San Diego’s ServiceNow In Starting Gate for IPO This Week

6/26/12Follow @bvbigelow

ServiceNow, the San Diego provider of Web-based IT management services, is expected to become a public company this week, after submitting final changes to its IPO in a series of regulatory filings and setting a range between $15 and $17 per share for the 11.65 million shares of its offering.

The IPO, which amounts to slightly more than 10 percent of more than 111 million shares outstanding, would raise more than $186 million at the midpoint price of $16 a share and give ServiceNow an overall market value of $2.4 billion. The company plans to trade on the New York Stock Exchange under the ticker symbol NOW, with Morgan Stanley, Citigroup, and Deutsche Bank Securities serving as co-lead underwriters.

The tally for U.S. IPOs so far this year is 78, compared to 143 over the same period in 2011, according to Renaissance Capital, which tracks IPOs. Some of that decrease has been attributed to the shadow cast by Facebook’s $16 billion IPO last month. Currently, 184 companies are in the IPO pipeline, according to Renaissance.

Four other IPOs also are expected this week, including Waltham, MA-based Tesaro, which is developing drugs for chemotherapy-induced nausea and solid tumors, and Exa, a Burlington, MA, developer of performance simulation software for vehicle manufacturers. Tesaro, which plans to list on the NASDAQ under the symbol TSRO, plans to raise $81 million by offering 6 million shares at a price between $12 and $15 a share. Exa, which plans to trade on NASDAQ under the ticker EXA, has set its share price between $11 and $13, and plans to raise $75 million.

ServiceNow, founded in 2004 by former Peregrine Systems executives, provides Web-based software that enables global enterprises, such as Barclays, Johnson & Johnson, and Qualcomm, to manage their IT hardware and software assets. The companyIn the first quarter, ServiceNow posted sales of $47.4 million, an 88 percent increase over sales of $25.2 million during the same period last year. The company posted a $5.6 million loss over the same period.

The company’s competitors include BMC Software, CA, Hewlett-Packard, and IBM.

ServiceNow discloses in recent filings that 2.65 million shares, or almost 23 percent of the total offering, are being sold by Fred Luddy, the company’s co-founder and chief technology officer. The company’s principal investor, private equity firm JMI Equity, will continue to hold its stake, more than 59.8 million shares (amounting to a post-IPO stake of 49.4 percent). Sequoia Capital, which acquired a stake a couple years ago, also will hold onto its 23.9 million shares (19.8 percent post IPO).

The company estimates its net proceeds will be approximately $131 million, or more than $151 million if the underwriters exercise their full over-allotment option.

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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