Tag Archives: crm

ServiceNow Settles Patent Cases With BMC, HPE For $270 Million

Workflow software developer ServiceNow ( NOW ) lightened its wallet by $270 million, then lightened its stock price Thursday. ServiceNow stock stumbled 3% after the bell in the stock market today before recovering. It was down a fraction, above 63, in afternoon trading Thursday, 30% off its record high of 91.28, set Dec. 4. ServiceNow went public in December 2012 at 18. Investors seemed none too pleased with the size of ServiceNow’s disclosure to the Securities and Exchange Commission, filed after Wednesday’s close, to settle patent infringement litigation with BMC Software and Hewlett Packard Enterprise ( HPE ). ServiceNow had disclosed in early March that at least some settlement was imminent . Hewlett Packard Enterprise stock was down more than 1% Thursday afternoon. ServiceNow rivals SAP ( SAP ) and Salesforce.com ( CRM ) were both up a fraction, with SAP just 2% off recent highs and Salesforce 8% off an all-time high 81.24 set March 31. ServiceNow, which delivers its software via the cloud, said that it is taking the $270 million charge in its first quarter, which it’s slated to report Wednesday after the market close. “The settlement terms are rather significant, at over one-third of ServiceNow’s net cash balance as of Dec. 31, 2015, but still represent less than one year’s free cash flow (management has guided for $325 million of free cash flow in 2016), and both management and investors should welcome having these lawsuits in the rearview mirror,” said William Blair analyst Justin Furby in a research note Thursday. He said, “The company should benefit from the removal of ongoing legal fees that have been included in non-GAAP expenses.” Furby said that he won’t be changing his Q1 estimates for ServiceNow but will look for “additional detail” on Wednesday. ServiceNow Q1 Expected To Show Earnings Growth Analysts polled by Thomson Reuters expected ServiceNow to report earnings per share minus items of seven cents, up from a penny in the year-earlier quarter. Revenue is expected to rise 42% to $301 million. With revenue rising 47% for 2015, the company topped $1 billion in sales for the first time last year, contributing to its three-year 60% sales growth rate. RBC Capital Management analyst Matthew Hedberg estimated that the settlement would cost $1.50 per share off ServiceNow’s presettlement cash balance of $7 per share. Hedberg, who still rates ServiceNow a “top pick,” said in a Thursday research note, “There could be slight upside to forward margin expectations given an early resolution, as management likely planned for a longer trial and additional expenses.” He noted “no future royalty payments” from the settlements. “Overall, we are glad to put this issue to bed and believe focus can now return fully to execution, which had been less than ideal in 2015,” he said. Despite its fast growth, ServiceNow experienced growing pains in 2015, so analysts will look for clues that might firm up expectations for 2016. For the year, Wall Street expects EPS of 60 cents minus items on sales of $1.36 billion, up from 40 cents on $1 billion in 2015. After meeting with ServiceNow CFO Mike Scarpelli Feb. 2, Evercore ISI analyst Kirk Materne said in a research note that the company is going to remain in the penalty box until investors feel more comfortable about the 2016 forecast. He pointed out that ServiceNow had missed its own annual contract value target in 2015 due to “elevated sales turnover” and a pause in hiring in Q2. Sales staff hiring ramped up late last year, but billings guidance of 33% to 34% growth for 2016 “assumes very little/no sales productivity improvement and modest growth expectations for EMEA (Europe, Middle East and Africa) as the new regional sales head ramps up,” Materne warned. Still, he had a buy rating and 83 price target on ServiceNow stock, seeing growth in its market and in adoption rates for its platform. The company now averages seven custom apps per customer, up from 5.6 a year ago, Materne pointed out.

Adobe Systems Transition Earns Price-Target Hike From FBR

With its stock trading within shouting distance of its all-time high, Adobe Systems ( ADBE ) earned a price-target hike on Tuesday from investment bank FBR Capital Markets. Adobe stock was up a fraction to above 93 in midday trading on the stock market today . The provider of cloud-based media and marketing software hit a record high of 98 on March 18. It sports a good IBD Relative Strength Rating of 85, putting it among the top 15% of all stocks in performance the past 12 months. FBR analyst Samad Samana raised his price target on Adobe stock to 115 from 110 and reiterated his market perform rating. He predicts Adobe will see 20%-plus revenue growth and 30%-plus EPS growth for the next two years. Adobe has shifted its business from perpetual license software to software-as-a-service delivered over the Internet. “We believe the transition to a subscription model has yielded a more attractive business model,” Samana said. “We expect this to be reflected in fiscal 2016 and beyond.” Adobe has three cloud computing businesses: Creative Cloud, Marketing Cloud and Document Cloud. The biggest is Creative Cloud, which includes software for creative professionals such as Photoshop, Illustrator and InDesign. Marketing Cloud provides online marketing and advertising services. Document Cloud leverages Adobe’s popular online document-sharing product Acrobat and its ubiquitous PDF format. The company’s Creative Cloud business earns most of the attention, but its Marketing Cloud is maturing at the right time, Samana said. “Digital marketing is at or near the top of the priority list for enterprises, and Adobe appears well positioned to help companies transform their businesses to be more engaging with end customers,” he said in a research report. Adobe should be able to continue posting healthy growth in the digital marketing business despite competition from Alphabet ( GOOGL ), Oracle ( ORCL ), Salesforce.com ( CRM ) and others, he said. RELATED: Adobe Driving Third Wave Of Enterprise Software Disruption

SAP’s Strong Pipeline Into Q2 Keeps Stock Near Recent High

While SAP ( SAP ) late Friday preannounced Q1 earnings and revenue that missed Wall Street views, investors Monday were buoyed by the German enterprise software company’s assurances that its pipeline is flowing strongly into Q2. SAP stock was up a fraction, near 77, in afternoon trading in the stock market today, just 7% off an 18-month high of 82.70 set July 25. In its release Friday, SAP CEO Bill McDermott said he expects “increasing momentum” in 2016. Shares of rival  Salesforce.com ( CRM ) were down a fraction Monday afternoon, but rival  Oracle ( ORCL ) was up a fraction. With final Q1 results scheduled for release April 20 before the open, SAP issued preliminary earnings of 0.64 euros per share minus items (73 cents at Monday’s exchange rate), up 9%, where Wall Street analysts expected 0.70 euros. It said revenue rose 5% to 4.73 billion euros (or $5.39 billion), short of the 4.85 billion euros and 4.82 billion euros that Evercore ISI and Wall Street projected, respectively, observed Evercore ISI in a research note. One euro was worth about $1.14 Monday. In a research note Sunday, Evercorse ISI analyst Kirk Materne said he’s looking for “more color” from SAP on April 20,  but “we expect the (Q1) license shortfall and comments around a slower start in the Americas are going to pressure shares on Monday despite SAP reiterating its full-year guidance and the comments around a ‘strong (Q2) pipeline.’ ” Materne maintained a buy rating on SAP stock, but said “we continue to favor Oracle ( ORCL ) and Microsoft ( MSFT ) in  mega-cap software.” RBC Capital Markets analyst Ross MacMillan maintained a sector perform rating on SAP stock but lowered his price target to 78 from 81. MacMillan noted that SAP’s Q1 cloud bookings of 140 million euros rose 22% year over year, and more than 25% in constant currency. “We view this as slightly disappointing” following Q4’s 75% “organic growth,” less than 50% in constant currency, “although do note that (Q1) is a seasonally weak quarter,” MacMillan said. “SAP also added over 500 new S4HANA customers, of which around 30% (i.e. about 150) are net new. While well below about 1,400 customer adds in (Q4), we would expect (Q1) to be seasonally weaker.” He said weakness in the energy sector and “some pull forward of demand” in Q4 due to S4HANA product promotions drove SAP’s softness in Q1. “As a result, we think there is limited read-through for other companies in enterprise software.” Got that, Salesforce.com sellers? “SAP’s fundamental growth drivers are rock solid, from our best-in-class S4HANA applications to our completeness of vision in the cloud,” said SAP’s McDermott in Friday’s release. “We expect increasing momentum as the year progresses, fully consistent with our guidance for the full year. SAP continues to be a highly profitable growth company.” HANA is SAP’s linchpin business software suite. CFO Luka Mucic said the Americas, dragged by Brazil, “got off to a slower start.”