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NOW · Forward model · Professional services and other · Bear case

What has to happen in Professional services and other

Model as of

This page changes Professional services and other inside the complete NOW model. Every other vertical, corporate programme and valuation assumption stays in the selected portfolio case.

NOW forward model
Horizon
Consolidated fair value $117.91 all other verticals held in this portfolio case
Final-quarter revenue $148M 2% of company revenue
Explicit segment contribution −$294M EBITDA less segment capex, before corporate items

Subscription growth decays to a 2.2% terminal, FY2030 subscription revenue reaches $26.8bn - 11% short of the $30bn target - margins run two points below guidance and the multiple compresses to 5.5x as the miss becomes visible. The evidence for a softer path is inside the Q2 release: part of the beat was federal on-premise revenue pulled out of Q3, roughly 125bp of FY2026 growth is acquired, Q1 lost about 75bp to Middle East deal delays, and the FY2026 subscription gross margin guide was cut from 81.5% to 81.0%. Fair value $117.91, below the current price.

Professional services and other

Basis quarter$110M
Final quarter$148M
Implied CAGR+6%
Final revenue mix2%

Implementation, training and other services sold at or below cost to get subscriptions deployed. It was 2.8% of revenue in 2026 Q2 and ran a GAAP gross loss of 26%. It matters to this model only as a small, deliberately unprofitable add-on that must not be allowed to flatter or distort consolidated margin.

Last four quarters
2025 Q3 $108M Reported
2025 Q4 $102M Reported
2026 Q1 $99M Reported
2026 Q2 $110M Reported
Implementation servicesTrainingOther
Sequential growth +2.0%/qtr decaying toward +1.5% H1 2026 of $209m against H1 2025 of $185m is +13% YoY; 2.0% a quarter is 8.2% a year, deliberately below subscription.
Professional services and other

Latest: $148M (2031Q2E)

Period Value
2022Q4 $80M
2023Q1 $72M
2023Q2 $75M
2023Q3 $72M
2023Q4 $72M
2024Q1 $80M
2024Q2 $85M
2024Q3 $82M
2024Q4 $91M
2025Q1 $83M
2025Q2 $102M
2025Q3 $108M
2025Q4 $102M
2026Q1 $99M
2026Q2 $110M
2026Q3E $112M
2026Q4E $114M
2027Q1E $116M
2027Q2E $118M
2027Q3E $120M
2027Q4E $122M
2028Q1E $124M
2028Q2E $126M
2028Q3E $128M
2028Q4E $130M
2029Q1E $132M
2029Q2E $134M
2029Q3E $135M
2029Q4E $137M
2030Q1E $139M
2030Q2E $141M
2030Q3E $143M
2030Q4E $144M
2031Q1E $146M
2031Q2E $148M

Assumptions & reasoning

  • Fifteen quarters of disclosed history. The line has ranged from $72m to $110m and has never exceeded 4.2% of total revenue in the window.
  • The basis margin is the non-GAAP gross margin: revenue of $110m less cost of revenues of $139m plus the $13m of stock-based compensation inside that cost line gives -14.5%. On a GAAP basis it is -26.4%.
  • Aseasonal, and the evidence is that the apparent Q1-soft, Q2-firm shape is inside its own noise: the derived Q1 factor of 0.961 comes from two observations of 1.019 and 0.895, a 12.4-point spread against a 4-point signal.
  • One large engagement moves this line by more than any calendar effect does, so no single print should be read as a trend.
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