ServiceNow Delivers Solid Growth

According to analysts, traditionally, the IT Service Management (ITSM) market has been dominated by on-premise vendors. With the adoption of cloud computing, the ITSM market is also moving to a cloud-based SaaS model. They believe that the SaaS based ITSM model was worth $7 billion last year and is projected to grow to $13 billion by the year 2016. The ITSM market is led by four big IT companies: BMC Software, CA Technologies, HP, and IBM. But other players are also making a bigger impact in the industry. Recently listed ServiceNow (NYSE:NOW) is one such player.

ServiceNow’s Financials
ServiceNow’s Q1 results surpassed market expectations for the quarter. Revenues of $85.9 million grew 81% over the year and were significantly higher than the Street’s target of $82.11 million. The company ended the quarter with a loss of $0.01 per share compared with a loss of $0.11 per share a year ago. The market was projecting a loss of $0.03 per share for the quarter.

During the quarter, subscription revenues grew 81% over the year to $71.56 million and professional services revenues grew 82% to $14.38 million.

For the current quarter, ServiceNow projected revenues of $94 million-$96 million with a loss of $0.04-$0.06 per share. The market was expecting revenues of $91.80 million with a loss of $0.02 for the quarter.

ServiceNow’s Expanding Market Reach
ServiceNow is expanding its market to government agencies as well as international locations. During the last quarter, it received Federal Information Security Management Act (FISMA) Moderate Authority to Operate (ATO) from the U.S. General Services Administration (GSA). The authorization will enable to work with federal, state, and local government agencies to provide these agencies with technology for expansion of their cloud technology along with cost effective tools for IT system consolidation and business process automation.

Earlier this year, ServiceNow also tied up with Hitachi Solutions to become the first business partner in Japan. As part of the agreement, Hitachi Solutions will resell the ServiceNow Service Automation applications and the ServiceNow Service Automation Platform to customers in Japan. In return, Hitachi will provide implementation, training, and first-level support for Japanese customers.

Meanwhile, the company continues to grow its product offerings. Recently, it expanded its IT Governance offerings by adding a new capability of data certification to their existing tool of Certification Management Database (CMDB). ServiceNow uses CMDB as a single system of record for the IT environment. The data certification feature will automate the process of checking the CMDB for accuracy and validation by scheduling resources to validate data models, attributes and configuration on a regular basis.

ServiceNow’s stock is trading at $39.97 with a market capitalization of $5.37 billion. The stock touched a 52-week high of $43.99 in April 2012.