ServiceNow (NOW) 24 Jul 242024 Q2 Earnings call transcript

Thank you for standing by. My name is Jay, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 2024 ServiceNow Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to Darren Yip, Group Vice President of Investor Relations.

begin. may You

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

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

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

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

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

the seen you of we for and announcements you've full U.S. to thank excited year year just into earlier today. leadership on we've received press been future government an and raised the internal previously more an company you, who the ServiceNow. about complaint know release, you, the comment us details, never been the of quarter, made now joining had we get the all the But today. crushed I individual we this Darren, hiring guidance, Thank want The everyone, before By employee. we all regarding a

expect, a the of was violated. internal the Board assistance investigation would seriously. policy outside you determined company complaint very we Directors As that took thorough The of counsel and conducted our with

Acting disclose the individual with findings the company total today, a entities. government as of subject hiring announcing the original the departure we're transparency, proactively the complaint. to was investigation And of of the the the proper result, who's

Desai, We mutual to COO, that also offer effective a agreement resignation CJ came immediately. company. the would our his President from and

compliance, isolated committed as procedures to forward thing. team are was sharpening While depth a me to clear, we proud And right incredible lead extremely a any our we doing to the incident, when this of that let situation. our it And has and expertise believe hiring are fully comes from talent result I'm perfectly continuity disruption. an be further policies without standpoint, the of we and the

Sloan respective alike. interim internal a Product while Officer, Award the decade Chief as He'll past for ServiceNow Betty, consider Chris was executive external named the recently CIO serve fact, In MIT the and I for candidates XXXX. who winner Leadership

in Our time. entire on focused products the our and and software delivering weeks' engineering they're a the industry, few team best release in is enterprise Xanadu

have because in got to give them. talking just shape. They're succinctly as cover to today. so as great we possible with done we fact, wanted the else much clearly and I facts In you And

raise So as situation. at in I again a once and said is ServiceNow the start, beat

had XX $X year-over-year QX than net currency, new guidance. year ago, And revenue are than above $X perspective. had had basis A XX%, points one delivering guidance. our XXX was is million at year, CRPO year at above increase. the end our basis were them execution. new XXX a margin a deal XXX deals a million level results that guidance. above Operating grew up constant over elite points year-over-year Subscription high our QX basis which of greater net we net ago, in XX% points is Our XX% constant we from new XX% six nearly which grew of greater we logos. that XX.X% This prove ACV, from logo currency,

and $XXX ever. the million deal signed new Our customer largest first federal threshold, third our we plus actually AC crossed ACV net

had workflows employee for over creator relevance million a soaring. had $X ITSM is ServiceNow the X $X deals All platform trajectory. $X This of respectively. XX Risk What's million. XX a our than XX XX deals. workflows XX X, on and Customer businesses an and AI over workflow were deals Security business had with unprecedented over top company million, is is had deals big million, in and X/X and deals our ITOM QX headline? of is over more transformation growth the $X

the Moving topic to AI. of

Assist doubled the our history. product new overachieving quarter-over-quarter. Now Significantly company's and fastest-growing became it net new in the ACV expectations

tech Now deals were many health million. over and others. two from million-plus had $X industries XX and X Assist which We signed care with impressive wins banking, of We QX, NACV to manufacturing across in semis,

customer, As ServiceNow. Stellantis is using lighthouse an AI

employee Assist platform employees, ST the optimize to and choice selected organization. Assist to with across integrate of will deliver Now Now entire solution platform using across AI routine as employees. delivering is supply Now efficiency and to organization. deflection Dell leverage entire Gen ServiceNow the and strategic Assist, efficiency across to experience its streamline global plans manage and finance across operations world-class AI service capabilities a experience their operations user seamless which customer biopharmaceutical chain. productivity business. Adobe tasks for to to with Now their enhance experiences a will increase will HR, and service, Merck of Assist Microelectronics to American their its to cybersecurity improve Honda IT its As and advance

with generation. We're ITSM Mindtree developer by using assist also chain LTI XX% and to supply flow together collaborating finance in offerings for and now expand is workflows. productivity grow code to increase and

strategy? Gen about the and enterprises AI So of adopting why in are thinking Think so design innovation. many ServiceNow's this rapidly context

Do The is for always AI first desirability. the is we ServiceNow putting have people. work to big pillar idea?

Our of strategy integrations, Gen help already the sources. systems across enterprise, flow persona. work, AI end-to-end we native into on orchestrate every different intelligence across infusing our the focused is and data department, every With people

do up-level low Now the the can work we so people train the to can the work. to knowledge machines value

for it? GPU on actually doesn't The of best have all second more customer faster the less models than hungry own models. better This and actually train, is because case large When initial it's these and models. pillar and of hallucinations the because approach With make accurate. are Can saving Now help feasibility. our done AI is domain-specific with public is to the is of faster our It's IT cost-effective deflection, from more the does staggering. results per Internet. avoided models Assist, do It deployment This XX final minutes at It's you language deploy it. we the service. are these we've The pillar ServiceNow desk business models. is look pillar our set We Gen tone sustainable innovating multimodal the viability, to sense? to approach

them. XX article Our colleagues the computer saving are time generates every minutes the for knowledge-based

to And This completing Thanks at looking Gen AI. scripts will noncomplex more our originally with What that's the a way. Xx our developers for [indiscernible] business forecast than the spend one be save way, and core? This IT to will Gartner in run Within to AI teams time. leading moment hours are is self-service an software Gen leaders look role a the GDP. global ServiceNow. it's does X.X% XXXX. XX,XXX the And and forecasted. faster XX%. excitement is according business the model. our employees it for will IDC, recent grow up and half Our Software-as-a-Service higher where than are By is like engineering with even spending

away So clear. for buyers future. is moving past building software consolidating into the the AI the trend from line are Enterprise

glass show the Expanding single easy ServiceNow modernizer employee to into future and IT has why It's our to alike many creating charts. at the The XX% planning us. great dim long-term of line a is customer rising They're of looking the the to the journey. few single business X,XXX from of light. year-over-year CIO market-leading to making model. want the our on improvement. they unlock the estate. over why the action built this is IT core points that platform spanning build as journey, CIOs see the intelligent And It's service ServiceNow now ServiceNow's this and platforms to it moment been data on service, relevance IT a with entire knowledge from buyers pane points don't of on blueprints pipeline for a new continue consumer-grade ServiceNow at top betting applications of surveys culmination are has out as working AI together more why enterprise.

Jensen Jensen like AI why he sees it on us. the seeing is us system the hit It's the said, operating when ServiceNow Customers head enterprise. Wang are for

tackling for both has level. performance tracking is strong, engineers. and the market Every innovation our our every the we customers moving While aspect day next been to opportunities and consistently granted. more with our engine nothing our We're up take machine and and automation our of of go-to-market

existing low-code App extending code. Creator with our new available no Studio ServiceNow Our Engine is to leadership

simplify build ServiceNow RPA updates brands. co-innovation for to We with now will So every applications. global major We're help deployments. expanded BT all can to partnerships see a even employee ServiceNow Group multiyear agreement there. extend opportunity engine capabilities units. our moving automation faster on great Other An

develop replace on bring to their service and product of largest work all leveraging small around for and digital Boomi solutions expanding tech is footprint a collaboration the media is will platform with world. Boomi This ServiceNow to as industry-specific business implementations. managed kind telecommunications AI-based the us to Deloitte is and Bell now innovations services new the internal within accelerating will experience from a the development. existing drive services competitor first transformation the Canada ServiceNow assist clients use to its leader. ServiceNow capabilities Canada. joint while in own

key our in education. AI verticals. their Force new help federal utilizing geographic markets The best-in-class Science growth Foundation is and expanding Air ServiceNow's to science, mission support will promote technology. Gen and new and solutions accelerating government's research, are to the knowledge U.S. adopt ServiceNow engineering We National

assist and where now AI using culture Bayer has the their as employees potential to Gen is with every hyperautomation a employee empower to they Germany, create In innovate.

of major public Nitori to the continues on Azure, we and Japan with so wins in UAE ServiceNow business We extend and Nomura, can solutions meet new Gen India. In in this in Information UAE. ecosystem requirements Panasonic our the of all including in we'll plans across transformation two hosted entities development momentum sector India through announced Southeast training. Morphus, and quarter, Holdings. Asia skills partner presence cloud Microsoft investments offerings, announced in digital AI a private We the Systems and Our launch growth our

develop for at ServiceNow further for built multiple looking faster new massive customers priority it for addressable sources, And is solutions models. also through use to increasing It's analyze capability plans Raptor new new Industry We're DB will powerful that's to reported Platform their digital our AI the ServiceNow's house ingest Now feed at they support scale again. yet expansion. to AI-enabled we our speed shared data a #X the can knowledge, and data from skills domain-specific categories, so ProDept in give much cases. for business database and order. Raptor DB. that scale have total expanding offering, enterprises data analysts further transformation into CIOs getting why market the

DB offering achieving inquiries XXx This the platform. of is signing in ProPlus improvement group many already highly similar already for in our launching program. forefront program. This We up. response our select of AI Today, Gen analytic top Raptor for AI lighthouse successful lighthouse this transactional we're a at customers the of version and new We're new throughput the XXx is to world. time designed have

capabilities. tuck-in This We ] Gen combination now and accelerate will acquisition beginning. company search REchin would Recon our an Germany. in is also further knowledge only completed of [ the based AI-powered In assist a management industry-leading data

some September on regarding announcements The intend data growing our and opportunity to massive, additional make is we data XX ambition.

can As opportunity ServiceNow is see, you not constrained.

this inbound sense excitement in more point centers, buying partnerships fielding that at community, a our business closing, in for exactly any new and Expanding differentiated it great geographic In where we're There's the new results should good our New industries, reason. all for this new here focus scaling delivering and our our stakeholders. of markets company, be. in is platform, history. it's and interest for

challenge are that are of there and to speculation and on largest, I've of also come. with the AI ServiceNow. broader new productivity, building most business course. business AI. leaning in factors about what's a to the efficiency are second cost we a not models. the customers Simply opportunity exactly guidance. reference other got architecture That's investing mindful will investing transformation. elixir new the questions put, decades macro only out ahead. few business why that Enterprises the we in environment. They They half they have Because elections our macro, a the This bullish drives year business in unknowns the full compelling is confirmed, for why are or but is rare in the our That's are raised Are world.

AI optimistic an work Our we're brand world's why putting for It's to the people. represents view of future.

of have will Luddy's more enterprise that personally we I'll years be original defining ultimately, been As more celebrate to Thank to will over the turn why? XX forward for time the company to And even the the over Fred attention. anniversary you of I and next you believe XXst I never convinced now exciting. ServiceNow dream, century. your we software be XXth Gina. you. look your questions. Gina,

the QX across Bill. demonstrated AI net quarter you, remains strong execution business as exceeding line the points. XXX growing our and metrics. end offerings. we currency, profitability see team subscription was billion, range our exceptional Once all top for with expectations. Now of continue $X.XXX Gen Now ServiceNow's our by to year-over-year tremendous of again, with were and Platform Thank revenues in contributions another guidance and resilient constant basis beats QX exceeding XX% ACV Assist new demand fantastic the high

quarter growth. the ended XX.X% RPO billion, currency at approximately representing constant $XX.X year-over-year

ACV point year from than Current We tripling continue From a XX% an more XXX to basis currency over QX. U.S. net was QX. $X.XX constant billion, year-over-year TCV X-plus with XXX our perspective, XX.X% year-over-year. last see from average point a had industry up basis versus contract a and growth, great year-over-year terms with guidance increase accelerating representing and new quarter-over-quarter deals acceleration quarter, from Federal both beat RPO well

also over XX% year-over-year Manufacturing a new and ACV had Hospitality, and quarter, Healthcare and of & Life Energy growing Retail about utilities strength, XX% were Sciences and Boats year-over-year. net areas great growing

than a customer foundation a of operations, has Platform XX% remains rate. quarter, We served GXK X base representing in $X by renewal reflected upon. build to us continue customers' customers. year-over-year. of This net growth for closed new a XX includes the Now mission-critical part strong our ACV stickiness as deals new in our The XX% solid greater million X logos, were of to which

over to We million. ACV net deals continue over X closing see deals deal quarter, in momentum XX million new $X robust in $XX and the large

in X customers top platform Our drive XX We to focus on included million deals continue selling more our products. of comprehensive multiproduct have $X as XX deals us X,XXX over now or ACV. a more paying

In nearly paying grew year-over-year. addition, million the more number of or us customers XX% $XX

ACV new ahead any family launched of date for period. new product AI the Gen continues our highlighted, net comparable Bill to trend As to

more XX% Pro size than QX. price a average over a the in saw comparable deal greater since than seeing Furthermore, upgrade. And launch, SKU Pro Plus versus we're increase Xx uplift Our in

capabilities Assist's powerful our workflows productivity in deals. of choice within of Now creative a cogeneration as over tool XX% well, Gen remain AI appearing

at time a down complex both cases by In releasing that live faster, announced drive case fast, very feedback a based by the and This that third. to to times resolve agents its cutting summaries on analysis help get Best pilot write are July, XX%. review to average going helped clip of nodes we're them Group learning value. innovations all, them with customers fast BT

majority as onboard We're the vast extend the We sales direct. AI to Gen arming our to further of working are scratching and surface are the the tools partners, with assist of them reach. sell opportunity just now go-to-market

spend. Non-GAAP profitability. XXX approximately efficiencies, by operating of line above guidance, over timing outperformance Turning to basis driven marketing our and XX%, was OpEx margin top points

balance world-class XX%. balance to and was quarter cash in Together, $X.X including billion We a results investments. to profitability Our with these a continue growth, ability free and demonstrate strong value. margin ended of shareholder flow drive cash sheet, our the robust

Moving to our guidance.

raising our XXXX outperformance, outlook. QX we Given are our

raising are more by million to million the at our we subscription of than FX XXXX, headwinds. revenues range $XX $XX offset an For midpoint incremental the

yields increase billion target million $XX.XXX to $XX.XXX both raise our from to billion XX.X%. We're a a on margin representing narrowed basis. net This constant year-over-year $XX operating of of full on growth and reported year XX% raising range XX% a currency also

subscription gross outstanding $XXX of XX.X%, million. free diluted cash XX% expect flow continue GAAP We average of to margin margin of shares weighted and

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

We constant currency growth of CRPO XX% a basis. basis XX.X% reported or expect on on a

operating of an XX.X%. expect margin We

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

we second was year. strong QX strength summary, heading half to In quarter, the see continue a the and into of

focus days in work of over vet incredible was around plenty incredible. from as it response the theme May knowledge consistent latest breakout Our woven pipeline a on for ServiceNow's The to discussions innovation an AI AI XX,XXX the in for the our of including of has $X aspect in into was participants, around been keynotes, billion customers room. was intriguing and people putting amazing sessions demos, inspiring of X every event.

was mentioned, billion. $X newly Bill created that As has XX% growth days year-over-year only up pipeline after XX since over and

our outperformance $XX further top billion to net us second half our ACV very in pipeline, and visibility journey in guide Our gives plus line good half into 'XX first our the with new combined revenue. of in confidence

Bill our of work team's and We couldn't their are century. open software of thank enough for I performance our Q&A. prouder be extremely becoming in defining this this company way With I can't on I'll that, to incredible enterprise a up hard proud team. and dedication Bill quarter, our it and and employees I'm XXst well the to

Instructions]. [Operator

from first line Stanley. Your comes of Morgan question Weiss of the Keith

strong more that environment little In a talk guys of us people it that, enables as an these closed, you a to And quarter. are bit can congratulations on to a but you be contracts guys lot to is if you really enables what concerned pull the about the it about noted, about you Bill, we're you the trigger, to people the is hearing seem of excitement trigger? What from guys but get lot pulling to trigger. opportunity to CIOs a will? the pull able you What that tentativeness get

there A QX unusual slipping Or in activity QX? deals follow-up for Was just terms Gina. this And of any the of was QX? then from to strength fundamentally

you difference very the discussing question, Thank for incredible Keith. the much of by that would, this I all, it makes. first and platform begin

most If want, where radically And what for the out executed. people their the a way of they're today solution. out. way and way growth digitization vectors business about the they simplify the work all necessarily threaded take into and selling you that processes But there flows complexity get new are CEOs have that's have narrow is think thing doesn't a difficult to the is department companies change you to really and only looking

So we're and able, especially that demonstrate real undeniable. incredible is AI to this platform, with value, our into able Gen built ROI we're

culture we built to value. deliver have And a

obviously, knows value. give I we're how a have elite the to of level in market I execution. team here an for call And very what connected. do credit We culture who describe

it integration and built great value and we innovation, DNA, quickly great fabric how the ultimately that great we how be of world, we to delivered just for into ROI. what execution our to that's care provable market in take build, post-sale between So the

go-to-market ahead execution did was about board pretty about net talked QX? the a perspective, saw team, On-prem was incredible Actually, -- question expect, as across the of net of unusual you expectations, bit then, deals on in And revenue to we slipping QX a your but new from great activity any come performance in that QX. more outperformance much No. incredible execution ServiceNow ACV strong From the of just we Keith, would ACV impactful. new more little

early the CRPO also, bit little driven new to respect a With net by higher primarily or renewals. beat, outperformance, again, ACV

guiding for But do to beat so. As early execution was you renewals in function this prudent really continue I've been incredible again. once know, of and I've team pretty how a been the by

the from Lenshow of next question Raimo Barclays. Your of comes line

BT, some that in should Robert terms that [ more me with do achieving you from and And way results. say, very small slightly actually as we ] Congrats [ think can ] of like of language like the Perfect. plant you a congrats. -- a your you're kind well. good talked use models these the and you more Bill, is of -- are specialized. in where efficient of models a think achieve we nimble about more about -- smaller, going forward like because you blueprint cases as large very lot AI Thank more

thank with question. no the you They key platform much working customer's you data. secure because There's quick. the companies lightning inexpensive or bandwidth when latency see domain-specific Ram, to mentioned a are models, the of I Yes. very they're to and as it, that again smaller data, our think it's end-to-end. And run. the customers' for they're because the goes And highly we're

busy experience out is the employees business best, about of work from we models. entire transformation, because to estate an new the actually to everywhere for digital do inspiring where work do customer to what and or which recreating building come excited reimagined the employee job IT their innovation take totally be they get can and developers life new their or net and experience dream So do then

the of time and And and saw And platform. unified see way, deployed Now increase Exchange I Assist easily and summarizing improved this deflection they You siloed said ServiceNow a us seconds. and by the XX XX% of does Stock business mentioned platforms incidents. could rates obviously, XX% in actually for the they business XX on this, cases core BT London you have lines they a to where transformation,

actively to X and enhancing increased them TriMedx. has they doing is have about their days saw A XX%, developer developers So we're basically, productivity, now what employee months. they're which they're could XX% biotech for Assist and talking improvement of just gone assist I X in using per Now and company productivity.

stuff. amazing We mentioned ], knowledge for live so One a And is I went were This our customers it go satisfaction their our AI general could went [ with improve to schedule Assist had articles for to solutions just this in just they employees. have Their They Gen their and but with from Cloud. to Danaos XX created June Community XX. in is able they provider. by way. XXX standpoint also availability implementation QX. QX content immediately digital a government and knowledge needed and from Now technology for access customer XX, well the a that activated decided SKUs went their pilot they customer

here whole Their these so a So deck. they to we're product know excited a that people get time a happy. Their one customers value every the rapid happy. we and mailing innovators into are what's their because so executives are love not you're from use to are of different we're people program on it so so instances, going happy. know connected And in that in market with

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

last years. percent desk. Bill, XX-plus for first I sure. in you'd notice from couldn't growth to overall the help RPO be but the that person Gina, X team Congratulations for the [indiscernible], That's [indiscernible] time the hit

Bill, front. that for kudos So certainly on you. one

more [indiscernible] What that holding 'XX. if there macro if you be really you it want rate the regime to reduction things guys that a have You've could been back Pro been through and towards business, change unlocks way there extent been there's on more have done Have multiple call is macro cycles rate head well. cuts for bigger as we that a ahead? certain really,

path give productivity Assist the going able product. to to you are you employ improvement the workflows, how shipping I also is of with we unveil into so there? quarters Where And your been AI by clients customer to much it just Thank see these and service workflows, AI unlock more on more much go and I create going front, forward? congratulations. the follow markable mean, each of you've mean X created do go domains and deeper workforce. Now

Thank Kash. much, your you question. and thoughtful your I really appreciate very comments

the line is the forward past think moving future is. and I not bottom really ball consolidating innovating is the the

think I company. dream the have a we for

dream C-suite. we how to that I think to know describe the

now toggling perimeter entire scaled across to now the I the and map. be it's solution defining think ready plan company we're move the we've internally, make the where enterprise. in the a where the road And expanded C-suite, one relationship bold and the we've obviously, in

So I together that's for all us. once coming think

of in AI saw terms In you the the broader the obviously, world. for investment hardware, macro,

incredible doing. of great the company work You the and saw the NVIDIA they're success that

like You see great companies well Microsoft and incredibly teams and doing copilot. with office dynamics and

they're So all all hyperscalers see or they're doing AWS the them. Azure, And it's you then And it's standard. GCP, good doing of we well. whether it's well, news is integrate all with

a We no can't it be doubt past okay? knew you We Gen and result. give strategy different eventually AI going to the would they had picture you of the our that. the upgrade we get And trend, knew hyperscaler We the about world to were the know the we expect with century NVIDIA. XXth built So that winner. that

suppliers. any innovation. it going chance to is story detect mitigate headed great where uptime. and Where utility a tell everything equipment, have give that taking equipment transform we your a of grid to we and I of we're They're you if power cases, an success industries. to skills, assets, I of we in with whether entire maximize need things, get But example terms are technicians, people blow take and prove question of to we're parts, trying And repairing and do that, time they to headed? demo care service in And to away great it's vulnerabilities critical the example, with for field industry, time, the real answer

and on it the disparate reimagine way combining the whole to companies, distributed ServiceNow data consumer going Now sites, the think the going going to suffocating parts are we've to to got There's And efficiency, going that and data, flows. a platform. put the goods. all across to for about industry, value could reinvent we're with advanced we're move that the manufacturing, it whole we've to connect work say operational chain. improve got analytics IoT platform, We're take maintenance predictive multiple I And profitability, into we're to think optimize about and and

chatbots personalized just own to think your They want shopping about deliver And experience. shopping experiences. AI-powered

You way. if but can't product, could in you streamlined buy it return a a great

You drop the brand.

You're business doing anymore. with not them

the a workflow, that product they the That's it's customer think want. the quality we're automate cycle experience advocating about going giving what to and all and customer entire of the virtuous ultimately So to service for the of industry. and them

health And it for goods. you rethink all. manufacturing, We're going so utilities, rethink care, rethink rethink consumer

Your next comes of of from Peter the question Weed line Bernstein.

the continued momentum. on Congratulations

I changes the big clients about I the people leadership. of that news to the leadership surprising part the was, team of the of obviously, CJ out really of important one success obviously day senior and in is think there. leadership a often some the pointed

kind Product additional of sector Beyond with key success. taking what continuity of from. a work to also do naming I the you the came and transition? it's operational the one team, And Chief with where public not was but those And smooth Chris to you Officer, of what ensure are ensure as see actions the steps probably guess given that to a business, bit keys just probably this operationally

you much, I Peter. very Thank question. your appreciate

them an and unbelievable all is cloud with I with team. the of drop team. the an including integrate Betty people of mode for have cofounders line the can who acting so actually been my capacity style where company grow-to-market on we and we've all is we company, today, he already the single he he one of business the in execution we Chris March we're leadership have of have, step in beautifully be and of leaders. the Pat development the that on great company. great the our and taking knows We defining the engineers Casey, met and runs And the decision-making actually, there in because a don't one. to

We're on company or It going miss mission, fired of permanent Officer. outside ready a hire and on I come more in everybody So the of the move. we're not to inside is a up. They Chief will execution. step a And But the Product company basis. to they're could already from the the the understand go.

our So very, very, a of they're to the is growth, the company, poised way, important U.S. public that, and our do business believe a in that. our want made. our great shape. arms continue And to very when to confident that we decisions especially by remains sector lot is that vertical confident third in quarter for we company. mention And industry very that's I have because And in substantially around very, the further get

love us. We're a job companies beat them. don't miss Our great love to doing them, and great a We service Peter. we for intend public here,

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

evening guys. easier. for Just an making exceptional our quarter, Thanks

first you. Bill, So question maybe, for

demand do to think you out? through as significant you're Just hold to what that's the upfront that companies talking strong and trying companies is join I'm early seeing makes it, And you're I causing have AI, the is, for traction. what the few that you clearly, of trigger guess them to about the think them one is figure AI that I out attached party? think do what

companies are of Yes, that AI buying companies that the products the in terms aren't? in

Correct.

ones conversation that do them the it yet, join with that get you how For the party? having to that you're still haven't adopted

they've AI a important little stories Yes. happened so because pretenders are they jaded. that question, think I from Samad, It's a many what's really is heard whitewashed

of in to stories, show handful then know are there before the already have doing them show we And them the them references the were cases, you give So the all use customer demos, get success and that show it, races. them it. we're map in because if advantage, don't, their move our other industry show to they we could second-mover they lose. for realize the where company don't off they out and and road taking participants And want they the them

And if XXX also, work, employees, difference work won't soon, and you work silly busy make about else. on with that doesn't tolerate nonsenses a think they'll the somewhere going go numbers, employees

So the true same is thing with customers.

it's validity your our productivity. happening. action, the where the us it's and install and of then It's Once see then to permission listening amazing it's you a story. have then demonstration. it's success education. and C-suite That's I they So think they an once story they're that an what's it's And it's a hear a quick go-live in order. interested in and into to go having And

our are critical surface we're partners that's important we're so in even I about Samad, opportunity so So I and arm that are just just now and to and our talked the would heavily are with with majority direct, and them the going really to And partners us. the current ecosystem the sales my working of reach script leaning to they very scratching add, and this go-to-market in tools right? broader. of vast that and our with sell, Those extend strongly

that's so here. be continued another going of the part of kind to And acceleration

analyst own I do, Yes, street you feet still and the these checks and activated. a getting I've factor. great if of think wow doing hear get there, said, been yes, can and when results channel as on did you imagine Gina they're I'm lot thousands Gina we're from makes more that's point to the one you partner the partners. then hearing one and not see on the a telling I and But say, they our talking the thousands it's when because, same it and story, a thousands

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

X acceleration Gina, you this to direct I one CRPO signaled sequential I'll months Maybe pretty XQ. expected change. ago, had things in an Gina. in know solid

if the I'm how XQ outlook. the given Bill So if election wondering on more second CRPO I'm uncertainty XQ given conservative just And being flagged half wondering big you shade sector. that in specifically, revisit a might the you're guide, is public half second that

question. it's Karl, great Yes, a

part net a but was early QX beat, renewals the they talked of as I'm I'm and are continuing execution the early that expected, so specific. of because and in ACV, that prudent part most about was that bit there new little the think of was renewals. in how factoring customer-by-customer beat beat earlier for I all be I to

continue for we full that the in think talked say QX And about. guide I in is But how so prudent and pipeline what I would year. that I to that about be I remain extremely confident

time strong than coverage ratios pipeline better are year. maturity So same last is

We number, has of I pipe earlier, XX% $X more that first generated the surpassed with came days. out And spoke knowledge XX billion. in

remains Bill prudent right, half Demand talk I and today is opportunity, of heard some the there's uncertainty the definitely as And bit you're little fantastic. our you've pipe strong. back assumptions. to about but so continue in so of be seems we a in of far healthy, year, and

Securities. of next Bank America comes Your of from of question the Brad line Sills

whether since impressive, note pipeline. on exciting. that around XX% to I same sounds sounds where question part has on that Now color glimpse into a large there Would stack. any what love sure, well. Assist wanted With strength, creator? increase there IT a maybe like some Are the to to standouts do ask or seeing knowledge, that as as it's Obviously, customer that with get employee that a looks in you're pipeline across to I'm

just a would there. So I to little love get color

creator much you Yes, I Whether would the the as the to platform. Now across as strength customer Brad, it's well Assist. it's across employee QX, saw say it's really board. Similar very results that in IT,

excitement across half respect pipeline Gen and we're absolutely strong But there is moving say really then back think is in operating with would pipeline attention I about such that here generated what so there as imagine, board. being cylinders very very to we see the you AI is as beyond. would and such the and And and all on 'XX we into

ISI. Kirk from comes Evercore of question the Materne next Your line of

quarter. terms answers, hopes X, congrats your to have just I'll with echo if over in could product really those set I the wondering one the this bit that you all. we And on little nice XX months? for out around as but the next on a earlier you to of Bill, opportunity in you expand little of a you bit bit was technology on and little expand a operational alluded you for conversations are Where customers? starting can look just your thoughts a

large for electronics a example, Japan offering, an really much, question. had a In and D.C. saw as appreciate on The this really company how go you I like amazing. biotech pharma it They had release and it. a STMicro And OT. us do at Thank and huge we has taken Washington, it's biopharmaceutical very upside and from company, you surprised quickly Yes. IT. company. It's for Kirk, saw this initial the for what already and off. a we're also it. Golfer with based knowledge demand what you multinational Boomi, Japanese auto is product 'XX the seeing really QX, mix partners company the as large We in

that products. think for there's we opportunity big So of both a here these

TAM workflow OT by technology billion. has $X increased about our

is sales see helping management. This we addition, TAM. customer $XX the billion In address order and us workflow

on into beauty development here. our again, with super traction so still development the engineers and we that are are doing are example. where encouraged company high-touch this capable quickly see that cycle feet great having a the of and is engineering of we virtuous on continue one street developers so developing linking the another intimacy the that days, and is dreams back this, part meaningful this So And early but we'll their effort the it's of the it's and of you customer they with the monitor customer our things feels beauties far yet the to And and of but the portfolio by now. update guys the

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

follow-up. Maybe pulled then have the And I you're I've I if like questions that you pipeline, in QX a the inverse that since from any to look referring the just that RPO feel sense that years quick confidence, you at the think, help you pushed far first that? XXXX, got I like thought by think in, us strongest for Keith's quarter give in and that of Gina, I are because otherwise to any deals a is us I think maybe if earlier would done the QX, one. deals This deals -- was you the got just about than had X around question guess there

Yes.

year-over-year right. is you're especially growing pretty at RPO incredible, absolutely our XX% scale. So at

We QX continue contract for average QX increase And the quarterly term see contract had right? so since average XXXX. terms to largest

my in said year that seeing script. than X-plus I more deals And tripling. TCV from so we're

just And is longer, duration customers that. in strategic Now making platform are really seeing of seeing a the which as we're deals, contracts so uptick resulting multiyear the meaningful power and really more in

slight in deals, as a a forwards in And prudent early differences of so that kind guide. I but no uptick only any about, big was against pull renewals, of talked

it. about So customers platform the AI again, we're really really AI of Gen power using how the understanding platform it's really transformation. the for that and platform That's becoming business into

just already just quarter, to leading maybe driving engagements in linearity maybe of conversations are larger, that growth. AI there? And RPO also commentary this Perfect. some strategic if much any are the And more

Yes.

larger strategic I And it's feel linearity what longer saw. conversations AI and very about are obviously, it Again, AI a in good. strategic absolutely, was average driving and driving really is really right? getting engagements we contract partnership good QX customers leaning into now. So terms,

a I think results. big all in seeing of you're so that is our of part what And

And a happened. the we Alex, that of and from give for you at like about became people build employees. people. with AI company piece trying platform the We've keep transformation And for looking includes complete to That's customers. to would the And of land the that's business Gina software bandwidth by people It at that industry brand, company we I we're people differentiated just to people thinking off. ourselves a secure. platform build looking is on expand what line us. pull then mentality think includes an what AI mentioned, a includes It stand It the work that putting what I you product ] time gone to company. [ a includes a include by place to

are expanding. account agreements And are tells things scaling, you, when into your we strategic company how the eyes. all build It's consistent of that before strategic Gina duration the these direction the of deal So The is a with sizes company. were the expanding. right, platform would in taken

of the line comes Murphy from JPMorgan. of question Mark Your next

play telemetry did opportunity companies ability quarter. very issues what amazing like crowd wondering SecOps into into a to think that the and point Is outages. to have want monitor more you and just could strike is your [indiscernible] and Thank you hiring capabilities. much, in reached I'm reasonable additives I wondering to up. type of you a that where some experience? move headcount if and large aggressive more that something marketing Gina, you sales improve It And and I to Bill, perhaps was you growth picked the could seem posture? would across what response. would response signaling the more detect then do of directly And it estate And a to you saw ITOM see kind IP

date Okay. good our remarks, Well, workflows marketing integrity the talk I'll And think relates systems, the July There via very Mark. visibility CMDB, of kept customers' in remediation your strategy, of start the a which was to CrowdStrike off kind for companies and was and impacted as the our which outage and our about ServiceNow. There into data systems customer onto to it and services we X you can service from hiring then to the as sped had portal. thanks impact of on employees systems thank CMDB the sales and instant I you're environment. were up Gina idea it X our operations mapping our relates 'XX and and to impact integrity to on infrastructure business ServiceNow up were ServiceNow. automated the And financial

a what's see customers So I more platform to think non-ServiceNow opportunities sales this lead could this. like actually once with possible

yes, that right? And even QX, it picking on to that QX the a on we up in bit about. that we ensuring lower street, go hiring question we're I was But sales So bearing focused these opportunities last was would drive and quarter. year, highlighted marketing, absolutely hiring because feet on a talking be little keep QX quota sales your are on and big

have to And tick kind we obviously, line up more we the hire expect deals. in overexceed sales to the we opportunity and marketing driving we ensure and to original do feet So the and and street grows, very hiring our continue of those those closing continue plans. with that much to will on bit. a

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

further for Congrats on strategic Bill, quarter. partnership the you now a assisting integration. copilot Microsoft announced you, you with acknowledge fantastic

that's you from hear deals proceeding to you're and those together if solutions. actually love for Just how driving

Joel. you very Thank much,

why Microsoft's We customer And much team. getting migrations good a ServiceNow We Azure Azure together is And we really And while of motion the That's Microsoft. I that market fantastic have good know them. very is relevance do sales wants. their of a and us wider And we're with working work customers, think customers And think closely we of Azure. streamline help we enterprise I opened partnership a is exposes And also with that there actually to us for really spectrum additional with both do it. big. together a helping ServiceNow. because teammates, what addressable to the we're partners. co-sell has we're

some in in and expanding Azure them. wins, multiple really we're in geographies. in now can of net $XX one and new logos And We we're win fact, net had And we together, as deals million we've how QX, two ACV. with thinking $X examples strategically over industries logo about of deal, them million-plus on new seven and new closed was

and capability And scale. to has So it complementary a X. gets that's any us more the I will and Now the synergy I speed And acknowledging it been And as and and winning more recognize do important we we're the and don't the have and unprecedented integrated things all it I enable go value place been to things, partnership formula, and built with even into our at Microsoft Assist copilot to Microsoft. that customers from when very platform is we'll that fully really bring the very does up day of interesting do without confident standard. straight quite everybody.

Your next of question comes line from Owens Sandler. the Piper of Rob

governance or somewhat via should customer as to these architectures in around conversations curious expect play you're play an where ServiceNow Bill, are we as modern that area we that just in thinking is about about think data DB, Great. partnership? Raptor directly

of take on RaptorDB any Thank data and Rob. is where and our activating and want ability think you that to to who's say it version point, I that automate at very automation, Gen this whole the platform of gather and much or And regardless in further has in And I us for it to source, lighthouse a the RaptorDB. workflow entering things a design to complement AI accelerate have into Assist Pro+, the of would right early think partners governing question, about example, program to done. platform the adapters of then Now it group will Now this now an our I the new RaptorDB-Pro. platform, our pro and ServiceNow get as we TAM way addition you

with we're bandwidth from TAM program And the providers with And further role the go our activate opposed the estates can and the to do everywhere, to use only our executional that work data we data competing integrating going of platform good to can other we bring see stakeholders. transformation just our we to our platform the extends offering. do the reach all customer of as they we this AI And have because the develop our because have for to as wants business and in excellence enterprise. if it that to learnings

industry-specific and activating it's So all use thinking big part of all cases. this our in

in not we're through So business can brochure, show showing transform you a you funding we process. when up, how and got hands, demo a we a our we're

Deutsche of of Your Zelnick line next Brad question Bank. comes from the

the I couple on execution elite quick of for level just the results. great got Gina, a you. and Congrats ones

Can would investigation of expect business And having all drove there into assume CapEx what and result big a we you Is unwind quarter. of a comment You then guidance? factored the that cadence be going in this federal point forward? should should on step-up foresee as you that clarification. And had that, a just we conducted? you the also to any

Yes.

question second that take I'll So first.

unwind then has as But focus about you. the changed. into no, to Analyst baked more guidance Financial already on no for we would AI. given respect year And of timing any there's So will Expectations anything And you federal it's step-up need we else. that not is would Day, CapEx, to it's I AI quarterly foresee CapEx Gen our business have in we full that at imagine, stop. than with full talked and as

So any kind stuff. I wouldn't of into quarterly timing-related take account an

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

I just of couple quick a had questions.

play of And that then say those CRPO that can points of sector. that I XXX top the QX. guys The in about out relation public you as does expected? Did in XQ think basis away remind expected, headwind But head, us want we my first as federal I had you -- it, headwind off now. to the call lap that contracts go to to normalizes

So the QX you as size up expected. will or to QX yes, on we pop and CRPO play that But did depending Obviously, expected. out out could headwind normalize business it yes, QX, comes should play now as as it yes, But our it we'll normalize that QX. not. fruition remember, again as And of know Fed to in in in QX let beyond.

We question. have time for one last

Matt Your of of Hedberg last comes Markets. the from Capital line question RBC

accelerating of few that put revenue Gina. the one obviously, of been the whether function, bit been has following seeing, a a on QX between Is the decelerating of maybe and last revenue divergence renewals CRPO Just CRPO Kind the it's little Subscription guide. we're for just or even up Maybe that here, and subscription questions. growth. but QX? just Gina, quick a has

Yes.

that has half showing first ACV you So basically, new versus 'XX. is net is what really in 'XX first half reaccelerated that

with The early other to nothing piece renewals do really. has

on-prem is last bit lower this in is of than -- are piece other QX is that a expected The mix than year. year little lower

results good about going for you the what So forward. think as things means QX and all it

today's your you conference participation call. thank in This today's for call. concludes We

disconnect. now may You