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Matt Phillips

ServiceNow dives after reporting sequential decline in profit margins

Cloud software giant ServiceNow — which has been something of a poster child for the AI-related software sell-off — saw its shares fall sharply after delivering Q1 results that included a quarter-on-quarter decline in profit margins.

The company reported:

  • Revenue of $3.77 billion, higher than the $3.75 billion analyst consensus estimate published by FactSet.

  • Diluted adjusted earnings of $0.97 per share, on point with the $0.97 analysts had expected.

  • Subscription revenue of $3.67 billion vs. the $3.65 billion predicted.

  • Non-GAAP gross margins of 79.5%, down from 80.5% in Q4.

ServiceNow issued guidance for Q2 subscription revenues of between $3.815 billion and $3.820 billion, compared to the $3.75 billion FactSet consensus estimate.

ServiceNow shares have been at the epicenter of the software sell-off driven by the fear that such companies are at risk of being rendered obsolete by AI. The stock was down 33% for the year through the end of the New York trading session on Wednesday.

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SpaceX went public on June 12 at a $2.2 trillion valuation, the largest debut in history. While the company hasn’t yet posted a profit, it seems to have convinced Wall Street that it will get there and grow its valuation on the way.

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Nike sinks to lowest level since 2014 after warning of “challenged” sales environment in Q4 report

Did Nike do it?

Investors had a mixed reaction after the global sports apparel company reported its fourth quarter earnings on Tuesday after the bell. Shares initially rose 5% as Nike beat out Wall Street expectations amid a hefty tariff refund bonus. However, the stock then sank to its lowest level since August 2014 in postmarket trading.

Here are the Q4 numbers:

  • Revenue of $11.0 billion (estimate: $10.8 billion).

  • Adjusted earnings per share of $0.20 (estimate: $0.12).

Ahead of this report, Nike warned that results would be flattered by a one-time tariff refund (now estimated at roughly $0.52 per share for the bottom line). That gave the company an extra cushion in snapping its streak of seven quarters of year-over-year profit declines.

Over the past year, the company had been punished by tariffs on imported goods, stagnant consumer spending, and increasing competition from other footwear brands like New Balance, Adidas, and Hoka.

Outgoing CFO Matthew Friend deemed it an “increasingly challenging operating environment, where sell-through remains challenged.”

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