NOW is a hypergrowth, moderate-quality, moderate-risk Services-Prepackaged Software company. The company demonstrates healthy revenue growth (57.7% CAGR) with improving profitability — the hallmark of a well-managed franchise. Pricing power is a key moat (88/100), providing protection during inflationary periods. The company ranks in the top quartile of its sector (94th percentile), supporting relative conviction. In technology, product cycle timing and TAM expansion define the asymmetry of outcomes — on balance, the evidence tilts bullish — strengths materially outweigh risks.
Why this works
The data supports the bull thesis — multiple quality and momentum signals align.
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Sector: Technology | Industry: Services-Prepackaged Software
▸ Capital-Light Model — High margins, low asset intensity
Final Verdict: ▲ STRONG BUY (Conviction Score: 89/100)
NOW operates a high-margin software or platform model within the technology sector. Gross margins above 60% typically indicate recurring subscription revenue, scalable cloud infrastructure, or intellectual-property-driven economics that compound over time. In an industry where R&D spending determines the next decade of competitive positioning, NOW's margin structure suggests the business has already crossed the scale inflection point.
NOW is currently positioned as a hypergrowth, moderate-quality asset. With TTM revenue of $23.0B, the company continues to demonstrate exceptional top-line momentum (57.7% CAGR). Profitability is on a clear upward trajectory with significant margin expansion (+6.6pp operating margin).
Quarterly Momentum:
Composite Scorecard:
| Dimension | Score | Assessment |
|---|---|---|
| Overall Health | 67/100 | Moderate |
| Quality Focus | 69/100 | Adequate |
| Safety | 55/100 | Moderate |
| Durability | 72/100 | Durable |
| Shareholder Value | 73/100 | Strong |
NOW's growth profile remains aggressive and structurally sound:
Revenue Growth: The company is maintaining a staggering 57.7% CAGR, with TTM revenue reaching $23.0B.
Margin Expansion: Profitability is on a clear upward trajectory. Operating margins have expanded by 6.6pp to the current level, while Gross Margins declined by 0.5pp. Five-year margin expansion: +10.3pp.
Cash Flow Powerhouse: The company generated $7.2B in Free Cash Flow, resulting in a healthy FCF margin of 34.5%. FCF CAGR (5Y): 27.3%.
Earnings quality analysis — the discipline of separating sustainable cash-backed profits from accounting-driven earnings — is critical for long-term investment conviction. The "Quality" profile of NOW is solid:
Earnings Quality: Rated as Excellent (cash > earnings), with an Operating Cash Flow to Net Income ratio of 311.4%. This indicates that earnings are backed by hard cash rather than accounting maneuvers.
Value Creation: ROIC stands at 11.1% (Δ+4.5pp), the company remains in a value-creation phase. 5-year average ROIC: 8.5%. vs. sector median: +4.7pp.
Accounting Integrity (Beneish M-Score): The M-Score of -2.93 indicates a very low risk of earnings manipulation. Notably, the score remains clean despite strong revenue growth — a positive signal that growth is being achieved without aggressive accounting practices.
Piotroski F-Score: 5/9 — Moderate financial health.
R&D Investment: The company invests 22.3% of revenue in R&D, indicating strong innovation focus.
Solvency: The company is aggressively deleveraging. Debt-to-Equity stands at 0.00x, which is quite conservative
Liquidity: Current ratio of 1.00x indicates tight liquidity.
Bankruptcy Risk: The Altman Z-Score stands at 2.44. While technically in the 'Grey Zone,' this is common for high-growth companies with large asset bases.
Refinancing Risk: Rated as Low (25/100). Given its financial position, the company is well-shielded from interest rate spikes.
Fundamental Beta: 0.78 (below-market, P25). Below-market systematic risk indicates moderately defensive characteristics driven by earnings stability and balance sheet strength.
Technology companies are growth-duration assets — their macro sensitivity runs primarily through discount rates and corporate capex budgets. Rising rates compress multiples while decelerating corporate spending reduces billings growth. NOW exhibits a moderate sensitivity profile:
No macro sensitivity data available for this ticker.
Shareholder Returns: NOW currently returns 56% of FCF to shareholders via dividends (0%) and buybacks (56%). The company balances reinvestment with shareholder returns — a prudent allocation strategy for companies in the growth-to-maturity transition. (Stock-Based Compensation: 14.7% of revenue — elevated SBC dilutes per-share economics and overstates reported profitability)
Dilution Warning: A significant concern is the share count increase of +403.7%, suggesting heavy stock-based compensation or equity-funded expansion.
Insider Sentiment: Net Selling. There has been net selling activity (approx. $242,400) by insiders like Chamberlain Paul Edward (). The lack of recent insider buying is notable.
Within the Technology sector (Services-Prepackaged Software), NOW ranks as follows:
Competitive Assessment: NOW demonstrates sector-leading fundamentals, suggesting durable competitive advantages — whether through brand, scale, technology, or regulatory positioning — that justify a premium allocation within Technology exposure.
| Metric | Status | Rating |
|---|---|---|
| Growth | 57.7% CAGR | Exceptional |
| Quality | OCF/NI 311% | Elite |
| Risk | Z-Score 2.44 | Grey Zone |
| Regime Fit | Unknown | Adequate |
| Composite Health | 67/100 | Moderate |
| Sector Rank | 94th percentile | Top Quartile |
Synthesis: NOW's moderate-quality profile within Technology (94th percentile), combined with strong top-line momentum and moderate-risk positioning, produces a high-conviction opportunity.
Verdict: ▲ STRONG BUY
Conviction Score: 89/100
Recommended Action: Core position candidate. Size above benchmark. The data consistently supports conviction.
Conviction Drivers: Positive: +Revenue, +Margins, +EarningsQuality, +LowLeverage, +SectorLeader | Negative: -CashBurn (anchored to Health: 67/100)
NOW is a hypergrowth, moderate-quality, moderate-risk Services-Prepackaged Software company. The company demonstrates healthy revenue growth (57.7% CAGR) with improving profitability — the hallmark of a well-managed franchise. Pricing power is a key moat (88/100), providing protection during inflationary periods. The company ranks in the top quartile of its sector (94th percentile), supporting relative conviction. In technology, product cycle timing and TAM expansion define the asymmetry of outcomes — on balance, the evidence tilts bullish — strengths materially outweigh risks.
This investment memo for NOW (Technology — Services-Prepackaged Software) was generated using quantitative analysis of 20 quarterly SEC filings spanning 2021-03 to 2025-12. Models applied: Beneish M-Score, Piotroski F-Score, Altman Z-Score, Fama-French factor analysis, composite health scoring (v2.1), macro regime sensitivity, insider activity analysis, and labor efficiency metrics. Latest filing: 2025-12-31. All data sourced from SEC EDGAR XBRL filings.
Institutional, 13F Holdings & Large Shareholder Filings
| Fund | Shares | Value |
|---|---|---|
| Vanguard Group | 102.0M | $15.6T |
| Bridgewater Associates | 1.3M | $205.1B |
| Renaissance Technologies | 1.3M | $204.0B |
Bankruptcy risk — annual evolution
Earnings manipulation — annual evolution
Last 90 days
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NOW Current | 67 | — | |
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