By Olivia Oran
June 28 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
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
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
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."