Riding Strong Growth, SD’s ServiceNow Sets Off Wall Street Stampede

Shares of San Diego’s ServiceNow (NYSE: NOW), which provides cloud-based IT services to big customers, gained $5.77—or more than 15 percent—to close at $43.39 a share yesterday in trading that was nearly four times the company’s recent average volume.

The stampede came after ServiceNow posted first-quarter financial results late Wednesday that surpassed Wall Street expectations—with higher revenue and a narrower loss than analysts were expecting. The company posted record quarterly revenue of $85.9 million—81 percent more than the year-ago quarter (when total sales were $47.4 million).

During a conference call with investors and analysts, ServiceNow CEO Frank Slootman said it was the company’s 27th consecutive quarter with year-over-year revenue growth of 80 percent or more. ServiceNow’s performance was strong across the board, which Slootman attributed to three “growth engines:”

Frank Slootman

—New customer acquisition: ServiceNow added 128 new customers during the first quarter, Slootman said, including W.W. Grainger, Transocean, and Dollar General. At the end of March, the company had a total of 1,640 customers, including 282 from the Forbes Global 2,000 list of biggest companies.

—Contract renewals: ServiceNow’s contract renewal rate was 96 percent during the quarter, Slootman said. Average revenue per customer was $198,000 a year, up 21 percent from the first quarter of 2012, when average annual revenue per customer was $164,000.

—Customer Upsells: Slootman said the revenue increase included a “significant contribution” from customers buying … Next Page »

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Bruce V. Bigelow was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Follow @bvbigelow

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