ServiceNow tanks on margins

Welcome to Seeking Alpha's Wall Street Breakfast, where we cover the top news for investors every morning. It's great to be with you on this Thursday, April 23rd. I'm Julie Morgan. ServiceNow is down 13% in pre-market action. The company reported its first quarter 2026 financial results, which featured a lower-than-expected gross margin outlook. For the quarter ended March 31st, ServiceNow reported adjusted earnings per share of $0.97, which matched the consensus estimate. Gap EPS was $0.45 compared to the $0.53 estimate. Revenue for the quarter increased 22 percent or 19 percent in constant currency to $3.77 billion, which was more than the $3.75 billion estimate. For the full year, ServiceNow expects a subscription adjusted gross margin of 81.5 percent versus the estimate of 82.1 percent. The company attributed the lower margin to the recent acquisitions, but that is expected to normalize by 2027. Moreover, during the first quarter, the company said its subscription revenue growth saw an approximately 75 basis point headwind from delayed closings of several large on-premise deals in the Middle East due to the ongoing conflict in the region. Tesla has paired its earnings rally in post trading on Wednesday as investors gauge the company Q1 earnings report and business update During the earnings conference call CEO Elon Musk said 2026 will be a very exciting year He said the company's heavy capital expenditure spending of about $25 billion this year will pay off in the future. Cyber cab and semi-truck production will begin this year, although slowly at first before going exponential at the end of the year and in 2027. Musk highlighted that there is a large pipeline of significant improvements for FSD, and it will be possible to achieve unsupervised FSD anywhere in the world where it is legally permitted. On the humanoid robot front, he said Optimus will be useful outside of the factories next year. The company will use the Fremont factory to produce Optimus 3 and is building a second Optimus factory at Giga Texas. It is anticipated that Tesla will hold an Optimus reveal event later in the year, and the CEO said the company is already making plans for the AI6 chip. Lululemon has a new CEO. On Wednesday, the company appointed longtime Nike executive Heidi O'Neill as its new chief executive officer. O'Neill will start as CEO and join the board effective September 8th of this year, and will be based in Vancouver. This shakeup comes at a crucial time as Lululemon has been struggling to find its footing due to increased competition from newer rivals such as Viore and Aloe Yoga If you remember Chief Executive Calvin McDonald in December said he was leaving the company without a replacement after about seven years at the helm O'Neill spent about 25 years at Nike. Earlier in her career, she worked in marketing for Docker's brand at Levi Strauss. She currently sits on the boards of Spotify Technology, Hyatt Hotels, an automotive retailer, Lithia and Driveway. Lulu is down 4% in pre-market action. Now for a look at a few other articles that are trending. Besant says many U.S. allies have asked for currency swaps amid the prolonged Iran conflict. QuantumScape sees increased demand outside of the auto industry. And SpaceX reportedly may make its own GPUs amid an AI push. A few items to tell you about on our Catalyst Watch. Shareholders with Warner Brothers Discovery will vote on the buyout by Paramount. Johnson & Johnson will hold its annual meeting. Shareholders will vote on a safer pay proposal and an independent board chair proposal. Intel will hold its earnings call. Key topics will include updates on supply constraints, margin expectations, and AI-centric computing data center demand. Options trading implies a 9% share price move after the earnings release. And the NFL draft starts tonight in Pittsburgh. Betting around the draft has exploded in just the last two years for DraftKings FanDuel and BetMGM This year prediction markets Calci and Pali markets will be much more involved Stock index futures are in the red a day after Wall Street ended higher with both the Nasdaq and S&P 500 touching record closes. Traders continue to monitor developments between the U.S. and Iran, with reports suggesting that the second round of talks could come as soon as Friday. Crude oil is up 2.3% at $95. Bitcoin is down 0.7% at $77,000. Gold is down 0.8% at $46,98. The FTSE 100 is down 0.8% and the DAX is down 0.4%. Texas Instruments is on our list of the biggest movers of the day pre-market. TXN is up 11% after delivering a strong Q1 beat and upbeat guidance, signaling improving demand trends. And on today's economic calendar, I have two items for you, both at 8.30 a.m., jobless claims and the Chicago Fed National Activity Index. That's it for today's Wall Street Breakfast. Thanks for listening. To take full advantage of Seeking Alpha with coverage on significant stocks and ETFs, become a premium subscriber. Check out seekingalpha.com slash subscriptions. I'm your host, Julie Morgan. Go out and make it a great day.