ServiceNow (NOW) IPO Jumps 34% by TechStockProspector


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									Robert DeFrancesco’s
June 29, 2012

ServiceNow (NOW) IPO Jumps 34%
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The tech IPO window briefly closed following the Facebook (FB) fiasco, but it’s
wide open once again thanks to today’s successful debut of ServiceNow (NOW,
$24.22), a provider of cloud-based enterprise IT management solutions, which went
public at $18 a share (above the expected range of $15 to $17) and opened for
trading at $23.75. The San Diego-based company sports a market cap of $2.9 billion.

ServiceNow provides a suite of applications built on its proprietary platform. Its
solutions automate workflows and integrate related business processes.
Organizations deploy its service to create a single system of record for enterprise IT
and reduce operational costs by increasing overall efficiencies. With the SaaS model,
customers can rapidly deploy the service in a modular fashion in order to solve
immediate business needs and then build new applications as requirements evolve.

According to IT research firm Gartner, ServiceNow operates in the fast-growing IT
management software market, which is expected to expand to $19.8 billion by 2016
from $13.6 billion this year. The company competes with BMC, CA, Hewlett-Packard
and IBM. ServiceNow has about 1,075 customers (up from 668 a year ago) across
the financial services, technology, healthcare, consumer and IT services segments.

For the fiscal year ended June 2011, revenue rose 114% to $92.6 million. For the
three months ended March, revenue was up 88% to $47.4 million. (ServiceNow has
switched to a December fiscal year.) International revenue accounts for about 28%
of total revenue, with Europe representing the bulk of this business.

ServiceNow targets organizations with $750 million or more in annual revenue and
a minimum of 200 IT employees. Large financial services customers generate
roughly 12% of total revenue. Upsells are an important growth driver as customers
add on new or additional services. In fiscal 2011, upsells represented 27% of the
total annual contract values, with this figure improving to 32% in the March quarter.
With the company’s renewal rate at 97%, customers are quite satisfied. Backlog as
of March 31 totaled $248 million, up from $210 million at the end of December.

The management team at ServiceNow is made up of some known tech names. CEO
Frank Slootman joined the company in May 2011 after serving as CEO of Data
Domain from May 2003 until it was purchased by EMC for a hefty premium in the
summer of 2009. CFO Michael Scarpelli, former CFO at Data Domain, joined the
company last August. Both the VP of worldwide sales and the VP of engineering held
the same positions at Data Domain, while CTO Arne Josefsberg was a 25-year
veteran of Microsoft, with his last position there being GM of Windows Azure

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Here are some of the topics covered in the June 2012 issue:

*Valuing Facebook
*LinkedIn balances growth & valuation
*Social media marketing M&A buzzes
*The Salesforce/Oracle battle goes social
*Bazaarvoice quickly bulks up
*Mobile Megatrend Update: Qualcomm
*Imperva builds its pipeline
*Splunk delivers strong results
*Zillow sees growth in rentals
*Finding value in former highflyer Riverbed Technology
*Signs of accelerated growth at Cornerstone OnDemand
*Sourcefire set for expansion in networking security
*Why Big Data needs Teradata
*Infoblox knows your network
*A Yahoo sum-of-parts valuation
*TSP Deal Report: Citrix expands in mobile infrastructure

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Tech-Stock Prospector Managing Editor Rob DeFrancesco has more than 20
years of experience covering the tech sector. He is a former senior writer with
Louis Rukeyser’s Wall Street., launched in 2003, is an investment-research service
focused primarily on the networking, storage, security, wireless and software
sectors. Annual subscription: $350.

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