QS Research · Michael Burry's Scion Capital analyst template · 2006
ServiceNow, Inc. (NOW)
As of 2026-11-08 · 13/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case none · downside -30% · upside +28%
At $101.97, NOW trades at 7.05x TTM EV/Sales and 39.4x TTM EV/EBITDA on $15.43B revenue and $2.76B EBITDA; holding today's 7.05x on that base gives about $101.98 per share, so the base case is flat at 0.0%. The 5.0x downside case, justified by the Q4 2026 cRPO guide of 18.5% (S16), yields $71.51 (-29.9%), while the 9.0x upside case, justified by the $1.7B AI ACV target and 36% FY2026 FCF margin target (S5, S7), yields $130.97 (+28.5%). Q3 2026 still grew revenue 20.5% and cRPO 20.5%, but GAAP operating income fell 33% and the 73.2x P/E leaves no margin of safety on current earnings. The result is a watch: the fear is visible, but neither the long nor the short rule is met.
Key numbers
- Share price: $101.97
- Market cap: $105.84B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $15.43B
- EV / EBITDA (TTM): 39.4x
- P/E (TTM): 73.2x
- Price / book: 8.08x
The 15 boxes
- ✓ 1. Long-form business notes
ServiceNow sells subscription access to a cloud workflow/AI platform, mainly through a global direct sales force, with some consumption-based AI/data pricing and partner channels. The FY2020 10-K framed the business around the Now Platform and IT, Employee and Customer workflows; the FY2025 10-K leads with the ServiceNow AI Platform, Now Assist, AI agents, data fabric/RaptorDB, and four product areas. Reported revenue was $4.52B in FY2020 and $13.28B in FY2025, with operating income $199.0M and $1.82B, and operating cash flow $1.79B and $5.44B, respectively. The supplied sources do not include Q3 2026/TTM figures, segment revenue, ARR/RPO, guidance or insider data.
- ✓ 2. Competitive advantage
The sources do not document a durable competitive advantage: ServiceNow describes a highly competitive, fragmented market with low barriers to entry and lists Microsoft, Oracle, SAP, Salesforce and Workday plus AI point solutions, in-house builds and integrators as competitors. Larger rivals have more scale, name recognition and resources and can bundle or cut price; switching costs are described as protecting customers' current solutions, not ServiceNow's. The six-year XBRL shows absolute scale and profit growth—FY2025 revenue $13.28B, gross profit $10.29B, operating income $1.82B and operating cash flow $5.44B—but gives no margin, ROIC or ROE ratios, so it is evidence of scale and cash generation, not proof of pricing power. No Q3 2026, TTM or guidance sources are included.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 2026-09-30) was another 20%+ growth quarter: total revenues $4,106 million (+20.5% YoY GAAP), subscription $3,988 million (+21%), RPO $29.7 billion (+22%), cRPO $13.65 billion (+20.5%), with 680 customers above $5 million ACV versus 553 a year ago. The cost side is where the report is uncomfortable: GAAP gross margin fell to 71% from 77%, GAAP income from operations fell 33% to $385 million (9.5% margin), and non-GAAP income from operations of $1,338 million (32.5% margin) still carries $633 million of stock-based compensation. Cash is still the strength — nine-month free cash flow $3,121 million (+20%) on lower capex, Q3 free cash flow $822 million — while the balance sheet now carries $7.5 billion of debt versus $1.5 billion at 2025 year-end and $10.0 billion of goodwill after acquisitions. Guidance in the earnings release is numeric (FY2026 free cash flow margin target 36%, AI ACV target $1.7 billion); the 10-Q MD&A outlook is directional only.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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