SEC Comment Letter for ServiceNow, Inc. (NOW) (CIK 0001373715) (NOW) — May 23, 2012
ServiceNow, Inc. (NOW) (CIK 0001373715)
Date: May 23, 2012 · CIK: 0001373715 · Accession: 0000000000-12-026566
AI Filing Summary & Sentiment
Referenced dates: April 26, 2012
Letter
May 22 , 2012 Via E -mail Frank Slootman, President and CEO ServiceNow, Inc. 12225 El Camino Real, Suite 100 San Diego, CA 92130
Re: ServiceNow, Inc. Amendment No. 1 to Registration Statement on Form S -1 Filed on May 4 , 2012 File No. 333 -180486
Dear Mr. Slootman :
We have reviewed your amended registration statement and have the following comments. References to prior comments are to those in our letter dated April 26, 2012.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
Comparison of Fiscal 2009, 2010 and 2011
Revenues, page 51
1. We note your response to prior comment 9 and your revised disclosures relating to you r results of operations for the three months ended March 2011 and 2012, as well as the six months ended December 31, 2010 and 2011. However, we note that you did not similarly revise disclosures for fiscal 2009, 2010 and 2011. Please revise to quantify t he relative significance of sales to new customers versus existing customers, direct sales versus channel partner sales and sales within North America versus and outside North America.
Comparison of the six months ended December 31, 2010 and 2011
Provis ion for Income Taxes, page 51
2. We note your response to prior comment 10 and your revised disclosures relating to your results of operations for the three months ended March 2011 and 2012. However, we note that you did not similarly revise disclosures for the six months ended December 31, 2010 and 2011 or fiscal 2009, 2010 and 2011. Please revise to provide a discussion of
Frank Slootman ServiceNow, Inc. May 22, 2012 Page 2
factors that have had a significant impact on your effective income tax rate for all periods presented.
Stock -Based Compensation, p age 64
3. We note your response to prior comment 15 and your revised disclosures regarding the comparable publicly -traded companies used in your common stock valuations. As previously requested, please confirm that the same set of comparable publicly -trade d companies is used in all of your various valuation estimates, including expected volatility, and update your disclosure accordingly.
4. We note your revised disclosure on page 69 in response to prior comment 20 that your board of directors concluded that the July 2011 valuation of $3.75 per share of common stock was not less than the fair market value of your common stock in August 2011, September 2011 and October 2011. Based on this disclosure it is not clear what the value of your common stock was during each of these periods although based on the table on page 66, it appears that the fair value of your common stock during each of these periods was $3.75 per share. Considering you use the Black -Scholes option -pricing model to determine the fair value of your stock -based awards and the fair value of the underlying common stock is one of the assumptions used in this model, please revise yo ur disclosure to clearly state the fair value of your common stock as determined by management or your board of directors for each of these periods.
Notes to Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies
Revenue R ecognition, page F -10
5. We note your response to prior comment 31 that the implementation and configuration services you provide represent the culmination of a separate earnings process. Notwithstanding your response to prior comment 32, please explain in detail the services performed for initial implementation and configuration and how you determined that these services represent the culmination of a separate earnings process including whether these services have any utility to the customer separate from t he ongoing subscription services.
Frank Slootman ServiceNow, Inc. May 22, 2012 Page 3
You may contact David Edgar, Staff Accountant, at (202) 551 -3459 or Patrick Gilmore, Accounting Branch Chief, at (202) 551 -3406 if you have any questions regarding comments on the financial statements and related matters. Please address questions regarding all other comments to Matthew Crispino, Staff Attorney, at (202 ) 551 -3456 or, in his absence, to me at (202) 551 -3730.
Sincerely,
/s/ Barbara C. Jacobs
Show Raw Text
May 22 , 2012
Via E -mail
Frank Slootman, President and CEO
ServiceNow, Inc.
12225 El Camino Real, Suite 100
San Diego, CA 92130
Re: ServiceNow, Inc.
Amendment No. 1 to Registration Statement on Form S -1
Filed on May 4 , 2012
File No. 333 -180486
Dear Mr. Slootman :
We have reviewed your amended registration statement and have the following
comments. References to prior comments are to those in our letter dated April 26, 2012.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
Comparison of Fiscal 2009, 2010 and 2011
Revenues, page 51
1. We note your response to prior comment 9 and your revised disclosures relating to you r
results of operations for the three months ended March 2011 and 2012, as well as the six
months ended December 31, 2010 and 2011. However, we note that you did not
similarly revise disclosures for fiscal 2009, 2010 and 2011. Please revise to quantify t he
relative significance of sales to new customers versus existing customers, direct sales
versus channel partner sales and sales within North America versus and outside North
America.
Comparison of the six months ended December 31, 2010 and 2011
Provis ion for Income Taxes, page 51
2. We note your response to prior comment 10 and your revised disclosures relating to your
results of operations for the three months ended March 2011 and 2012. However, we
note that you did not similarly revise disclosures for the six months ended December 31,
2010 and 2011 or fiscal 2009, 2010 and 2011. Please revise to provide a discussion of
Frank Slootman
ServiceNow, Inc.
May 22, 2012
Page 2
factors that have had a significant impact on your effective income tax rate for all periods
presented.
Stock -Based Compensation, p age 64
3. We note your response to prior comment 15 and your revised disclosures regarding the
comparable publicly -traded companies used in your common stock valuations. As
previously requested, please confirm that the same set of comparable publicly -trade d
companies is used in all of your various valuation estimates, including expected
volatility, and update your disclosure accordingly.
4. We note your revised disclosure on page 69 in response to prior comment 20 that your
board of directors concluded that the July 2011 valuation of $3.75 per share of common
stock was not less than the fair market value of your common stock in August 2011,
September 2011 and October 2011. Based on this disclosure it is not clear what the value
of your common stock was during each of these periods although based on the table on
page 66, it appears that the fair value of your common stock during each of these periods
was $3.75 per share. Considering you use the Black -Scholes option -pricing model to
determine the fair value of your stock -based awards and the fair value of the underlying
common stock is one of the assumptions used in this model, please revise yo ur disclosure
to clearly state the fair value of your common stock as determined by management or
your board of directors for each of these periods.
Notes to Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies
Revenue R ecognition, page F -10
5. We note your response to prior comment 31 that the implementation and configuration
services you provide represent the culmination of a separate earnings process.
Notwithstanding your response to prior comment 32, please explain in detail the services
performed for initial implementation and configuration and how you determined that
these services represent the culmination of a separate earnings process including whether
these services have any utility to the customer separate from t he ongoing subscription
services.
Frank Slootman
ServiceNow, Inc.
May 22, 2012
Page 3
You may contact David Edgar, Staff Accountant, at (202) 551 -3459 or Patrick Gilmore,
Accounting Branch Chief, at (202) 551 -3406 if you have any questions regarding comments on
the financial statements and related matters. Please address questions regarding all other
comments to Matthew Crispino, Staff Attorney, at (202 ) 551 -3456 or, in his absence, to me at
(202) 551 -3730.
Sincerely,
/s/ Barbara C. Jacobs
Barbara C. Jacobs
Assistant Director
cc: Via E-mail
Robert A. Freedman, Esq.
Fenwick & West LLP