[Monksdream]

NOW, one month

[Monksdream]

NOW, 10 day hourly

[Monksdream]

NOW One year chart

[Monksdream]

Our Crush on Software Stocks
We love Software-as-a-Service (SaaS) companies.

For starters, they tend to have incredibly strong gross margins, meaning the costs associated with adding new customers tends to be very low. This means SaaS companies tend to become exponentially more profitable as they scale.

Some other benefits of the SaaS model include:

Recurring revenue and fast growth
Higher lifetime value of customers via long-term contracts
Larger market via the cloud
Proprietary technology and intellectual property

Seems great. But before you rush out and YOLO into a bunch of SaaS stocks, remember this. Such a wonderful business model comes at a price: high valuations. SaaS stocks tend to be some of the most highly valued stocks in our universe.

Below you can see the enterprise value to revenue ratio (think of it like price to sales) for SaaS stocks versus traditional software companies.


SaaS stocks have always held higher valuations than their non-SaaS counterparts.
Now let's take a look at some SaaS stocks in our universe so you can get an idea of what we look for in terms of "AI" SaaS firms.

The Third Largest SaaS Firm in the U.S.
AI agents are the next evolution of robotic process automation, and ServiceNow (NOW) claims to be all over this opportunity, something we explored in our recent article, ServiceNow – The Best Stock for Investing in AI Agents?.

They also happen to be the third largest SaaS stock in the United States.

Back in 2017 their investor deck didn't mention AI once, but the most recent deck won't shut up about it. The proof is always in revenue growth which has been consistently strong while slowly decelerating.


Growth deceleration is to be expected in a company of this size. - Credit: Nanalyze
All key metrics for ServiceNow are solid, though we're not given net retention rate. Instead, we can use "revenue buckets" to see whether customers are spending more over time. With 8,600 clients and 86% of the Fortune 500, much of the opportunity lies with existing accounts.

One metric, "remaining performance obligations," allows us to see contractually obligated revenues which provides a leading indicator should growth start to stall.

It's a solid company in many ways, but our eyes are on agentic AI which ServiceNow won't stop talking about. Unfortunately, we're not given much hard data about the success they're seeing with AI functionality. That means we're left hunting for clues, though we'll be content if revenues continue on the same growth trajectory.

Real-Time Data Streaming with Confluent
Artificial intelligence algorithms have consumed most of the big data available, so there's a strong demand for new data. When new data is produced, he who processes it the quickest will be able to realize the most value from it, something we dug into in our article titled Confluent Cloud Growth Becomes All-Consuming.

Confluent (CFLT) has a real-time data processing platform that (they say) represents a $100 billion opportunity.

While Confluent now boasts about 5,800 customers, that represents less than 4% of the estimated 150,000 organizations that rely on Apache Kafka as the real-time backbone of their business. That vast untapped reservoir is the foundation for the company’s now $100 billion TAM. This year they're expected to clear $1 billion in subscription revenues so plenty of opportunity remains.

DSP is their new data streaming platform that's supposed to drive loads of future growth going forward
Confluent joins 60% of SaaS companies that are adopting consumption-based models which provide them upside from the exponential growth of big data. If new data is a scarce resource, then it should grow quickly as firms look to digitize everything.

While revenue growth is decelerating, it's still expected to be in the 20s, and that's one side effect of consumption-based models which adjust to ye old macroeconomic headwinds. Net retention rate is down to 117% from 125% since the last time we checked, and that ought to be ticking up as their new DSP offering is said to complement existing solutions while enjoying a boost from the AI surge.
A Note From Nanalyze

There's a reason roughly half the companies we hold in our Disruptive Tech portfolio have some element of SaaS to them. What can we say, we have a type.

If you've ever wondered what we hold in our tech portfolio, look no further than a Nanalyze Premium annual subscription. We share all our secrets with our annual subscribers, so you'd be able to have access to all our research, our portfolio, and more.

Your team of MBAs
Nanalyze YouTube channel
Nanalyze Tweets
LinkedIn
Nanalyze on Facebook

[BigHeis]

Big mistake, huge!

[north40000]

Now at ~ $886, AH. CEO on CNBC-TV at 6:00 pm today

[north40000]

Trading much higher at $872.50 after hours today.

[Slim6]

36,000 NOW software licences are getting cancelled today. The government was not needing and was not using them. Others are realizing the same. Hundreds of thousands are getting terminated as useless.

[Slim6]

Be careful, growth has slowed. NOW is heading into an environment where it will be valued around PE of 10-15. Even if it is valued at a rather lofty PE of 15, the stock will not have support until it hits $95 per share.

[BottomBounce]

ServiceNOW $NOW Book value is under $46.00 per share. OVERBOUGHT

[BottomBounce]

ServiceNow, Inc. $NOW Total Debt (mrq) $2.24B overbought by 900%

[Oleblue]

Stock is headed North.😃

[BigHeis]

How has that been working out for you?  I have to assume you are a short seller.  This stock is going to the moon!

[OptimusPrime555]

Pump and dump! Snake oil salesman CEO selling AI smoke and mirrors 🤣

[EarningsCentral]

[BigHeis]

So true!  

[Oleblue]

ServiceNow CEO Bill McDermott says AI 'deniers' are going to lose big

[BigHeis]

This week will be another interesting week for NOW. Wondering if and when Bill will ask the board to split the stock. It never has split so far. Time will tell.

[BigHeis]

I know right, but nobody is talking about it except Cramer🤔🤔🤔

[Oleblue]

God Sent Opportunity," Top 3 Stocks To Buy ASAP, Billionaires Are Buying With Both Hand

[BigHeis]

Service Now is such a great company run by a very smart CEO Bill McDermott. I often wonder why more people do not see this or post about it. This forum has been dead since 2021. Now is the time. We are at a precipice and this stock is going to the moon in my humble opinion and I for one will continue to buy on dips and hold.

[Glider549]

Even better now.
Broke thru resistance.

[DayTraderOG]

Great movement

[T695]

Anther 10-20 dollar move most likely come by end of day

[T695]

$520 maybe

[whytestocks]

News: $NOW 3 Key Takeaways From Nike's Second Quarter

Nike (NYSE: NKE) reported second-quarter earnings after the market closed on Thursday that were significantly ahead of analysts' targets. The shoes and apparel retailer reported earnings per diluted share of $0.70 on sales of $10.3 billion, handily topping the average analyst estimate's...

In case you are interested NOW - 3 Key Takeaways From Nike's Second Quarter

[whytestocks]

News: $NOW 3 Tech Stocks That Are Wildly Overpriced

After an ugly slide during the last few months of 2018, the stock market has done well in 2019. With just a few weeks left in the year, the Dow Jones Industrial Average is up around 20%, the S&P 500 is up by about 23%, and the NASDAQ has gained nearly 30%. However, that rising tide has push...

Read the whole news NOW - 3 Tech Stocks That Are Wildly Overpriced

[Pharaoh-1]

Nice come back today.

[Pharaoh-1]

I really like this company, awesome business model, looking for $300.

[Pharaoh-1]

Seems like ready to go - excellent chart set up.

[fung_derf]

This chart looks very strong right here, but have concerns over the future of the company.

[$Pistol Pete$]

$NOW ServiceNow (NYSE:NOW)

2018 EPS Estimate: $0.13
2019 EPS Estimate: $0.55 (+323.1%)
Stock Price: $182.16
P/E Ratio: -173.5
Consensus Rating: Buy
Ratings Breakdown: 28 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $176.8519 (-2.9% Upside)

[Trueheart]

Roger that, Somanymike.

Trueheart

[somanymike]

Thanks. This looks like it is setup to run nicely up to 200 over the next month or so.

[Trueheart]

Congratulations on your great gain. We have a winner here.

Trueheart

[somanymike]

Buy some calls! My July 20 185 strikes are up almost 30% since I bought them yesterday morning.

[Trueheart]

My sole problem with this company is that I don't own enough shares.

Trueheart

[Trueheart]

I guess it's quiet here because the stock is a pretty steady grower and there's no notoriety or analysts shouting up or down about it.

Trueheart

[somanymike]

Thanks. After looking at the chart and the really strong numbers here, I was surprised to find such a quiet board. Looks like it's ready to continue running upward!

[Trueheart]

Glad to have you aboard, Somanymike.

Good luck to us both!

Trueheart

[somanymike]

Getting in here tomorrow, looks like a good entry.

[Trueheart]

Go, baby, go!

Trueheart

[Trueheart]

Josh on CNBC just recommended NOW over Dropbox.

Trueheart

[DaReal]

Name change and 1:10000 R/S filing hit the FLSOS

http://search.sunbiz.org/Inquiry/CorporationSearch/ConvertTiffToPDF?storagePath=COR%5C2017%5C0829%5C02714579.Tif&documentNumber=P12000087826

[BlueAlien]

NOW gap up

[highstakes]

Boom

[highstakes]

Big money made here

[highstakes]

Boom

[ClearlyStocks]

Insanely new highs

[highstakes]

Wow goid stuff