ServiceNow, Inc. Common Stock (NOW) Stock Analysis — Latest Investor Quotes & Trade Calls

ServiceNow M&A Opportunity Despite High Valuation Concerns

"Well, we got to take a look at Service Now, Paul, because it's M&A Monday. Bloomberg news exclusive reporting the company is in advanced talks to buy Armis which is a cyber security startup and those shares now down though so ticker N O shares are down more than 10% now so extending some of those opening declines. Bloomberg has weighed in on this, saying that for now Service Now would help its ID asset management practice, but they're just questioning that deal price — $7 billion to gain 300 million in annualized recurring revenue, which to them seems expensive. I don't know the multiples here, but I mean, it's a fast growing business and, you know, you got to put this capital to work somewhere. I don't have a problem with it. Let's go."

The discussion highlights ServiceNow's advanced discussions to acquire the cybersecurity startup Armis for $7 billion in exchange for 300 million in annualized recurring revenue. Despite a drop of over 10% in share price during the announcement, the speaker expresses a mild bullish stance, emphasizing the company's fast growth and the need to deploy capital effectively.

ServiceNow Stock Split Eases Employee Compensation

"Actually, in practical terms, this is oftentimes why a company splits its stock when your stock price is somewhere in the ballpark of a thousand dollars per share, it may get tricky trying to award employees with stock awards. Maybe the employee hasn't earned a thousand dollars worth of stock, so do you issue partial shares? Or options on partial shares? Well, it might be easier if you just had a smaller stock price, so post split ServiceNow will be less than 200 bucks a share, making the employee stock-based compensation much easier to manage."

The commentary explains that ServiceNow's high stock price complicates employee stock awards, and by splitting the stock to below $200 per share, the company simplifies its compensation process. The segment highlights the rationale behind the split amid steady revenue growth and operational partnerships.

"NOW (update): Q2 rev +22.4% YoY, RPO +28.5%, cRPO +24.4%. 528 customers >$5M ACV (+20 YoY), avg ACV $14.5M. 98% renewal rate, +468% net new ARR YoY. Gross margin slipped 82.6%→81.0% on AI/data center investments but op margin rose to 29.7%. 6th consecutive Gartner leader. $275B TAM by 2026. Trades 13.3x EV/Sales, premium to CRM peers."

"NOW: Premier enterprise workflow platform with 22% YoY revenue growth, 98% renewal rates, and expanding into 33 IT verticals. Dominant ITSM player (45% market share) accelerating despite size. AI driving growth with Now Assist exceeding targets, delivering 60% higher contract values. 30%+ FCF margins, expanding operating leverage. $1268 price target (17% CAGR)."

"NOW (earnings update): Q2 shows platform dominance - all top 20 deals 5+ products. AI Control Tower governs 3rd-party AI tools, making NOW central AI orchestrator. 22.5% sub rev growth, 500bp cRPO beat, 250bp margin expansion. Reinvesting AI efficiency gains ($350M+ value) into growth while preserving 30.5% margins. Creating self-funding flywheel vs competitors."