SERVICENOW INC.
CEO: Frank Slootman.
Revenue: $92.6 million in FY 2011; $43.2 million in FY 2010.
Net income: $9.8 million in FY 2011; net loss of $30 million in FY 2010.
No. of local employees: 220 as of last year.
Headquarters: Carmel Valley.
Year founded: 2004.
Coming stock symbol and exchange: NOW, New York Stock Exchange.
Company description: Provider of comprehensive suite of cloud-based information technology services to large enterprises.
Key factors for success: Increasing complexity and fragmented IT systems owned by large companies that drive them to outsource certain services via the Internet.
ServiceNow Inc., a San Diego provider of cloud-based information technology services, has been talking to investors in advance of a planned initial public offering this week set to raise about $200 million.
In a half-hour presentation posted on the Internet last week, founder Fred Luddy and CEO Frank Slootman expound on the business and why it is poised for even more robust growth than in its previous eight years.
Luddy said a big reason behind the firm’s success so far is a common, agile platform that helps customers, primarily larger corporations, better manage their IT systems.
“We think we’re on to something really big, and this is really the tip of the iceberg,” said Luddy, who served as the company’s chief executive officer until May 2011 when Slootman was hired.
The company didn’t return calls for comment, and is in a ‘quiet period,’ preventing it from making comments on the pending IPO. However, in securities filing of June 19, ServiceNow revealed it will issue 11.7 million shares at yet to be determined price ranging from $15 to $17 per share.
Because ServiceNow’s total shares outstanding are about 120 million, which would value the company from $1.8 bil1ion to $2 billion.
Right Spot, Right Time
The company shares will be traded on the New York Stock Exchange under the ticker, NOW.
Bob Slapin, executive director of the San Diego Software Industry Council, said the company has been gearing up for its IPO for about nine months, soon after it brought Slootman on board to replace Luddy as CEO.
“They’ve experienced some rapid growth in the past few years,” Slapin said. “They’re in the right spot at the right time.”
According to securities filings, in its most recent fiscal year ended June 30, 2011, ServiceNow reported revenue of $92.6 million, more than doubling its revenue of $43.2 million in FY 2010. In the prior year, it had $19 million in revenue.
Last year it had net profit of $9.8 million compared with a net loss of nearly $30 million in FY 2010.
For the company’s first six months of FY 2012 that ended in December, it generated $73.4 million in revenue.
The company is also rapidly expanding its staff. In a March filing it stated last June’s total full-time employment was 375, and that it planned to add about 500 more people during 2012.
In a June filing, ServiceNow said it had a total of 729 full-time workers as of March 31. Last year, the company said about 220 of its staff were based in San Diego.
Move to Larger Quarters
In February, ServiceNow moved into a 94,500 square-foot building in Carmel Valley.
ServiceNow’s customers are major corporations that it defined as having more than $750 million in revenue and have IT departments, with a minimum of 200 employees. As of the end of March it counted 1,074 customers in such industries as financial services, consumer products, IT services, health care and technology.
Among several major names the business identified as key customers in 2011 were Advanced Micro Devices Inc., Barclays, Flextronics International, Kimberly-Clark, Philip Morris International and Qualcomm Inc.
Luddy said ServiceNow helps companies better manage all types of things that can be as simple as providing a forgotten password to access an employer’s intranet site to tracking patients on a hospital ship.
The thing that’s driving much of the business is a growing adoption by many companies to obtaining some IT services from a cloud based entity, rather than buying and owning new hardware and software, Luddy said.
Many CIOs (chief information or technology officers) are telling the company that they don’t want to own the new equipment, and “they sure don’t want to run it,” Luddy said.
ServiceNow’s board of directors contain some heavy hitters among the local high tech community and include Paul Barber, managing general partner for JMI Equity; William Strauss, former CEO of Provide Commerce, the parent firm to ProFlowers.com, which was acquired by Liberty Media in 2006; and Charles Noell III, who is a co-founder of JMI Equity, but also the president of the family investment company for San Diego Padres Chairman John Moores called JMI Services. Noell is also a former director of Peregrine Systems, a local software firm for which Moores was chairman from 1990 to 2000, which filed for bankruptcy in 2002.