ServiceNow (NOW) 24 Jan 242023 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by. My name is Sheryl, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q4 2023 ServiceNow Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Darren Yip, Vice President of Investor Relations. yours. is floor the Darren,

Good afternoon, and ServiceNow's Quarter for thank Year XXXX you Full joining Earnings Fourth and Conference Call.

Bill our and Joining Officer; and are McDermott, and Officer. Chairman me Chief Chief Gina Operating Mastantuono, Desai, Chief CJ Officer; Financial our President our Executive

our year call, discuss XXXX. will results we first the today's our fourth for During XXXX quarter quarter review and guidance and full

information a we for differ discussed materially guidance, assumptions. to most cause including get or events. started, as our to statements risks, press want of on factors on is information actual such XX-Q results SEC call, we that involve information to of to obligation contains Please today's XXXX and that Before the filings, or We and recent refer statements. may our this XX-K, including based that duty forward-looking future release result as from today emphasize update new undertake statements earnings no and and forward-looking our our uncertainties

We'd present today related to non-GAAP financial calculated today's otherwise on both current and press also all performance accordance substitute we remaining a are rates between with to at obligations measures, release measures and revenues, that which reconciliation for except investments. financial website and presentation, in for noted, we posted or out RPO earnings see GAAP investors.servicenow.com. not and as refer addition please the RPO, GAAP. and measures in investor are To cash these Unless to our and non-GAAP growth discuss point like measures non-GAAP

With that, be also over will on I'll to call website. call today's our of replay A turn the Bill. posted

outstanding QX. much, you thank everyone, closed call. joining beyond expectations and a ServiceNow with for Darren, you, XXXX today's very Thank an

the of business. Here's state our

growth also company's growth guidance. high points XX.X% basis at currency, in XXX grew engine. ACV, is XXX our That's intelligence a basis from increase. than injecting results had high-performing guidance. approximately of constant was that net above above story. our our XXX Operating guidance. points greater revenue points cRPO We at end ago, basis above margin XX% That's new a fuel QX the million by Subscription up deals tell The constant our is $X new currency. already Artificial into over XXX XX%. XX% year XXX

spanning QX with ServiceNow's now creator, performance we customer over breadth our X businesses is ACV. technology, workflow packed portfolio. full milestones With of the billion have in $X and

XX QX. deals and north and employee $XXX have million $X XX ITSM, in lines over $X with over ACV. $X in We individual Security million million. X top over had each risk of and each had combined Customer, product double-digit double-digit deals ITOM million. XX ITAM, for with workflows, deals the creative of

customers firm, services million are record Chipotle, ServiceNow. a very new large Corporation in financial Our new which iconic France, is Group Air customer digitally global TIAA, Data and our had such accelerate as history. in signing continued count logo Busch in with NTT, logo new a a QX. brands transforming large including Global million deals $XX XX over NNACV X We to win with largest

first can they TIAA, functionality out-of-the-box accelerate We time our through market. us one that are XX with new still proud business is their so of to expanding customers,

Group. Australian States Digital its record QX strong wins Army, Department Delivery public United in a including Defense key QX, the Postal continued of U.S. Following sector growth in and with Service

XXXX of at We have operating the XX proud finished extremely to plus. are rule

and XXXX hear you'll reflects strategic As Gina, relevance. from ServiceNow's guidance ongoing our our belief

and growing. solid rock is business core Our

growing. is Our perimeter

platform is Our adoption growing.

well only And success. enterprise is greater intend new XXXX fact, opportunity to it. to ServiceNow journey, milestone we in fired To in are, understatement. We on to and extremely latest massive not but we're successful positioned, this would of be an business was is the movement, define the make say an even software powered transformation this up XXXX era by a unlocking This AI. industry. in lead

some spend will time growing grow XXXX. of tech this $X.X That AI $X trillion decade trillion. means to the $X from in dimensions that us took get in only Let's by estimates for years, new another to trillion framing spending XXXX, world. the in $X plus trillion it to accelerating Gartner spending X

worldwide IT time For will from and estimates come nearly the of bigger by first growth XXXX, IT that in decade, communication than become services. XXXX. software the IT in a services Gartner will in all services spending

we the What for And be which a is years, spent ServiceNow being a deeper into secular innovating catching will between once-in-a-generation strong, this wave have we're drill trillion $X XXXX, investing, is preparing why durable by trend. when it forecast has here you so on market and for Gartner and been AI. early. XXXX supercharged

have When saw introduced, exciting we long Pro record We track adoption. a commercializing very breakthrough and of technologies. were SKUs our customer traction

our Plus just outperforming X Pro Exciting. of upgrade the Vancouver Pro release, which launched the are with Our offerings, pace months ago cycle. we

to immediate new only conversational new drives QX, workforce. our The get this since example ambitious AI it many. And significant innovation, of faster strength HR advanced minutes AG set In cases full X gen Assist and and This Employees trajectory. is to they first is AI service it results self-solve Businesses in HR for capacity faster Siemens resolve issue ServiceNow's especially takes delivery Now its for our resolution Virtual through XX up. we launch using quarter validate released as capabilities, get to rates, answers higher the deploy our chat. entire net need. always, Update road Agent map. global

dramatically capability They workflow they text type code months. high-quality speed generating to to describe the using has several This by innovation our text of are for been increased code code XX%. increases text have to using developers won. developer ServiceNow's developer productivity. Our

at by follow-up speed. service automating the reduces the management job necessary get repair field recommendations visit. technicians for first while cost in revenue Assist the providing done Now increasing helping and Identifying equipment,

strategic open, as safe enterprise It's AI continuing can use to advance strategic partnerships to business are AI. cornerstone AI platform transformation. responsible of why joined the itself, we and we imperative. XXX-degree the the why also AI Beyond to every as our Alliance ensure a ServiceNow grow see It's

Today, capabilities governance ServiceNow's EY solutions for AI we of EY with be using to And AI course, generative our strategic enhance experiences our customers. to their co-create expanded also all for alliance will employees. generative for of

These handful also is have ever new goal billion only expansion are the ServiceNow $XX of a X worldwide software our in to achieved. on company told investments our as another the business We of unveiled major ServiceNow's long-term now culmination addition partners in team many. partner latest of of series I've companies platform. moving Phase surpassing program, examples building of are which that incidentally a the the X, into models ACV,

of Scale this about There have on much strategy: ahead new elements art is are truly execution the capitalizing company. opportunities long-term for We an global of key runway scale. Execution, and as platform all is company. a our form. growth X we so know

Today, of One charge alliance This of resolution. early service companies a from those in Management our Disputes experiences. transform solution with end-to-end the Visa built strategic single resolution dispute questionable through final the globally, connected the alliance, will ServiceNow investigation of solution ServiceNow everything making a In to and offer a alliance for customers gen will dispute to payment resolution. Visa. market AI-powered indication for first X-year the launch was announced initial phase Visa,

workflows. ways And ServiceNow customers. company tucked to be the the an UltimateSuite, more we the create. Now growing complete automation as enhance we in And harmony with offering beauty task If can SaaS we That's a our this AWS fix is in experience. any example partnership long with ServiceNow fix it mining new AWS. marketplace. value can customers to Beginning workflows will drive, available perspective, we our value find to a user stimulant process intelligent month, for more automation landscape limitless have The consumer-grade the that identifying architecture why a existing Platform. we That's we active it, delivered is help in software us for the across From speed our Another platform. legacy in an gives of accelerate believed challenges it.

another need on to it innovation new deliver our to ears technology told music experiences, for its One That's tired now." need coming want ServiceNow. we and of to excuses brand on for don't new nicely and CEOs me, obviously into and "I'm We boardroom. decade wait finally promise. my

plenty we're progress There's the more making. and to building discuss company the we are about

recent have more #X leader them. a We to than to U.S. listen in XX #X in XXXX Glassdoor's Top for to and time in ServiceNow ranked and accolades overall Places Work ServiceNow as Best capabilities. analyst AI as reports our software. automation separate lists firms

out largest on of was One databased. and to They companies of achievements time. and Index. the ServiceNow overall employees that's fifth, index. is technology is Opportunity This company our study what the happens really American scored #X America's the companies over proudest at ServiceNow XXX index

are great a have together. glue that people culture means That company to the all that This being a fought rewarded to who winning with because binds great team so hard us much means is life. a build

and over Luddy to our up the who all it in too. way, and deeply work and X made customers last ServiceNow they do. winner We the fun why show We year. our company, platform. people about the professionals to care have hungry is. the way We we world-class some why try results also Since stick at here partners. together as our the ServiceNow That's humble invented along have million our help Fred emerge contributions we've believe to applied It's

building who XXXX work works your trust that and ServiceNow. we've will We're back. now, we of and getting AI ever, thank a we're to got only world putting the To started. world our shareholders we're for as you masterpiece here, all you, the invest ServiceNow, with continue to because in show

questions over the Financial meantime, like Officer, have our I and the to forward to In discussion the I'd Gina. turn call look the we'll outstanding to shortly. Chief

team's year. New you Year our all was our guidance of needs platform agility for growth responding Thank to are to what intelligent Once relentless to in Happy metrics, quarter conclude you, position the been solidified has as another phenomenal enterprise execution. QX digital our operating margin we exceeded and trusted on Bill. ServiceNow's in. transformation. focus top exceptional driving showcasing listening a has line again, who

revenues, XXXX any revenues exceeding representing scale a currency of guidance that subscription our XXX range year-over-year in been end enterprise constant also out growth. $X.XX XX.X% by growing the company. other We billion closed currency, subscription software hasn't constant $X.XXX All by high points. basis QX, in at organic accomplished In were billion, with XX.X%

strength. year-over-year billion, constant quarter versus currency business to quarter. representing Government guidance. Telecom, $XX consumer our XX% ended growth the basis particularly in to RPO energy and the and year-over-year perspective, XX.X% Technology approximately also continued industry cRPO an saw services, and and representing was beat control constant growth, robust impressive From utilities an were education point growth. and at billion, show Media $X.X acceleration XXX a currency

announce which highlighting I'm portfolio. our Bill of in As just fast $X noted, pleased generating QX. the in momentous milestone creative categories $X ACV, over our billion to hit now that workflows X crossed workflows, have We in following in workflow breadth that QX, billion ACV customer

a demonstrate the relevance Our renewal QX, part rate a was remains platform customers' it mission-critical best-in-class in the NOW strategic to of of our as XX% continuing operations.

for in customers growth landing We customers net with continuing large XXX AI in with accelerated $X X $X our our We X,XXX ended XX% the largest X,XXX our full new million XX% logo of as year-over-year. ACV for net the In over ever, Pro net products $X family new SKU. including increase new paying full releases QX in deals customers closed includes increase an deals We right greater year for million XXXX, a new And million fourth ended we approximate the our new contribution bear gen $XX in quarter new ACV quarter, ACV. over than saw ACV. than the product year consecutive greater drove QX, to our quarter. over any on million. the of the That fruit deals focus us original first with in

spend disciplined XX%, approximately top XXX points guidance, Non-GAAP the exceeded driven our to by line margin outperformance Turning above management. profitability. and basis operating

was up points XX%, free flow cash XXX Our year-over-year. margin basis

operating free For margin and margin cash XX% XX%. Total was year was flow flow for billion. XXXX was free the full $X.X XXXX a cash robust

balance share of as healthy objective program, billion managing a of with and of cash year our dilution. the primary shares In the ended impact QX, we XXX,XXX $X.X in investments. including repurchase with part repurchased sheet, the We

the strong of As authorization. of have we growth, the to original our remaining end of the world-class million quarter, profitability Together, demonstrate results continue billion balance to shareholder of $X.X $XXX and drive ability value. these a

guidance. Moving to our

accelerating this exited we our outlook seen be are those transformation. products lining This with as early robust XXXX. reflect build pipeline XXXX in with success of of movers momentum with raising already wave strong gen to next are investments our the We customers partially which our the to reflects we've first AI business up the

As the always, incremental customer around macro be budgets our in continue our cost assumptions to we for prudent guidance. and

XXXX With that to turn guidance. let's mind, in

are XX% at a raising on million constant currency year-over-year our the $XXX XX.X% We to subscription midpoint outlook a $XX.XXX $XX.XXX basis. range billion revenue's by XX.X% of billion, or representing to growth to

this margin We point expect to X of of benefit useful from earlier our growth month. years in centers life offset by XXX subscription from change our gross reflecting resulting equipment center and in data XX.X%, an investments X emerging from completed basis data a assessment opportunities,

continued by our also OpEx XX% margin full from efficiencies. driven XX%, raising year operating We're target to

cash basis points overcoming headwinds. an of expect flow XX point margin year-over-year, We cash incremental up XX%, tax of free

expect million. of we diluted outstanding GAAP average weighted XXX Finally, shares

expect revenues $X.XXX or $X.XXX to currency growth a For representing between billion to and XX% basis. XX.X% subscription we XX% QX, constant year-over-year on XX.X% billion,

has expect in a contracts growth reflects reported business, We our cRPO a strength XXX the basis which XX-month a federal QX resulted to create of of growth. point This basis. on negative higher cRPO will of tremendous constant mix and that impact XX% currency both

We ServiceNow's are rates as will these federal renewal expect in contracts contract XX%. QX that renew

operating margin an expect XX%. We of

diluted Finally, quarter. shares average we GAAP expect million for XXX the weighted outstanding

XXXX. in for amazing are outperformance XXXX pace position summary, success of of value their stage deliver bottom as becoming gained time automation power in is end-to-end digital and throughout positions in century. of customers the momentum accelerating Now of AI in platform workflow top XXst In the The people. our our on and of the delivers. proven Leaders for example ServiceNow's platform us ServiceNow's intelligent QX software investments enterprise continued to across the the into the The transformation Platform has the investment strength AI the year. another set and team's the our accomplishments defining to gen strategic platforms with interest prioritizing leverage growth that to company well lines, journey quick shifting

to to I XXXX worldwide we contributions ServiceNow's an forward our year. a to even and CJ for would remarkable this all their year, our exciting to extend employees look was Bill, like success and outstanding gratitude past XXXX. more

for up Q&A. it open I'll that, With

Deutsche the Brad Instructions] Zelnick line first question Your from [Operator comes of with Bank.

if finish Platform clear love choice what an Now view you of versus is be for us digital close Great, last performance to a or contextualize you participation year, a going see amazing and and it's would enterprise It the Now-specific. even congrats to it's modern you can new help destination of great But on share there. rates did maybe the as ACV sales XXXX. your AI Bill, the rates, as rep workflows. I'd out bit net environment how about just to hear

out are in exists really Platform say the system, happening, this after putting to conversations, and half rip you with for gen a much same they're to if force What's terrific. the CEO the and we you in without the months, actually be and in century of in we is replace. the unifying this the to out these systems, landscape there complexity gen architectural the in a is I now the the they thank take mess of position question. They realize which one the manage multiples have and manner about meetings adjustments very has legacy because AI. there going getting very involved XXX data cooperate Now Brad, CEOs are there, to Yes, last beholden people their AI And to, cases, which think very with that momentum many the environment of well advantage their X platforms with Things can revolution. and

they of So now. executive that as those. they're it really end-to-end meeting, platform looking we Gina the I you for platforms C-level that transformation. one intelligent are get have matter. We're think, for digital And said, When

And AI, momentum outstanding. with regard is to gen the

has new any said, that SKU into we I put other As the introduction marketplace. outsold

the around real improving because sells in unbelievable. it just cases gen it itself. if XX%, a no I mean appetite are productivity, sensitivity price AI, there's So there's XX%, business and you're to invest so

really, his So we orders gen coming. CJ engineering really The getting good team. actually great I to think AI because have we're unbelievable in product, thanks investments place. We're a are and

tell I So compared year, time would you at last this year, you more to time should this be this now. bullish

Thanks it's so question. much taking the Yes. see And the guidance. reflected great it in to for

Brad. Thank you,

from comes of Mark Murphy with floor the JPMorgan. Your yours. next question Mark, line the is

ACV companies strongest AI family. it's a of heard We the saying I Bill, with produce any of net any So now. its contact only right gen that really say new the think platform uses AI other software product had products I've don't real-life

to wondering element mind accurate, I'm factor should pricing what's it's done back the to efforts driving faster the Should allowing that's So maybe and we relate some Or AI Or so and see packaging? of it. fantastic? that's it your think on of you've to is really that you if more team, which think we ahead work in other is that AI. you adoption getting

AI Yes. mean on this let resolutions end-to-end obviously one you this Visa dispute great also. is strategic at brands with CJ mean customers. I using But to look in I'll the I of the it with in when solution manage the the just of it. partnership gen about capital the companies. substantial one deflecting and do customer can world, radically impact takes the technology simplifying gen these all And resolve to cases think their conversation AI their has comment human

to the of the biggest appliance instilling opportunity. recently, industry a from more COVID, if EY they a AI talking at great opportunity, look idea it's on went of for and XX% you single home manage world, growing. in to pane the of online participant. the corporations and single much I XX%, at glass look governance some and I you was has a sales to Post every was If than compliance and gen Germany industry risk in

spot. brought the here part So the one when his about Service call to and part he's instead of Field think on it, case what another agent the of a where knows Management pencil, -- it. got part it the a team one with resolves the of rep of but exactly is just AI CJ using and marketplace, bring, clipboard to on gen mobile, the instead That's

more a And repairs The consumer repair plus create on far lot box a will pay stream. the itself, along margins than you same-day the they are same-day with appliance. get agreement if annuity can a greater nice the

what CJ, we're And our is and thank us you marketplace. the So about and fundamentally this here talking business using congratulate I I for give the do do platform rethinking is job thoughts. that know and way to you continue to innovation bringing to AI. want unbelievable gen your Please you transformed the

here how are since say, that for investments Mark, learned talent asked was Thank would perspective. with us we And not customers. XXXX I of in absolutely what speed Element continue of very is game absolutely you're spot our you, a the from but changer And Bill. questions our AI familiar you on. that on team the some AI from innovation, only

quick you Let couple a me give insights. of

one release specific use generative first were We -- AI case first to of September. the ones ones product starting in the with the

So that had perspective. first we advantage definitely mover's from

Street, for ones will on we the them that is in that our one, highly environment, banks of sign specifically gen be Street one how wanted Wall Wall New and Street, from York, telling know the AI to the first know signed you were Street first Wall go New able sentiment this solution us. X were in tell a done, me work they perspective, I customer to there but However, AI with is And to and you regulated Bank want with sense with a in the QX. York regulators in to you

their wanted And transform signed so with a we margins overall company shared very up. employee that who go experience that with can also manufacturing wants In employee to signed to we and also then food productivity. addition, services a productivity large their large retailer transform restaurant fundamentally

is This game definitely a changer.

a from lot customers. learning We our are

our momentum. September, Bill how on you, here are and expectations we of Pro, I very was exceeded the We did we XXXX all And launched seeing our has monetization this significant and Thank on as Pro Plus that of ITSM Gina when Mark. SKUs. shared well

Arjun Our with Bhatia next the William question comes Blair. from line of

that on than congrats. are attributed seeing IT I'll Is touch you're this workflows to add of strength adoption SKU? those drivers plus the relatively in there, driving you're and at AI my that that there customer there wanted you're because that I look this other there and is employee net the maybe I seeing ACV to stronger workflows if Or mix quarter. driving the momentum in solutions? some new

Arjun, Yes. really Thank much, you it. very and I appreciate

us squarely on our of can align couple the note, top in that we're on you front, of about opportunity what for and to the all mid when especially specifically, their things nobody ACV Service there's blanks Management to a XX integration customer statistics XX% gave ServiceNow the important new lose Field It's with Relationship over fill the up do, Field and I year-over-year. Management, fact workflows, a it in we for tremendous we the don't category. can net seeing XX customers. And is example, our take it's all has When our Just current Service place problems. think fantastic X really those to just think back participants deals, for was I of office and and opportunity a the win, to what Management Customer

interesting. in to Every is it's they data have CEO with reported in that and important than list we XX To space. this well. so have very employee logos of of really And they a those it no-brainer a is some I'm are mentioned of incidentally, and CJ do category. single to like jobs data that can productive year-over-year. information spot kind better and that more with recognize back great whole nice both packed of people the the we of employees employee seek like and and natural have language. as was that the workflows, want areas share X deals now far paragraph it sure new our you So kind their the of your is And make top content them looking good. logos would in And was think to have But up I really to XX% just I

And Thank Arjun, of questions you're you spot you, the that Bill. some asked, on.

So specifically employee was Pro a catalyst AI and workflow. Plus both customer our for and SKU

So I'm are years one. ago and we which Number in on was multiple an know to of growth service. that's $XX amazing million. are a number ServiceNow difference that service we and a customer $X and of two, few orders how within customer do workflow, to making we That's team customer because cross which magnitude quarter, billion of just proud had so ACV, the ServiceNow

our So sectors do a Number business, with unbelievable growth to service strongly. And growing customer out outlined, very for very Gina the we the Service on and from designed many really telco employee in continues public well, Management one, the across delivery to to besides perspective, service QX. and addition in related in Management. million-dollar citizen Service customer workflow, saw industries, service. in specifically and delivery that triple-digit service And some well as ServiceNow growth products, industry, workplace did sector with HR service was had point to world deals including from customer direct Field legal delivery, on I'll of Customer we workflow telco Bill's telcos also, sector perspective. saw Two call public largest

Sachs. the next from Your comes of question Kash Rangan with line Goldman

environment of and feel just on tough? numbers. and Bill, to it and sales looks company existing Gina, CJ. business it Bill, like already that I magnitude. with It is to faster if question close despite among your lead has staying could you. much how a That's companies say first easier give cycles talk at bit much has me. about easier, that, you're gotten customers But Congratulations, AI generate results more pace for you potential about the better XXXX for splendid with in that Great to hear that we software for bring based repeat generative do sort it us business? the the the making and deal a easier little how and initial has Can a gotten to AI, repeat generative

outlined, right? Kash, platform's that you couple on strategic I a tough, across and Demand out, of happened continues that to We to which Gina has very what as deals things. ready will it so things are us say our the industries, performance QX. still significantly. is not improved as Across high, Yes. our touch is Gina large in have be environment, called to from the million-dollar this relevance, the saw deals was globe, strong. has allowed very It

just that. touch me let So on

CIO reached to October, an a large manufacturing On generative the POC example but out the AI AI you give in do X purchased and me generative it demand for varies industry, company, a wanted December. by we weeks I'll to are -- in of

it from Plus Bill ServiceNow also fast. perspective, large a moving A very, CEO very decision talked doing sales a cycle that was is because that of initiative with SKU top-down a proof about. currently concept So Pro a is retailer

demand customers gen are they that very very, us a specifically, pulling So direction for those AI very cycles, from is clear on in yes, in are sales it And fast. certain that industries.

than for on in and he want results manufacturing specific met kick to cycle. use faster off ITSM sales CEO cases want a Pro Plus Germany, to the that in This end Pro and And is "CJ, you SKU I should a Bill call I see ITSM. They review said, December, the on I had -- company February." large follow-up of

saw and in it, from so gen we similar is faster And a say would it's what Gina on I but to on AI, will overall still environment cycle. touch QX, QX

I Kash. thing, one May just also Yes. add

their personality. If every own single you they think about all have industry,

and pharma billion example, to drops this I of XX% And for that an $XXX had So cycle, is over And process years. a company. clinical meet year for X.X the the average as a on life know, example, trial you fail. industry is trials opportunity them this for clinical

example, So minute, generation, come protocols? generative if automate the for would about opts the stay include for up process, patient. won't site what per AI line think for be patient you otherwise $XX,XXX patient well, just that be you can agreements, contracting with in engaged And a out, document they say, do lose trial. And time also money, example, to with regulatory that a patient the you has because in the that in they every to

in the platform AI on generative and cut cycle go down there the So radically ServiceNow time clinical can these trials. obviously of

are the to of out gates, go. ready right CEOs, So

team, team, my let's out. Your figure this

there's And a I have so real I'm we a platform think already it. appetite. has is that So why bullish

from comes the Stanley. Keith of question next Weiss line with The Morgan

really bit the on equation. on I to congratulations XXXX. end of Again, talk the wanted little expense side to strong a

guys the little on to that outperformed X%. side sales the relationship strength hiring, are only us And you margin looking on I of quarter for the bit? next expansion R&D of sort talk of operating at count up of guys about really looking this was side more equation Sales marketing nicely to a see further You bit little the is changing than equation you head a and year. Can surprised sort and where marketing.

of went head we If ahead almost back sales ago, and XX% R&D head right count count marketing years marketing was is and sales X matching now. R&D.

we heading how into sales So expand are capacity the sort the and priorities especially you of And changing necessity about sales investment as XXXX? how guys capacity feeling are XXXX? now, to into go

for Keith, question. so is much this Thanks Gina. the

QX as really top the obviously XXXX. well as beat those in on the line the of continuing bottom proud yes, expand in margins to line and So we're

around R&D investments gen and in innovation Specifically, all AI when our investments AI. you head think and it's about continued in count,

you've commentary heard, already driving on the and investments double we're engineers given really the revolution. gen surprising down continuing keyboards in not that so on to fingers And AI

So you'll continue that. of to see more

sales you've it's And and you got not lot street So the right? sales in On about operations, got there. side, sales, scale on really sales have marketing, quota-bearing marketing leverage, in count, there's and a head the It's there. right? feet you've so operations just marketing

as fact, higher. growth about to much in sales, on you the 'XX have actually larger think to had capacity in would than reps we down able ramped I it going break we've a If going increase street see that were XXXX, you in feet into into sales rate quota-bearing And years.

XXXX. capacity feel about we entering how a from great we're perspective, So

seems It then. speaks it to really increasing an efficiency like sales

quota-bearing to given reps. You less people any just need support sales

up Productivity you increasing growing efficiency that as and scale operational from hiring the perspective, 'XX we'll not as as much. a going as definitely would go into as expect. fact be you're And is the well Absolutely. of we some heads

does brag Gina Keith, Now We're Russ Counsel who our about Office using And of neither Elmer, Platform. General is doesn't this, Lead. the

company, really the of productive. functions they're would the office back the with same actually something. that And so automated, much the too Platform us X head count all contracts And done to AI We things we're it Xx that and spending in that other we're so on do getting tell than service time had, on Now is even the $XXX,XXX. job. So companies take legal delivery, less

and we reorient built fundamentally took of a jump Our team and could And us all based kinds the General change made and world, our hire and to didn't rush, engineering gave that Legal AI around it that have office those call great want of the the workflow to Service product actually Counsel, huge on We he they it. which over agreements, that decision Delivery, on. he lawyers LSD, anybody. now Russ then

on internally with associated it. external Now as So everything marketing with force we Now an do

things Bill Americas this just proud XXXX, way that in while transaction new our in of sales we also centers, that new But large proud Keith, Yes. the And Europe specifically including which compared also and very sales super is handled But sales of were for what XXXX just expectations different your for of and the to besides logos, a really wanted our that mentioned are out call ahead but efficiency. platform improving The XXXX. was referenced. new well buying specifically us expansion gaining logo growth. moment growth sales Bill efficiency I in Gina really capacity you're that of logo is when teams in of to one our terms the

line the Jefferies. with question Your Samad next of from Samana comes

to of you versus a cohort points gen if than could in that basis kind was break about much I close how help you for and the think of Congrats upside, you the on -- of cRPO drove us more AI adoption on upside and was great the Gina, XXX kind could of was on XXXX. down ACV the expectations understand what's wondering of new it us strength net maybe expected renewal mechanic the and just drove that, exceeding that what quarter? the if the

Yes, sure.

would basis not by there, beat half ACV AI. say net certainly, outperformance by driven we know. gen it's And probably in and it's gen guidance and new I XXX So is as but points QX AI all cRPO half you our growth

in half we core business also of our doing say And early And and than assumed it's well. So then about the we had see I half beat. renewals did total guidance. our higher is would also

AI? then, products so the some observability demand And for you've gen outside last as XXXX maybe the or the product beyond about is in over the interest for gen portfolio about But the CJ. ERP whether are and seeing it's think AI, talked you workflows, beyond of Bill, year AI... this optimistic you about or are or most And most what Great. gen of newer or you you where

Absolutely.

for us balanced net workflow. So single that, performance say. would workflow always I across on single is that's thing Samad, great ACV, is general, a every which In every here new what a grew

continue our go-to-market our And across And they so teams, to that our really deliver teams innovation proud how that team, of engineering lines. product sell innovations. go-to-market the to know and we both

So that's number one.

at telco, they media look nice of industry as for when are very seeing TMT, I our traction. tech, that Number and I in out, some two, products called specifically

grew QX technology out operational in also only but under Management released had that Management. not very amazing nicely. Bill workflow also also product Pablo leadership workflow our grew. We and of Service Customer an Field employee the technology called Service then Stern, XXXX,

I'm and asset besides phenomenal the and list I had AI then security, through can a XXXX. about gen tell same this so our So management you risk, walking thing as

lines continue to all to So besides momentum have product these I expect generative AI.

Your Wolfe Research. next question comes from the line of with Alex

quarter seeing contribution of contribution think the a and first about see. bookings either kind What's a to little that great Plus or monitor quarter can the have AI And a gen us Just And dimensionalize in and amount conversation QX? bit AI of I aspiration And and gen can here congratulations forward. the fantastic were it better we something we a better the how about 'XX? go -- impacts So on rate say, should and of for really follow-up. all, quarter. Pro model on going tangible that I'd I give in I or see attach about you're I revenue indicator to as fiscal kind with see further to wanted could hear for to dig -- the the if market? where the of or just cRPO from track you quick of penetration a we you think a that

It's new full is our of Gina. called including Sure, first of original script, Alex. end the largest product releases I'd contribution right? day, drove this any products and ACV quarter out net What the Pro At of say ever, gen my new in the we the SKU. family in AI

in Pro full for Pro? days. that. That being of the absolutely get shown curve our said, than our has it's it the steeper we the adoption So question to first launch, Certainly, very do I early Plus quarter often, be

thought guide $XXX for the perspective, the curve that be midpoint, And 'XX of and original it's going far contribution AI, but from so huge, certainly helped right? million than not but So gen my steeper Pro. revenue a adoption so the to it's is early at about when I days, increase

SKU, we customer stronger excitement to first in the so from interest We will base of about numbers think in you the an still penetration. days Pro conservative everyone early right get on the But ever by keep saw as And our the at update our the than that else we're and it's excited being 'XX and guidance larger, for momentum I continue to time much eye we same it. because as as will -- now, early. and is

half if Super the through talked the we about headwinds guess, things paying I the first just second about the then the of year, helpful. And around then year? I opportunity cRPO trend And How or what attention the be actually you throughout to linearity just half. that should the does think in there? other

Yes.

But billion remain point guide So I'll the XXX tell at help by growth. product out to We increased expect is 'XX. what similar we going plus QX than we XXX called to XXXX you and is any to point. QX. guide our that going AI in further so basis from million. $XXX QX, innovation points as I basis impact And out as that portfolio the levels increases in QX ever in about not the that I'm -- our guide confident our that in $XX drive in of of year full to gen all this

comes from question next Needham Cikos Mike & Company. with line Your the of

what I'll to think during of was couple relative SKUs the a had indication the make price maybe echo Can CJ SKUs is the which I my any I like properly. teased Pro peers. for years? for come the back, kind out expectations. just sentiment as you wanted of just well us sure the I earlier interpreting that give my now in that to for here Pro Q&A, relative market the Plus exceeding and wanted had along monetization with your And capture to SKU we've

Yes.

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over many expectations. products This We years. definitely so so exceeded have many our launched

POE So the on that's price looking leaning at out us it what, on number were in, get customers what line my how is in one. Number uplift. I'm the two, based with to just from we expectations would volume perspective, When discounts, try simple POC, thing. asking

is This us. in god, value?" not But CJ. value any, now, the line not to right Bill is did to my So said, is deliver work We going customers. now, earn "Oh the Where right get our my I it have our right always expectations. for with for and as

the Karl from line with UBS. comes question next of Your

direct Maybe Bill this to I'll and CJ.

not largest both You there's surprised ever your there already ServiceNow, but would bank. even guess on I with bit not a bank largest a a win out be ServiceNow's more mentioned new deal how sure hear big to have to that's And big little about that I'm I'm love customer that. new I'd win.

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Yes.

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financial you. on our is true look Yes. at XXX% Karl, it core. particular institution, say that fundamentally, would hear the to that great I when core of is from I services

services IT strategic new the at perspective, but platform very is this management it a largest for automation of is is generative service much foundational logo new on financial services that institution. the ACV. it was and perspective, figures AI-specific deal, So management win transaction X very digital not net It had from IT this and there, we large an operations in

that material. is So

Joel with Truist comes the Fishbein question of next from Your line Securities.

I also outstanding you have execution you. guess this Bill, done. guys for will is echo I the

been remain very look sector there. It public vertical, to what strong does very to the guess around do going like quarters. is things. adoption your second cyclical the spending I used cadence consistent? AI public the is, question it's And X several for is, sector Just from their think around be Number one how perspective? for you you

the you Well, very thank it. really question. much appreciate for Yes. I

governments up. have Our that I federal federal for have, in there's many what of a States clearly that tremendous business back other and think and benefit doing opportunity is around shareholders, the an we United our references really world. outstanding. that And replicate the to many we That use to we're cases ambition the many is and

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Yes.

our So global we that Joel, as XXXX, sector. in consistent have performance what call public everything saw in we seen, you

start some U.S. federal, of highlighted in by me let there. logos So that the strength QX, the Bill we followed discussed.

that also And we want growth I that doing United XXXX. and is, inspiring local well, in the also States. very really are to governments However, was our for do state state in platform

but U.S. state So and only federal, not also U.S. local.

team in cases some spent that leverage I AI. with in have they the public Now central States, in also we public to sector really their QX, governments, some Kingdom. for example large sector did our expansion and the let United me sector take our and in use we seen QX. and had well platform an also ask, agencies, we really London did in public ask well, Besides with ServiceNow Bill's customers, continue federal. of United significant And U.S. also similar Australia including generative On our time then for customers'

when picture. large, at I And good many others, when out. So it these we opportunity it besides called at is I Germany a nations, and remains the look Bill XXXX, Canada, look pretty as in see

the give sector think little adopting as just follow-up And AI. you the you Great. on color a Can on public what us the just there? trajectory is

gen make so AI conversations to you want first our that with understand, sure government. the trajectory, that I just started is have The

logos first public large as with was sector One it. I our QX of call a in agency,

a the in would We go as and a to the early of half to And and AI, we to in days, or few had second see countries, compared It's local see QX with demand. adoption will also But AI. public manufacturing going and definitely wins across I sector. across we our we of federal, say, are XXXX, into continue state, we platform position like strength others. generative in the services financial have given our

line the next The comes of question Peter Weed. from

to latest momentum in NRR by think the really you are several building And I year, been I wins guess on there for driven and say, releases. with that and seeing Congratulations prior have amazing years, I'd the on continued this that, had there that some really or been year, think stability of customers has But Gina comforted. macro. I think I expansion that nice in kind this some deceleration flagged in

to see of and might XXXX we this see out kind signals be is kind may look that things of you dipped the Or to some exceed you what continue here, new from able they As XXXX, where normal in to year? acceleration trend do like this to down? of kind may NRR

that that say at is at growth. the well the question. as we I'd scale about logo we're What new expansion we on Peter, Thanks, are feel as -- for our great rates

year has customers, several each new larger years. accelerating our earlier, been last our every over and mentioned in and CJ and especially growth, the quarter So every logo each

expansion our and extremely logo scale, net remain new our at And growth. strong, our does rates as so

new upselling will us. customers see joining as of a us well you existing with so nice logos continue And mix to as

At best-in-class, and remain we billion $X.X And in we year. billion $XX.XXX are so hit expansion rates scale, these of next proud going extremely them. to revenue our

the We And America. with more of come line question. will have that question Bank of one Brad Sills for time from

large from tough seems about around applications a new haven't I wanted this that We environment to deals. a of ask just enterprise transformational strength. lot big the like close new companies application logo It heard year. to

of but gap I on give at just closing big kind some this you're on opportunity? where does know color started And for of that wallets this your sight that more with now? focus, ServiceNow? wanted these mean what also, of any in Does that to with global expansion has I large So organizations given line large getting these then you that been are why organizations? to ask a

Yes.

So financial large services many manufacturing, Brad, in I Besides new also will touch automotive. saw institution, specifically wins on we customer it.

with public in new for Europe initial got large And continue large also which saw had growth. ServiceNow, new to is business, also sector. logo, new outperform agencies. We logos a in massive stated commentary, And new strength commercial Americas that We logos. I and my

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expand scale, So at yes, a this account for but continue bigger starting are specific we us. will to

teams And did or next for asset once time, months, to X thing our the the budget big that job security on you beautiful for with ITSM then a that, ones who have set for customer the they one risk. last working our implement, of I'll the customer first say, IT became in some X hey, touch aside management or

XXXX. has also go been that into as So built we in

today's Ladies concludes you and for gentlemen, that joining. Thank call. all

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