NOW -7%: Not good. Subs in line with Street and short of the ~$4.01–4.03B bogeys, cRPO of 21% cc below the ~21.5–22% bar, and a 4Q cRPO guide of 18.5% cc that sits under both Street (19%) and the ~19.5–20% bulls wanted. EBIT margin guide worse. Organic cRPO will be focus for the call.
Positioning had come down last few days following concerns over the VA contract headwinds, but this is a bit worse even taking that into account. Some nascent bulls will be disappointed.
3Q subscription revenue of $3.988B (20.5% cc, +21% reported) was right on the $3.99B Street and below the ~$4.01–4.03B bogeys, a 50bp cc beat on the 20% guide vs. the ~120bp average beat of the last four quarters. cRPO of $13.65B grew 21% cc (20.5% reported) vs. ~21.5–22% bogeys, the 20% guide and $13.57B Street. Ex ~1pt Moveworks and ~1.25–1.75pt Armis that’s ~18.5% organic vs. the ~19–19.5% bulls were looking for. Net new cRPO of $450M q/q vs. $430M a year ago. RPO of $29.7B (22.5% cc) vs. $29.4B Street.
Op margin of 32.5% was ~140bps above Street’s 31.1% and 0.5–1pt above the ~31.5–32% bogey (31% guide). EPS of $1.00 vs. $1.03 Street despite the OM beat: net interest swung to about -$12M from +$109M a year ago (interest expense $81M vs. $6M). Subs GM of 80% was ~65bps below Street’s 80.65% and down 300bps y/y.
4Q subs guide of $4.245–4.255B (21.5% cc, +22.5–23% reported) vs. $4.24B Street and ~$4.24–4.26B bogeys. The midpoint is a 1pt cc accel from 3Q on a 1pt easier comp (19.5% cc in 4Q25), so the 2-yr stack is flat at ~41%.
4Q cRPO guide of 18.5% cc vs. ~19.5–20% bogeys; 18.5% on the $12.85B base is ~$15.23B vs. $15.29B Street. That’s a 2.5pt decel from 3Q on a tougher comp (21% incl. Moveworks), with the 2-yr stack down to 39.5% from 41.5%. Moveworks’ ~1pt laps at YE while Armis stays in, so the organic 4Q guide is ~17–17.25%.
FY subs goes to $15.78–15.79B from $15.76–15.78B, a $15M raise at the midpoint vs. a ~$10M 3Q beat over the guide midpoint ($3.9775B). That passes through the full beat but lands below the ~$15.80–15.83B bulls wanted. The new FY implies ~$4.25B of 4Q subs, the 4Q guide midpoint.
4Q OM guide of 32% vs. Street 33.5%. FY OM held at 31.5%, so the 3Q margin beat comes back out of 4Q. AI ACV target raised again, to $1.7B from “beat $1.5B” (it started the year at $1B). FY FCF margin goes to 36% from 35% on lower capex; FY subs GM held at 81% after two cuts this year. Large deals were strong: 19 transactions over $5M in net new ACV (+135% y/y) and 680 customers over $5M ACV (+23%).
EBAY +4.6%: Clean beat-and-raise that clears the bogeys on GMV, revenue, OM and EPS, and the 4Q GMV guide (+12-14% FXN) sits well above the ~10-11% bogey; ads were the soft spot and there’s no 2027 color on the release, so the margin framework on the call will be the focus for the HF shorts.