UPDATE 1-ServiceNow IPO prices above range

Thu Jun 28, 2012 7:02pm EDT

By Olivia Oran

June 28 (Reuters) - IT software company ServiceNow priced its initial public offering on Thursday above its expected range at $18, an underwriter said.

The San Diego, California-based firm raised $209.7 million in the first major tech IPO since Facebook Inc went public in May.

The company priced 11.65 million shares as planned. It had intended to price at a range of $15 to $17.

The ServiceNow offering is being viewed as a crucial test for lead left underwriter Morgan Stanley, whose reputation as the premier bank for tech deals was scrutinized following fallout from Facebook's IPO. Facebook shares, which priced at $38, have declined by as much as 33 percent although they have rebounded in the last two weeks.

If successful, the ServiceNow IPO could also help revive the broader tech U.S. IPO market and push out issuers like software security company Palo Alto Networks which is expected to launch its public offering in July.

"I think SeviceNow is a harbinger for general investment sentiment for tech stocks over the next three to six months," said Lee Simmons, industry specialist at Dun & Bradstreet.

ServiceNow's offering also comes amid a global slowdown in IPO activity. Excluding Facebook, global IPO proceeds during the first six months of 2012 dropped 45 percent compared to the same period last year, according to Thomson Reuters data.

"This is one of the higher profile offerings in the pipeline and if this company can't debut strongly then that is going to be a bad omen for the IPO market," said Jim Krapfel, an analyst with Morningstar.

ServiceNow follows a string of successful public offerings from other cloud-based technology companies including Guidewire Software Inc, Brightcove and Bazaarvoice Inc , which have all seen their shares rise since their IPOs.

In fiscal year 2011, ServiceNow's revenue more than doubled to $92.6 million. The company swung to a profit of $9.8 million, up from a loss of $29.7 million in 2010.

Its customers include Deloitte, Juniper Networks Inc and Staples Inc.

ServiceNow is offering 9 million shares during the IPO, while company founder Fred Luddy is offering the remaining 2.65 million shares.

ServiceNow's venture backers - JMI Equity, Sequoia Capital and Greylock Partners - aren't selling shares in the offering.

Besides Morgan Stanley, the IPO is being underwritten by Citigroup Inc, Deutsche Bank AG, Barclays, Credit Suisse, UBS AG, Pacific Crest Securities and Wells Fargo & Co

ServiceNow will use the proceeds for working capital and other general corporate purposes.

The company intends to list on the New York Stock Exchange under the ticker "NOW."

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