Schwab Network on $NOW (Oct 29, 2026)
NOW's quarter was mixed: revenue of $4.11 billion slightly beat the $4.09 billion expected, but adjusted EPS of $1.00 missed the $1.12 estimate; it raised fiscal 2026 subscription revenue and free cash flow margin guidance yet largely came in below street expectations, with a more defensive, choppier outlook explaining the stock's roughly 18.75% drop. The speaker says this does not mean NOW's business is negative.
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Definitely uh we are seeing revenue coming in at $4.11 billion. Actually, that did slightly beat the street's expectations of $4.09 billion. Uh but what we did see is a miss on the adjusted earnings per share coming in at a dollar even.
Street was looking for a $12 and the ARPO total re uh total ARPO came in at 29.7 billion growth of around 22% on a year-over-year basis. Now, they did raise their subscription revenue as well as their free cash flow margin for fiscal year 2026, but largely coming in below the streets expectations.
And unfortunately, their outlook is starting to transition. They're getting a little bit more defensive when it comes to their guidance in some respects and that's why we are seeing the move to the downside this morning.
As we speak, the stock is down about 18 and 3/4 of a percent.
What will be interesting with regards to Service Now, this was kind of that first company that kicked off the s the SAS apocalypse, if you will. Uh does that actually happen this time around?
It's not saying that their business is negative. It just means that they're getting a little bit more defensive and it looks like the onboarding and the outlook is a little bit more choppier than what they have expected or kind of what they led the street to believe over the last couple of quarters.
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