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

Shares of San Diego’s ServiceNow (NYSE: [[ticker: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

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Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.