. Not not not that I think that they're going to zero. Uh, what's happening specifically with Service Now, I don't know, maybe I'll listen to the call.
So um I don't know what's going on with Service Now. We didn't look at it really. Um but yeah, I'm not I'm not certain about the survivability of of SAS. I think as anthropic and open AI come out, I think every single industry will be in question and the the the clearest one that would be in in focus would be the the the coding aspects because that's right now artificial intelligence is finding great breakthroughs and making the cost to generate code practically fall to zero.
And um you know software will be easily generated at at businesses for their own needs. But like I said service now could be perfectly fine. I'm not making a statement about service now. I'm not following them.
Service um service now is not cheapest name either. And if suddenly this company like Palanteer isn't cheap per se on paper, but this company is growing five times faster than the companies we've just shown.