r/ServiceNowStock

I recently bought NOWL (the 2x leveraged ETF) for the first time. I was wondering how popular it is in this community. Do many of you hold NOWL, or do most people just hold NOW? Is holding a 2x for this stock worth it if I’m just looking to make a 20-30% grab? This is my first time participating in this stock.

I reckon we need another couple of good earnings, once $NOW can prove AI is a tailwind not a headwind, we moon, until then, accumulate

Original Post with Charts and Widgets: https://readplaza.com/s/e5f0ac0e71

Start with the beat itself. Subscription revenue came in at $3.877 billion, 23% constant-currency growth, 150 basis points above guidance. Operating margin at 29.5%, three points above what they guided. AI ACV crossed $1 billion, up more than 40% quarter-over-quarter. On the surface, this is a clean quarter.

The reason the stock is soft is what CFO Gina Mastantuono flagged before any analyst could ask about it. Roughly half the Q2 revenue beat came from U.S. federal on-premise revenue pulled forward from Q3. Strip that timing shift out and the organic beat is closer to half the headline number. That's why the full-year guidance only went up $15 million on a $150 million-plus outperformance.

What the market may be missing is the backlog. The contracted revenue ServiceNow expects to recognize over the next 12 months (cRPO) came in at $13.2 billion, up 21.5%, beating guidance by 200 basis points. ServiceNow added more new contracts in Q2 than analysts expected. Q3 has more to draw from than the guidance raise implies.

Then there's the GAAP line. Reported EPS came in at $0.29, missing estimates by 9%, down 35% sequentially. Moveworks, Veza, and Armis are all integrating simultaneously, and those costs are landing in the P&L before the revenue from those acquisitions has fully shown up. That's a temporary drag, not a structural problem, but it's ugly on paper.

The AI thesis is on track. $1 billion in AI ACV with $1.5 billion in the crosshairs by year-end. The market is repricing a quarter that looked cleaner than it was once you pull the timing out. This could take a few weeks to digest. Very bullish on $NOW.

The market is so bearish on SaaS stocks, but I think $NOW could be trading at $150-160 within 24 months.

Fuck yea. Hyped for this call. Hopefully we can hear more about cybersecurity

For ServiceNow, I view renewal rate as the most important KPI right now. And the fact that it bounced back to 98% is so so so important for shareholders. If this had stayed at 97% or gone down to 96% we'd be in a fire sale right now.

https://preview.redd.it/2042b5s8iueh1.png?width=2548&format=png&auto=webp&s=0b1f963c6df6492915d46d07aa6e871f3361175d

KPIs I'm watching on every NOW earnings release:

KPI	Narrative implication
Renewal rate	Platform stickiness. Will AI allow companies to churn off ServiceNow in favor of cheaper alternatives or with better AI features?
Top line growth rate	Market expansion. Are new customers choosing ServiceNow despite having the option to create their own software or buy from fast moving competitors? Are existing customers continuing to use the platform more?
Margins	Earnings quality. As ServiceNow tries to introduce more AI features into their product, will it hurt the margin profile of their revenue?

now is around 40% from ath. you think we hit that? analyst have target average of 140+ so lots of upside. I’m planning on buying more tomorrow

Citigroup recently reiterated their Buy rating but marginally nudged their price target from $158 to $156. Their Q2 channel/field checks showed solid demand, but noted that some massive enterprise deals are taking a bit longer to close, and AI monetization ("Now Assist") will scale gradually rather than overnight.

What are your thoughts? Are you staying away due to short-term software jitters, or are you looking at this $103 level as a solid long-term entry point?

With the latest IBM weak software results, do you guys think we go up or down on earnings, considering that they're gonna announce their layoffs on the call as well? I feel like saas is the most cursed sector and 99% of the time algos just push it lower regardless of the news

ServiceNow is down more than 50% in the SaaS selloff, so instead of building a forecast and arguing for a price target, I ran a reverse DCF. I took today’s $107 share price and solved for the FCFF growth rate the market is actually implying.

I started with FY2025 free cash flow and adjusted it for stock-based compensation, since I treat SBC as a real cost rather than a non-cash add-back. From there I used a 9.5% WACC, a 4.35% terminal growth rate (set to the risk-free rate), and a 10-year explicit forecast, then solved for the growth rate that makes the model’s output equal the current price. The answer came out to 11.2% annual FCFF growth for the next decade.

ServiceNow has grown SBC adj. FCFF at 26.8% over the last five years, 40.6% over ten, and 37.7% over three. So on every historical time frame, the company has compounded 2-3x faster than what the market is now pricing in.

(I tried importing a sensitivity table here with implied share price based on WACC and implied FCFF growth rate but for some reason I can’t, or don’t know how to.)

Anyway, my two cents: I think the pessimism baked into the price is exaggerated, and while there’s a real threat from AI, I think it’s too early to call. When the market assumes a company will slow its FCFF growth to less than half its historical levels, much of the downside may already be priced in, and that’s kind of the setup I’m happy to own a little of and wait on.

Genuinely curious what everyone thinks, is 11.2% FCFF growth rate too pessimistic or actually fair for the next 10y or so?

There have been rumors circulating from people in SN that there will soon be a new large wave of layoffs. See the servicenow subreddit. This might be unfortunate, but from an investment standpoint, is this a good thing for the stock ?

Here's my list of pros and cons

##Pros

Layoffs = reduced SBC and reduced SG&A, so it could set up for an easier beat.

They still guided to 1.5B$ in AI Annual revenue, so I think there's no issue there.

They could be reducing the excessive head cost from covid.

##Cons

This could signal that the growth story isn't as great as the CEO says.

We're seeing a lot of layoffs in tech sector and it didn't bode well for the stock prices after.

Exemples : intc in july 2025, after layoff announcement, stock down 20%

Google in July 2026, same thing.