ServiceNow grew revenue 24% but earnings fell 22.60%, as the company deliberately spent on sales headcount and engineering payroll to win future customers. The article argues the company did not cut prices to win deals, since gross margin stays at 74.77%, and free cash flow came in at nearly three times reported net income. The stock closed at $140.86 on October 9 and has returned 58.1% over six months, outpacing the Insider Monkey Billionaire Index's 24.3% and the State Street SPDR S&P 500 ETF Trust's 15.1%. According to the piece, the main risk is valuation: the stock trades at 28.14 times forward earnings, well below its trailing multiple, and a current ratio of 0.70 leaves little room for a bad year. The earnings recovery depends on spending stopping and growth holding up.
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