ServiceNow - How Wall St. Turns A Blind Eye To Stock-Based Compensation
Amit Ghate • 10 Comments
Amit Ghate • 10 Comments
ServiceNow Is Expanding Into New Markets
ServiceNow - How Wall St. Turns A Blind Eye To Stock-Based Compensation
Amit Ghate • 10 Comments
Amit Ghate • 10 Comments
Thu, Apr. 21, 1:09 PM
- Three months ago, cloud/SaaS software firms sold off after cloud IT service management software (ITSM) firm ServiceNow (NOW +14.5%) missed its Q4 billings guidance and offered light 2016 sales guidance. Today, the group is rallying after ServiceNow beat Q1 estimates, provided in-line guidance, and reported billings of $376.7M, up 41% Y/Y and beating guidance of $360M-$365M. The company also reported a 48% Y/Y increase in clients with over $1M in annualized contract value, to 249.
- Cloud gainers include HR/financials software leader Workday (WDAY +2.3%), ERP/commerce software firm NetSuite (N +4.9%), marketing automation software firms Marketo (MKTO +3.1%) and HubSpot (HUBS +3.2%), talent management software firm Cornerstone OnDemand (CSOD +2.9%), customer support software firm Zendesk (ZEN +3.8%), collaboration/project management software firm Atlassian (TEAM +2.6%), enterprise healthcare software firm Castlight (CSLT +5.4%), and life sciences software firm Veeva (VEEV +2.4%). The Nasdaq is nearly flat.
- BTIG's Joel Fishbein has hiked his ServiceNow target by $5 to $85, while reiterating a Buy rating. "Strong results across the board suggest that the company continues to see success both in core ITSM and as a broader enterprise service tool. After enjoying most of its public life as a beat-and-raise stock, 2015 was somewhat messy; strong growth and good [key performance indicators] supportive of the bull thesis were overshadowed throughout the year by minor miscues -- a forecasting error, currency adjustments, and inconsistent billings reporting.
However, 1Q was clean, with strong billings growth, healthy upsells, and metrics showing growing contribution from non-IT services. Law of large numbers is still looming on the horizon but ServiceNow is on the path of being one of a few elite category-leading enterprise SaaS companies. We continue to be buyers of NOW."
Thu, Apr. 21, 12:48 PM
Thu, Apr. 21, 9:21 AM| Thu, Apr. 21, 9:21 AM
Wed, Apr. 20, 5:37 PM
Wed, Apr. 20, 5:24 PM
- ServiceNow (NOW +2.3%) has jumped 11.5% in late trading after beating expectations on strong across the board revenue growth.
- Billings rose 41% Y/Y to $376.7M in the company's "best first quarter ever," says CEO Frank Slootman. The company has 249 customers each paying more than $1M in annualized contract value.
- Revenue by segment: Subscription, $267.4M (up 48.6%); Professional services and other, $38.5M (up 20%).
- Free cash flow was $67.1M (22% of revenue).
- For Q2, the company is forecasting total revenues of $332M-$335M (in line with consensus, and representing growth of 35-36%); of that, subscription revenues of $284M-$286M (growth of 42-43%) and professional services/other revenues of $48M-$49M (4-6% growth).
- For the full year, it's expecting total revenues of $1.355B-$1.38B, in line.
- Press Release
Mon, Feb. 8, 2:37 PM
- Many tech stocks are seeing 6%+ losses as investors flee to safety yet again. The Nasdaq is down 3.4%, and the S&P 2.7%.
- As was the case on Friday following Tableau and LinkedIn's disappointing guidance, a slew of enterprise tech stocks are seeing big losses, with cloud software and security tech names well-represented on the casualty list.
- Also: Solar stocks are having another brutal day (TAN -6.7%) as energy stocks get routed amid fears Chesapeake Energy is close to bankruptcy. WTI crude oil is once more near $30/barrel.
- Enterprise software decliners: Adobe (ADBE -9.6%), Paylocity (PCTY -19.1%), Salesforce (CRM -9.9%), Workday (WDAY -12%), Guidewire (GWRE -12.5%), ServiceNow (NOW -11.5%), Zendesk (ZEN -13.8%), Paycom (PAYC -13.4%), Marin Software (MRIN -10.3%), Castlight (CSLT -8.4%), Cornerstone OnDemand (CSOD -12.1%), Atlassian (TEAM -13.2%), inContact (SAAS -9.6%), and Bazaarvoice (BV -14.5%).
- Enterprise security decliners: Palo Alto Networks (PANW -12.2%), FireEye (FEYE -9.8%), CyberArk (CYBR -11.5%), Proofpoint (PFPT -12.7%), Qualys (QLYS -8.9%), Imperva (IMPV -9.7%), Rapid7 (RPD -9.4%), and Barracuda (CUDA -8.4%).
- Solar decliners: SunEdison (SUNE -11.3%), SunPower (SPWR -8.8%), JinkoSolar (JKS -7.6%), SolarEdge (SEDG -7.9%), Yingli (YGE -7.1%), TerraForm Power (TERP -10.7%), and TerraForm Global (GLBL -9.2%).
- Other major decliners: Micron (MU -9.1%), Western Digital (WDC -10.5%), Arista (ANET -10.9%), Universal Display (OLED -10.6%), Rackspace (RAX -11.3%), Fitbit (FIT -8.7%), Nimble Storage (NMBL -11.3%), Sierra Wireless (SWIR -9.9%), Rocket Fuel (FUEL -9.8%), Knowles (KN -9%), Mitel (MITL -8.9%), and Alarm.com (ALRM -8.9%).
- Previously covered: Yelp, Cognizant, Tableau, Globant, Ambarella, European tech stocks
Fri, Feb. 5, 11:01 AM
- A long list of enterprise software and security tech names are off sharply after business intelligence/analytics software upstart Tableau (down 45.3%) reported slower-than-expected license revenue growth and issued below-consensus Q1/2016 guidance.
- Also possibly weighing: LinkedIn (down 39.6%), which derives a large % of its revenue from cloud-based recruiting and sales tools for enterprises, issued weak Q1/2016 guidance.
- Given the magnitude of the drops, margin calls and forced selling by funds could be playing a big role. The Nasdaq is down 2.2%.
- Tableau suggested its growth slowdown has to do with softening IT spend and a need to improve sales productivity, but analysts have raised questions about competition from the likes of Microsoft, Amazon, and Qlik. LinkedIn forecast a growth slowdown for its field sales hiring solutions business, while blaming European/Asian macro pressures. The company also noted its display ad business continues declining amid weak industry growth.
- Major enterprise software decliners include Splunk (SPLK -23.7%), Workday (WDAY -15.1%), Adobe (ADBE -7%), Zendesk (ZEN -15.2%), ServiceNow (NOW -13.6%), NetSuite (N -12.4%), Salesforce (CRM -11.2%), Paycom (PAYC -10.6%), Ellie Mae (ELLI -11.5%), Cornerstone OnDemand (CSOD -7.8%), Veeva (VEEV -7.7%), Ultimate Software (ULTI -9%), Luxoft (LXFT -7.5%), Manhattan Associates (MANH -8.5%), Box (BOX -6.6%), Guidewire (GWRE -13.6%), Demandware (DWRE -9.3%), Hortonworks (HDP -9.7%), and Tableau rival Qlik (QLIK -16.6%). The casualty list includes many cloud software firms, as well as several analytics software plays. Previously covered: New Relic, Atlassian.
- Major decliners among security tech firms: Palo Alto Networks (PANW -12%), FireEye (FEYE -8.9%), Rapid7 (RPD -8.6%), CyberArk (CYBR -8.3%), Proofpoint (PFPT -8%), Imperva (IMPV -8.3%), Fortinet (FTNT -6.9%), and Vasco (VDSI -5.1%). The selloff comes in spite of an FQ3 beat and in-line FQ4 guidance from Symantec, which has been losing share to various upstarts.
Thu, Jan. 28, 2:53 PM
- Though the Nasdaq is up 0.8%, enterprise cloud software firms Salesforce (CRM -2.7%), Workday (WDAY -3.8%), Demandware (DWRE -4.5%), Veeva (VEEV -3.5%), Cornerstone OnDemand (CSOD -3.3%), Marketo (MKTO -4.4%), Actua (ACTA -2.4%), HubSpot (HUBS -6.2%), and Zendesk (ZEN -2.7%) are lower after cloud IT service management (ITSM) software leader ServiceNow (NOW -16.5%) posted a Q4 billings miss to go with revenue/EPS beats and issued light 2016 sales guidance.
- On ServiceNow's earnings call (transcript), CFO Michael Scarpelli attributed the billings shortfall to a ~$5M forecasting error. Regardless, Mizuho and MKM have responded to the Q4 report by downgrading to Neutral. Mizuho: "We find two [billings] misses in one year concerning." The firm is also worried about a premium valuation, missed quotas by sales reps, and a "large customer's preference to cut payment terms in half."
- MKM is less concerned about the billings miss, and calls Q4 results solid. But the firm is worried about macro pressures, and thinks ServiceNow's track record of major op. margin guidance beats is "unlikely to be sustained given decelerating billings and the current macroeconomic environment."
Thu, Jan. 28, 9:23 AM
- Gainers: NEOS +59%. DNR +17%. BCEI +16%. UA +16%. FB +14%. INO +13%. ATHX +12%. PBR +12%. WLL +11%. MRO +10%. [[PBR-A]] +10%. TRXC +9%. CHK +9%. MLNX +9%. LINE +9%. MT +9%. SDRL +8%. HOG +8%. ETE +8%. STO +8%. CRUS 7%. KMI 7%. BBL 6%. HCA 6%. MJN 6%. CJES 6%. PYPL 6%.
- Losers: NOW -22%. OSIS -22%. EBAY -11%. INVN -10%. URI -10%. INCY -9%. JNPR -10%. OAS -7%.
Wed, Jan. 27, 5:40 PM
Wed, Jan. 27, 4:59 PM
- Though ServiceNow (NYSE:NOW) beat Q4 revenue and EPS estimates, it reported billings of $365.7M (+33% Y/Y), below guidance of $370M-$375M.
- Q1 revenue guidance of $298M-$303M is above a $297.8M consensus. However, 2016 revenue guidance of $1.34B-$1.37B is almost entirely below a $1.37B consensus. Billings are expected to total $360M-$365M in Q1, and $1.6B in 2016 (33% above 2015's $1.2B). 2016 free cash flow margin guidance is at 24%.
- Among the positives: 2015 free cash flow was $227.6M, well above net income of $67.4M. 230 customers now pay over $1M in annualized contract value, up from 206 at the end of Q3.
- ServiceNow has fallen to $64.10 after hours, making new 52-week lows along the way.
- Q4 results, earnings release
Oct. 22, 2015, 1:14 PM
- Down in after hours trading yesterday after providing cautious Q4 revenue guidance and reiterating its full-year billings forecast in spite of a Q3 beat, ServiceNow (NYSE:NOW) has reversed course today. Shares are at their highest levels since August.
- CEO Frank Slootman used the earnings call (transcript) to talk up ServiceNow's deal size growth and its efforts to expand beyond its core cloud IT service management (ITSM) software market. Annual contract value (ACV) per Global 2000 customer was $816K (+28% Y/Y), and net clients included Express Scripts, Alexion Pharma, and Dow Chemical. IT operations management (ITOM) software saw 170% Y/Y growth and made up 14% of ACV; ITSM performance analytics software grew 179% and made up 5% of ACV.
- When asked about ServiceNow's guidance for op. margin to drop to 9% in Q4 from Q3's 15%, CFO Mike Scarpelli attributed the decline to the timing of expenses/hiring. When Slootman was asked about a slowdown in professional services revenue growth, he stated the company is making an effort to push out more services work to partners. Professional services/other revenue made up 17% of Q3 revenue (subscriptions made up the rest).
Oct. 21, 2015, 5:10 PM
- While ServiceNow (NYSE:NOW) beat Q3 estimates, it's guiding for Q4 revenue of $277M-$282M (+40%-42% Y/Y), below a $281.4M consensus at the midpoint. A strong dollar is expected to have a 4%-5% impact on revenue growth, after having a 9% impact in Q3.
- Billings: Q3 billings totaled $286.4M, +38% Y/Y (+46% exc. forex), above revenue of $261.2M, and above guidance of $280M-$285M. However, full-year billings guidance of $1.2B has been reiterated. Guidance for seasonally strong Q4 is at $370M-$375M (+35%-37% Y/Y).
- Financials: With billings above revenue, free cash flow totaled $42.3M, above net income of $25M. Q4 FCF guidance is at $60M, and full-year guidance at $207M. Operating expenses (non-GAAP) rose 37% Y/Y to $153.8M - sales/marketing spend account for $91.7M, R&D $37.7M, and G&A $24.4M. ServiceNow ended Q3 with $729M in cash/short-term investments, and $467M in convertible debt.
- 39 Global 2000 customers were added in Q3, leading total penetration to top 30%. 206 customers provide over $1M in annualized contract value (+62% Y/Y).
- Shares have fallen to $67.50 after hours.
- Q3 results, PR
Aug. 11, 2015, 4:59 PM
- Along with its FQ1 results, Computer Sciences (NYSE:CSC) announces it's buying Fruition Partners, the biggest management consulting firm exclusively handling deployments of cloud IT service management (ITSM) software leader ServiceNow's (NYSE:NOW) products, and Fixnetix, a provider of IT systems management services for financial industry trading desks. Terms for both deals are undisclosed.
- ServiceNow has been seeing rapid growth as it grabs ITSM software share from on-premise software vendors. CSC notes Fruition is "the only ServiceNow Master Solutions Partner operating in both North America and Europe," and plans to sell its services via CSC's 1,000-person salesforce.
- Regarding Fixnetix, CSC states the company "will be a key component to the implementation of our infrastructure strategy and will advance CSC as a leader in providing managed services to capital markets firms throughout the world." Fixnetix is based in London, and also operates in NYC, Tokyo, Boston, and Chicago. Both purchases bolster CSC's commercial IT services ops before they're split from the company's U.S. public sector ops.
- Following its FQ1 EPS beat and revenue miss, CSC is reiterating FY16 (ends March '16) guidance for EPS from continuing ops of $4.75-$5.05. Consensus is at $4.85.
- Global Business Services revenue fell 7.5% Y/Y in FQ1 to $919M. Global Infrastructure Services fell 15.3% to $885M. North American fell 6% to $957M. Nonetheless, op. margin rose 140 bps Y/Y to 10.8%, and free cash flow by $50M to $120M. $118M was spent on buybacks.
- CSC has risen to $67.00 in AH trading.
- CSC's FQ1 results, PR
Apr. 29, 2015, 3:02 PM
- After following markets lower most of today, enterprise cloud software vendors have jumped thanks to a Bloomberg report stating cloud CRM software giant Salesforce ($51B market cap) has been approached by a potential buyer, and is working with bankers to field offers.
- Gainers include Workday (WDAY +6%), ServiceNow (NOW +4.3%), NetSuite (N +4.3%), Marketo (MKTO +2.7%), Zendesk (ZEN +1.2%), Cornerstone OnDemand (CSOD +1.6%), Castlight (CSLT +2.4%), and Jive Software (JIVE +1.5%).
- Though the cloud software market has seen plenty of M&A activity, a Salesforce deal would easily be its largest. Workday ($17.5B market cap) is the second-largest enterprise cloud pure-play. ServiceNow ($11.6B) is #3.
Apr. 21, 2015, 4:06 PM
- "ServiceNow (NYSE:NOW) continues to execute on its massive opportunity, and increasing traction within the enterprise creates an opportunity to be over $4 billion in revenue in 2020," writes Pac Crest following the cloud IT service management (ITSM) software firm's Monday analyst day. "We believe the recent pullback in shares creates an opportunity to buy a disruptive software company with quickly ramping free cash flow."
- Pac Crest note ServiceNow "continues to add over 20 new Global 2000 customers per quarter while also increasing the average annual contract value to $746,000 currently from $555,000 a year ago," and that revenue is expected to reach a $1B/year run rate by year's end.
- Like other bulls, it sees ServiceNow's expansion into non-ITSM markets such as HR service management, field service management, and IT financial management software acting as a catalyst, and is also upbeat about its recently-launched app store for 3rd-party apps that integrate with ServiceNow's offerings (similar to Salesforce's Force.com).
- ServiceNow rallied to $77.50 today, recovering a portion of the big Friday losses seen after the company offered light Q2 guidance to go with a smaller sales/EPS beat than seen in recent quarters.
- Analyst day slides (.pdf)
ServiceNow, Inc. provides cloud based services to automate enterprise information technology operations. The company focuses on transforming enterprise IT by automating and standardizing business processes and consolidating IT across the global enterprise. Its services include the following... More
Industry: Business Software & Services
Country: United States
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