Summary
This filing covers ServiceNow's (NOW) performance and operational status for the period ending June 29, 2013. As an "emerging growth company" at the time, ServiceNow highlighted its ability to leverage certain regulatory exemptions, though it irrevocably elected to adopt new accounting standards promptly. The company detailed significant investments in its finance and accounting teams and internal controls to address past material weaknesses, expressing confidence in their remediation while acknowledging the ongoing compliance burdens of being a public company. ServiceNow also discussed its strategy of potential acquisitions and investments, warning investors about potential integration challenges, dilution, and the diversion of management resources. The company reiterated its focus on reinvesting earnings for growth, stating no intention to pay dividends, with shareholder returns primarily dependent on stock appreciation. Finally, it noted the volatility of its stock price, influenced by various factors including operating results and market sentiment, and acknowledged that a significant portion of its stock is held by insiders, granting them considerable control.
Financial Highlights
43 data points| Revenue | $102.22M |
| Cost of Revenue | $36.00M |
| Gross Profit | $66.22M |
| R&D Expenses | $17.95M |
| Operating Expenses | $85.57M |
| Operating Income | -$19.34M |
| Net Income | -$21.41M |
| EPS (Basic) | $-0.03 |
| EPS (Diluted) | $-0.03 |
| Shares Outstanding (Basic) | 672.27M |
Key Highlights
- 1ServiceNow is operating as an "emerging growth company" and has chosen to forgo certain regulatory exemptions, committing to new accounting standards immediately.
- 2The company has made significant investments in its finance, accounting, and internal audit departments to address and remediate previously identified material weaknesses in internal controls.
- 3Despite believing material weaknesses are remediated, ServiceNow cautions that full compliance and testing under Sarbanes-Oxley Act Section 404 are ongoing, with potential risks if not successfully maintained.
- 4The company is exploring strategic acquisitions and investments, but warns of potential integration difficulties, dilution to existing shareholders, and management distraction.
- 5ServiceNow has used all net proceeds from its June 2012 IPO for data center expansion, office build-outs, and general corporate purposes.
- 6The company does not intend to pay dividends and expects future returns to shareholders to be driven by stock price appreciation.
- 7Market price of ServiceNow's common stock is expected to be volatile due to various company-specific and market-wide factors, with a significant portion of stock controlled by directors, officers, and principal stockholders.