NOW - Earnings call transcript Q3 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Q3 2020 ServiceNow Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker, Ms. Lisa Banks, Senior Vice President of Finance. Thank you. ma'am. ahead, go Please

Lisa Banks

afternoon quarter you XXXX Good for joining ServiceNow's third earnings and you. for thank us Thank conference call.

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

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

to and our from and in actual regarding will cause factors in information set and social control mitigation release assumptions differ particularly including and that but MD&A be XXXX as on facts we is get guidance are will our rapidly, conditions. that and assumptions statements decisions purchasing the some to the information XX-Q including our business the COVID-XX is forward-looking and information discussed of economic press emphasize to based limited operating. length XXXX based on we customers guidance, and of our on matters those statements. materially may risk and for in XX-K on impacts requirements, Many certain COVID-XX impact our filed today. our to this provide customer's distancing we relate October global are filings, want continued of which started, we other results that particularly contains and macroeconomic refer Before uncertainties in that to the severity Those we to the such and that XXXX, uncertainties the environment call, changing timeframes assumptions XX, assumptions for involve will forth cycles, based related of these of on The for and as SEC know Please today to, continued of including on our of not beyond be the risks, forward-looking such the sales risks, for industries. assumptions, those QX our

GAAP also in To financial the figures that not net and obligations. press between except results, remaining reports the please refer company results with substitute like over to call that, We see posted for calculated on today to will we filed for Bill. GAAP. With these now of to all non-GAAP financial like and which are filed I today, are would measures investor also accordance quarters, and non-GAAP will and presentation A today's posted press the investors.servicenow.com. release earlier to income a addition revenues, website. previously at our for of performance our turn reconciliation in point prior call non-GAAP releases, discuss replay the out as to All be

Bill McDermott

call. Thank you, loved everyone. Lisa, hope you our healthy your QX I afternoon, are Welcome to and and good safe. earnings ones and

of these in ServiceNow be to and times. communities challenging support strong in continue We employees our

about meaningful is unlocks Systems, agility that digital people. digital We into to on ROI. need work faster XX% to power Companies workflows. clear have Everyone this also unimaginable across brought speed, for experiences is platforms. missing It's and the this seeing. change resilience. the holistic customers, demand. Getting departments ever. the and In once-in-a-generation initiatives. digital passionately pivoting enterprise be workflow of And models. to All Companies companies But chains the it's new That's integration. is massive customer and disruption. leading all will shows remain scale enterprise important only It IDC architecture now. now gives The is shareholders. new have our as to this being at modern is The has words, better fueling not are investments split cross transformation of all be what us, business. without in has is ROI been to The invested critical. expectations. being will the ServiceNow link people. Massive platform workflows research that Managing into world. differentiator. and by and need delivered workplace digital across complex single deliver Platform we're operate other focused reformed the simply for the innovation apart. distributed. Platform, future the other in delivering than revolution. Now silos, to business more employee enterprise. Now They XXXX become workflows platform It's are opportunity is $X together customers Enterprises of employees data make offering than ability the value speed of or adapting the the partners their collaborate the enterprise teams ways, processes More it change. and model come the a serves trillion creating have This investments and must

my one Despite goal their colleagues to results. revolution will experience." that single Platform QX perform is COVID provide operating a enable workflow CIO a me, the in tasks top momentum As provides our Gina consumer Now like to outstanding unstoppable. said details. is delivered XX The to environment, the environment the with "My of the team

at well faster. The I'm In focused, of disciplined, driving innovating the and beyond. sustainable other helping $X in of to has our Here are which largest incredibly million deal to largest are are over raising we headlines. our we now ACV times, been committed and full succeed billion we're with year our never beat today. board. on growth ACV, $XX who We crossed million. team. customer, $XX the surpassed We customers We way landed proud We're X,XXX challenging priorities. across customers most ever speed guidance the expectations has over with our our above

the work. future of Our team leading is

workplace I Safe on. delivery, service their service our employees operations, hardware connected go We management, services are every introductions releasing new new weeks product and return help to workplace. delivery include operations. asset with to management, our service innovations two customers safely back the Workplace Other telecom financial legal Suite, could

direct-to-consumer platform innovations the demand for our industry customer In flawless where subscribers differentiated are service. addition,

any customers There demonstrates One the of How's impact service? seamlessly services was for no the Magic to We for their largest the Gartner Now Vendor downtime. agility of recognition XXXX two position our Now a innovation any upgraded with of leader subscribers. in the help power And completeness low in example quickly on and this We streaming in world QX for challenge. putting course, we code and to the solutions, IT application of yet leader that ability past the Enterprise of amazing. environment Quadrant Gartner were think highest honored the Platform their We in this core leader XXXX and execute named customer of Such breadth ServiceNow active be zero management Platform. in ITSM of weekend another of validates the management ServiceNow the is workflow our a business tools. risk the to Magic platforms. Quadrants, IT remain believe - our both IT vision risk to

let's across highlights look Now portfolio. performance, our QX at

Here we go.

deals more Our products. three top or XX included

Our Agency. XX capabilities anywhere. ever from the complexity, AI with with Sinai of IT customers reduce deals learning to the top and deals. Mount top federal XX strong. cost risk, was We work and automate, remains XX and included Information embedded XX in won machine Pro and ITOM was included people enabling while ITSM choosing are Systems of Defense in helping core The organization the scale ITSM deals. XX deals

growth to workflows those be driver, $X deals customer deals continue the of CSM, were included than Our XX X XX a top greater of million.

customer workflow enterprise wins in QX standard. is how ServiceNow Our demonstrate becoming the

US federal the are have capabilities federal our IT was using to machine into enterprise Affairs. real-time largest we ever. heroic their up largest QX included and nine Court. service VA to wins and Claims and Now critical benefits serve Army Department With This Deals free health, modernizing significant ACV. And in to now Affairs services. the better as will have manual and Air US customer with quarter Federal will of learning Senate example, the veterans. is Force, ITSM of its visibility workflows deliver customers veterans. management the of Veteran and to have our AI US In Platform We such Department Pro, its US deal costs employees They our automate availability new business capabilities. the agencies, ever, $XX million For over with Veteran the

are the future of Air As publicly Now the has vision. their Force US the they Platform described, deploying as Force Air part digital of

We are country services our helping Bar deliver like the around to self-help Genius men and them the serving globe. women

is state a created manual the to transitioning expanded appointments. public solve operating manual centralized can across services In work for state to a enable employee leveraging work-from-home protect the issues state They're while Now Platform Platform, Outside Paris governments The bought changes addition XXXX priority. of Tennessee's to transformation. the transformed. enables relationship Dell's Now model. Now a of safety standard driving appointments model, dispersed Their issues that are existing and Services federal ServiceNow Governor latest ensure onboarding utilizing continue Alaska's its state, population keeping systems, digitally department and and has for and and that digital of numerous Human our is and environment. public ServiceNow. to and when with using Platform. health feature reopen adopted directive the enterprise significant for The pandemic to industries, will and effectively. customers workflows check-in They a offices federal, CSM processes be HR arriving quickly to Department the new self schedule State to in workers to operating their digitally issued the also release,

huge the to example IT replacing financial institution better another Safe together. and risks, in HR continued Indian major Leading This industry going telecom to QX, Workplace provide its will became managed support customer experience helping enabling them and industry Our A working replace consolidate new onboarding, is best legacy of TPX, chose with the and management, are to legacy customer mission providing product. servicing visibility Suite and of first complete apps. the the Platform, see solutions specific to ServiceNow our seeing ServiceNow way TPX's that movement is savings. new this give run on the we In enterprise project customer in our markets serve. is stitched they Platform were enterprise Now onboarding of in to provider, portal, momentum of solutions strong Dell control by the to the product customer services transitions, support. Now we

two employee This new added Suite, and safety quarter travel into the state health apps safety and we testing. Workplace

for At environment safe a tracing for contact & Poor's used apps Raymond James time seen not ability value Safe to weeks, Workplace quickly Customers Standard downloads their innovate to and apps. our Rutgers, Workplace include and apps students Workplace to in We've and all Rutgers Safe our are deliver faculty. our ensure reservations, Safe screening, of months health years. XXX and University. Our demonstrate being room nearly and

my is customer know, of was Here huge you of Famer. as many ball a my I'm fan, favorite Hall Bobby win. grandfather McDermott basket a

restart basketball ServiceNow be helped than I in proud Using demonstrated week ServiceNow technology, and ServiceNow processed processes place. Florida NBA entered tools in successful and more possible helped restarting. who able careful right successfully of associated sports So professional X,XXX were bubble complex XX,XXX safe, couldn't the guests facilitate for staff, have pro season. and more the a the with to WNBA protocols league implement a in WNBA documents. the NBA and lead than that with ServiceNow's return vendors The employee more to screening under manage was and how league manual to essential workflows a

the become to helping employee, NBA forward to of the continue very digital experiences. partner fan We and to transformation proud drive WNBA, league look to player and official great deliver and are the we workflow

is drive ecosystem partner customer our even we great growing As stronger. wins,

In partnership are is customers digital between recently to ITOM We at telecom, with scale, another are help IBM's ServiceNow opportunity combines manufacturing, grateful the businesses for customers. Watson to go-to-market and ServiceNow in accelerating. our sciences. healthcare IBM We accelerate QX ITSM partners an and reducing This ServiceNow AIOps Accenture. we a new transformation and to IT their with ServiceNow our partnership making customers automate ServiceNow. life services, grow serve Group week, for cost Last quarter. outperformed financial and The government, investments business capabilities announced great risk. Business summary, announced will and was programs Accenture expanded new

are ability succeed confident this our environment. in in to We

$XX We beyond. are path and long-term to bullish our outlook on our and billion

opportunities our expanded Our WNBA, more. the Accenture. There leadership has many as and NBA with and and are IBM partnerships marquee such reach

resonating. Our brand is

partner. are We becoming essential strategic C-suite an

fast. growing is ecosystem Our

Our go-to-market capabilities are stronger than ever.

product second to is none. Our innovation

We and the this are deeply talent in best committed developing industry. to attracting, retaining

this the We best the a make is diversity, company are thrives. what's to where us Diversity tent stronger, belonging. inclusion talent big makes and dedicated going and And unstoppable. company belongs making destination us ServiceNow to

just announced exceptional caliber marketplace. leadership Global us are member and Jackson Likewise, stronger. are digital employees were experience the leaders. we industry could and leading getting across joining Board people the Apple experiences This world. I consumer Gaby leading using industry. drive Gaby new best-known a so Both create experience be Chief Gaby more in demonstrates only great be to deep-tech team. year's to to strengthened not who revolution recognized are Our and leadership for technology employee is thrilled the Toledano recently ways, it scale attracting. some is board music headwinds best make organizations unprecedented joining will started. industry have many talent We will company Officer humbled with addition a for the experiences innovative more Music. world-class leadership brings and survey we market were only customer Larry we as building of have as In of the today, tailwinds. the our be global new companies invaluable an our transformation anonymous Talent the and XX,XXX our in Larry of innovative team to than at His

XXst enterprise become a it, have verb. make modern and company a workflows. positioned investments we behind transformation, need, software the platform great creation for will workflow. technology the we the the We business a great is businesses of of integration of missing defining for enterprise the standard facing, challenge experience century. incredibly Whatever well enterprise link workflow is existing to is ServiceNow every the workflow workflow Remember,

We will and Gina. And turn slow more strong. to CFO, goal. finish be of friend, call pursuit to our year now my will the this in not down up We outstanding couldn't very over fired I this

Gina Mastantuono

representing our for continued the that billings QX Thank revenues and beat a by quarter robust carried despite margin execute top line revenues cash ServiceNow driven a fantastic very We and currency high of our were year-over-year strong challenges growth. subscription representing year-over-year or representing adjusted quarter team ended to you, Remaining created growth. exceeded $X.XXX currency subscription and the year-over-year at billion, constant subscription QX XX% growth, by billion, was year-over-year approximately performance from $X.X Bill. the subscription XX% XX% COVID-XX. the QX as and team. great RPO $X.XXX current representing well constant were sales obligations was the XX% generation. end constant growth, to currency billings billion, through execution free billion, approximately guidance, RPO flow operating $X.X

our time workflows portfolio Our employees, The top-line partners. of that needs our customers. experiences provide the of uniquely Platform to strength great value positioned demonstrates deliver power to customers, is and ability and and evolving the to exceptional for Now our create product meet

that The and unified challenges in processes links integrations enables role customer's a digital Now their solving together are into silos, the workflows. missing and departments, We playing key transformation. accelerating system, Platform

the operations. the resilience XX%, to quarter-over-quarter improved mission a customers of rate Now of demonstrating critical our remains part renewal our best-in-class Platform Our business as

win deals highlighted, to teams including deal. more, customers. quarter. $XX are our Bill net QX, ACV sales our than nine in new with those $X deals We bigger As greater ever And of the million closed in in ACV million largest what's XX continue

brand now to introduced ACV. with Our customers more that uncertainty of us amazing have new our C-suite. products resonate testament has the and macro a to than that land COVID X,XXX logos our $X is the ability paying to despite million We continues over

our our lower basis QX of our were QX. was as into outperformance, a point expenses T&E to margin was XXX points last top with year strong Year-over-year, QX guidance, of investments margin and result beat operating profitability, QX basis by by as generation. from about T&E shifted a expenses driven of planned that XXX COVID Turning versus incremental operating spend pipeline XX%, offset marketing consistent spend in lower and marketing line R&D

balance and lower model as the CapEx Our driven results business profitability. XX%, collections. of T&E free ability these of by demonstrate and quarter growth our well up our spend Together, drive as strength to was cash flow XXX and year-over-year, basis a points strong in the margin

in airlines, guidance, the earlier areas seeing new million we $X are of have severely outlined trends strong, deals do been we've The renewals to to adapt move which in in business business. I want the Before of industries. into our need see to highly smarter ServiceNow have include in momentum year, customers the of the on heading Collections that strong. last affected such impacted and of like trend QX, expect remain quarter XX% free very our industries Overall, upside to and six to a and and is while update of drive realizing represented and these QX. workplace headwinds transportation, are workflow. they also quickly healthy into year. flow Furthermore, affected And in terms cash faster the industries we see we way give seen about payment macro a closed customers brief continue hospitality, providing some we ServiceNow. very retail as that strong I DSOs. We headwinds, Enterprises continue to to expect future, and but remained the over energy, helping steady we existing

ability has ratio coverage for our a XXXX. and the to finish pipeline us year to deliver pipeline gives of Our remainder in the robust, generation strong remained our confidence

are As guidance a raising for year. the result, full we

representing to XX% raising subscription billion, year-over-year billion are currency range constant revenues growth. between $X.XXX We our and $X.XXX

and adjusted to growth. subscription to year-over-year our $X.XX XX% range between billings are $X.X We billion XX% raising billion, representing

reflects This lower XXXX we our expenses savings margin operating subscription COVID. full-year additional to XXXX XX%, XX.X%. raising to are from related We and expect to T&E XX% of continue margin gross from

advantage future, at our the of learnings the to and and work. leaning investments will that digital resources giving R&D elsewhere. environment advantage current our well organic redeploy to while heading quota leverage and many make innovation of ensuring of note These savings efficiency, and positioned we're the from in pipelines point growth. future take engine, incremental market the us to ability of return in lasting reinvesting these and acceleration taking expect effects our are that our beyond. for the bearing expenses some on and plan that to to drive take maintain have leadership overall the learnings We're XXXX disciplined me we into tremendous growth Let we We into fuel

cash. Turning to free

cash margin XX.X%, basis increase XX.X% XXX are the from full-year better raising free operating forecasted XXXX our flow our expectations and originally points in for the We than year. collections for to reflecting our margin

QX, we expect billion, revenues to $X.XXX billion currency representing and subscription constant between year-over-year growth. XX% $X.XXX Turning

We expect XX% $X.XXX between billings growth Moving to billion, year-over-year subscription and $X.XXX on XX% to profitability. representing adjusted billion

For incremental XXXX. XX% includes a for up which margin, QX pipeline XXX points basis spend expect marketing QX, some from investment QX that a and us we strong about set to activities generating into and into operating shifted of successful

Finally, and the XXX fourth strategic In million million XXXX workflow and outstanding average we expect authority. weighted shares is ServiceNow of full quarter diluted XXX summary, respectively. year

to the Platform adapting experiences focus are team's new for workplace addressing workflows across transforming the enterprises of existing and is performance the the power that customers. missing value the delivers these exceptional layer needs systems time technology our for extremely are on enterprise. of our to new we and investments The proud to enterprises I'm Now functions value. As Now across the integration as siloed of multiplies create Platform future, CXO's using chains,

are to Our one more expanding enterprises and our speed ecosystem the and strength and our great architecture more scalable and and capabilities partners with ability model efficiently deliver its our efficiency. reach, of experiences recognizing are

I'm a we century. journey platform very and company are seeing about software our the defining for billion excited in We the company traction are becoming $XX enterprise the company towards business. revenue of the digital XXst

lot wouldn't know around is on in at one trying your families your dedication has moving for without of to to the everyone a home, employees your before we thank the for of to appreciative are on want work I going and just Finally, lives, Q&A, juggling their you. caring during times. contributions. of how every all position want our these ServiceNow We each of be it we in and strength express just and world

With turn like call that, we'd make over You questions. ServiceNow. now for to operator, us the

Operator

Lenschow Instructions] of your is [Operator Raimo Barclays. first And question from

Raimo Lenschow

Bill, bigger a slightly question. picture

terms in you than demand in like for terms sales had going world from planning new Now home, living the that different generation is Thank years of learned in hiring, coming normal how kind of lessons of are way lead in working we have you. this this before, of a to what etc.? you generation, environment we terms so now far in of function

Bill McDermott

you appreciate I Thank very much, Raimo. it,

that we're however accelerating First of in the learning actually COVID It environment. transformation is platform digital is game. all, a

the and When of platform where see difference. you So the talking truly look IDC, record it's unlock. we And productivity the need have system to at thoroughly can that workflow you new make invested about change. as of kind

any system technology see in nice environment. in puts action on a a information of meaning whole the position in now You industry, us new taking very which

So COVID I what here accelerated think happens transformation. digital is

people into they as going they've that as got are to can. keep possibly Now fast it,

Our and is make by every to as ever before, geographically sure direct and sales persona. model are also relevant continuing expands coverage we industry as the bit force

existing and inside motion complement selling with support very an logos. can accounts this pursue to both You nicely also new net

an to with do in These big be not have done do where events. stadiums of can going thousands environment events to be in You're you people.

into the for that to event. That like revenue strategies the also techniques future You and you can put growth ability into a take bring growth. of do where digitally T&E experiences live gives them it company have and ServiceNow some

when of future super into leaned started months revolution. eight March super, different excited that is about as in goodness was super and we're because a than know, our environment, this it Raimo, ago. we And confident you did to totally work thank now execute ability So the in we

Operator

Samana. is Your next Samad from question

Samad Samana

pandemic seeing curious state as the I transformation was seems spend of processes an existing Bill, I'm how processes of etc.? maybe old well. on by driven wanted tracing, acceleration And to governments. there like with and contact touch driven monitoring and It modernizing or strength near-term you're in local kind dealing the or versus PP&E strength on like federal much even the there

Bill McDermott

I I to Yes, way, needs a But extremely have, have, they transformation by a even way if needs had going brought think things When people to all in COVID. accelerated COVID work communications of in distributed that that to they go fact of from I the the the they what it that know, have clear work self-service with And you have, home, were might needs never everything the resolved. the now the the light. said, environment. these that happened clear, believe, clearly as digital been is, you became all technology things we're that read research, pandemic environment back after is is to

across changing. work The change. the citizens work get the is to required very opportunity The the will generation And of federal way future millennial it is to slow. country because as that's to the So it's changing. relates information a is people government, big

of providing So communication terms the government rethinking is services. strategies digital and in

So these to for here workflow time because be to services there's lot long a of fix. things a are going

processes automating and much major the and human-friendly local, in but an So to really a in everything a continue federal, rethinking that have going yes, work source been state accelerate. drive and revenue - do out it's of the digital environment is in going bottle. been think transformation I we return way. genie never the in more back automating now in, of It's is the hasn't work, are where we And more to and to

Operator

is Materne Evercore question from next of Your ISI. Kirk

Kirk Materne

obviously quarter. backdrop is these give economic taking thanks idea was of for Yes, choppy. Bill, still wondering much question, you very and going us big some congrats when I you you're on just the the could into the deals, - if

view more this - processes So to still budgets it, if your just that be areas antiquated obviously are on conversations? Are other you all because trying allowing used together? get a I'm wallet more decisions to just on taking and is this on, customers giving you dollars guess. sense, sort you What's business to pull areas larger now make or backdrop. of a and sort But about these that. would it color going are Is I on maybe earn to take that clearly bringing in those budget you share are going having economic you what's to you vendors? able from difficult Thanks. from spent of - a other Yes, to some are taking from love of other

Bill McDermott

It's my pleasure.

might employee to and journey self-serving that up learning resolve to and for one might a to come the all you the So managing resolved from of bottom that portal work of services that can think of line, their of now clear creating segment that functions. if terms - provide future cases one it, in training that an employees employee to need them them, on-boarding issues It's the all Kirk, need, experience. the be about across on multiple

workflow All related. are things these of

all love So our the last over strength And of created It's the half-century. accelerated I what's to use. so people beautiful application has of use, of it. been easy to hide the truly complexity the work because think consumer so future it's we

the call the get and taught you want taught way them or do so you the to and mood This customer they to a want And the them they're to want automate they Netflix hey, them is they're a What to what know a not they experience, I to the especially cross-sell service it for and the new order need that the aren't SFA customers tools to customer in AI It's for us work, middle similarly, world, then they all a an big in a workflow should us of signed a you companies bot to initiate self-help open. want, then service human this. whatever people give have Disney+ to of to resolve really expect service. in a great not digital intervention, the or the sell wholesalers, companies the they're terms mood resolved a if a of now. they do available make I And through, to up calling when work have and or get right headset, you, trying the for the of give are of that. etc. experience. kind problem a like, this. customers retailers, good a cross use kind terms itself digitally. great process in In upsell today, past, direct-to-consumer And and up-sell initiated. gets And is human something that they to how used

with and brand direct consumer to create great and experience. got my a So go my I've my to product

All of is workflow. this

They the So delivered the it's in future and XXX that all there. Platform. going retired. it working story better. of a they could controls list about retiring They own also drive of so there's to thousands when a she place the legacy hundreds large on and all is with dollars of so these run And and want getting And literally talked their hundreds them they in with the in and you And great a way our XXX just from procedures extraordinaire pleasing people she highly work to workforce. well. in triple-digit and everywhere basically another much productivity a told risk of you they XXX, want world changes the and Now that's their running and to by mitigate now up, to take them and CIO millions. on everything have their all this application is tools out about applications in because to them all converging took had add thousands and are navigate place, them be then systems, a like I bank. allowing But Board, in

are they huge So saving money.

Operator

Keirstead next from Karl And question your UBS. of is

Karl Keirstead

roughly you're about margins the ServiceNow in to margin Gina, seems a Maybe Gina. one a basis at which is high this at at that later, come rate, story? and basis has end, experience comments up XXX margin to view end, I'll that your like with I perhaps cost about. firm the XXXX intended perhaps the of at points the year XXX and trajectory, spectrum. we which maybe probably low upticking the I'm this investments thinking just to directionally will going push that us was about is I for direct improvement probably if how wanted it pre-COVID know the of Maybe structure at be your not to but somewhat changed, all, ServiceNow's on there was improvement end one should guidance. asking improving COVID points whether unsustainable. band to put ask

Gina Mastantuono

Yes.

basis trying of question the for margin - said to great sustainable, give was Carl. this thanks right. to right, and XXX trying is so improvement I you're I you seeing question, that it a as here, So elaborate year the point was some not It's

all Some them say of and not at return will what the to these that is costs of we level. will wanted same Right.

take means leaning being really work our future perspective, rest so of will be on the the at we of but to and laurels. into don't as absolutely from And Bill digital in what we to of that transformation really positioned remain exploration well cost talked And positioned that a are leader, and acceleration just the plan about we that market we well invest ensure we that sure that continue making growth view really happening. absolutely advantage of and to to are will forefront the

start more not the wanted basis post make we'll and of will that the such growth. efficiencies a guide. see in in so redeployed absolute areas sustainable, that pandemic learnings to is kick certainly quota clear I resources margin the come be R&D will and bearing to world and points And as in that XXX some But really on

Karl Keirstead

time as to ask follow-up the of pretty well CEO way wondering comfortable Bill. has on you're been to in And were lever by execution that. strong. if I new Bill the bigger the year your M&A much. becomes a congrats now anniversary. now move that Perhaps, just you'd on it's seat, that the announced love been very like. a could And ServiceNow, I'm getting you in thoughts I'd you Thank a that the ServiceNow since it's direction

Bill McDermott

Well, very much. Karl, thank you

everything my here, it with been the loyalty, It's it's workforce, here that the well DNA. has Promoter so love the very customers, amazing. really the I the I the and culture positive. is And think satisfaction, partners, is excitement committed, the a Net on know and You jelled so just Score, year. been

and to time of So I'm my having the here life. be honored just

extend so and of better you core the of organically go enormous We experience the the going Then and items where think itself, enterprise. have what it and - business the the to and have layers and geographies. management. the having so and some in of that As so relates and potential with core TAM just do and people in ServiceNow workforce you potential all the the management that we're make situation much experience about to and and we today platform a much has service that when customer service to much of people here and lives and M&A, opportunity has management their customer the so future And for much business and you customer you itself. about then in employee the we're about think success of will along the huge service to I have mentioned also think workforce with the that

think to have industries. You about

paper-based You put have in to and Stanley going And just in taking I you personas came processes Morgan $XXX at on automating mean, you the to workflows think and we're what all had depending together, when first about when US. it here - them enterprises billion look serve. was research into I the

to you billion if So that. that to easily just get extrapolate you the could $XXX world, in

so core with business, the AI about now and operational much the CSM, the and think the organically. all experience, you efficiencies, employee If ML

to worked strategy I been us because well able re-platform So think all Platform. the Now that has of for tuck-in to code the we've

now time, them a who expanded that their time reintegrating acquisition building tech debt. no the through engineering that companies they're all mess Many hands have of instead amortization. have have spending We on

doing it we're in So and doing what here thoughtful we're about why the very we're customers. to service

the we scale, rails So story. would never on big, and we from growth is, There's would grow. experience short the customer's of sizable interests on it more the getting we room long a plenty that guard Now for The doing TAM something an clear and to they're did benefits of and have very Platform. if large expansion away opportunity. take the is But it's organic

Operator

next Morgan Keith Stanley. question of from Weiss is Your

Keith Weiss

of Bill, are competitive historically. for the for workflows Who a that this it get but really who duking deals guys about or one feel workflow your of Gina. big are then on perhaps going converge main lot you trying as of with a excitement there that the there's vendors out Definitely competitors different ServiceNow done? out your question ServiceNow? for and space, on automate the like environment kind set to has Can sort are than and you and us give opportunity perspective you people's does to big the vision are trying other to a of it seem seen those well and

Bill McDermott

Keith, we don't win. need amazing anyone to that's thing, you know, the to for lose us

at in So last and heavily environment doing think if speed, COVID of we where platforms. the of system especially the no there and of serving a they're large top to-do is switching resiliency now in have record with interested right have thing list. about acceleration quarrel platforms, them. the those out in providers their technology you customer employees out and Most the CEOs there, leaders out And those invested

point And which there's you course around, providers as customer the for into problem standard a itself, not onto of always on where the then we that's And workflow but employee indicated, really going huge platform. we're for service are are and be solution think about now platform the we've the perimeter us. building So running areas, providers, point Gartner people innovation tremendous platform became the the gaining solution if the TAMs. extended to automation. Also traction management

how They're see ServiceNow, it basically legacy, companies putting I can very across experience. and can they saying customers on weeks. they different we get And because done, how as most and ask my about so is talking get workflows that's a retire the go basically then them, important and talk grade a the quickly happening how them in automate get ask legacy consumer can So it and and a don't my we're we I And what Fortune systems, they're awe it don't done. because give language are large even employees We you to are price experience, companies. great large-scale quickly I can tell XXXX about domains, that's in taking when years, silos to can in Now. they my to from literally as much

place to worried plays the see what's the about. life that not into in of all the platform, have really been processes them scaling the like manage playbook possible, very they out business customer put tell there focused we an that in the would we So getting then run And they're do on show and the We're we art relationship only into deals to year and level. value well. at of it. nicely you we these what through no but just is can obviously the have cycle getting the the them are and it I and competitor the And go last are show form that their ServiceNow very, And customer, tools, people these large value.

Keith Weiss

got for I Gina, in in If confidence the it. is XX% something have I think but the got you conference by you business, count also in are the then call, math definitely basis. And on up my the right, it, Got hiring. guys guys order a on expressing head year-on-year

investing moderate? mind expect should two ServiceNow XXXX? going-forward of that One we follow definitely about you. there questions or implications for the sustainable as a billings we revenues subscription of this that trend level think where two, opportunity, margin behind just some is So to model kind that And keeping type overall, for to are growth growth on be subscription dynamics of basis given that we the of billings should of the in and

Gina Mastantuono

Great question, Keith.

So I appreciate it.

year-over-year, off pledge continue in pretty lay significantly. were but COVID-environment, the R&D yes, made that year sales. that, especially you're Head to going we actually aggressively is So, We in numbers. going not grow in we our this in and to only count to right headcount were not up the your and

we we're the just And respect fantastic. high-quality that organization. so really have and thrilled for Xs are continue that, we to ServiceNow, high-caliber has to we've People come hiring new work that. that. are done this leadership XXs in we on made about announcements focused And will getting really been want And to and we talent. so just on trends, and do With

believe and right not is to our investing growth earlier, the Certainly innovation. yes, and a in including will sustainable, continue on we're this of the margin time said and year perspective, will I disciplined level it's the seeing bit really focused so, comment will headcount. absolutely ensure this behind early investments, I that driving 'XX. grow points ROI, that be we're that very to absolutely we trend From And a too at that all basis XXX headcount, but we same

Bill McDermott

of so saying, the things people we're one we build Yes, got Keith, to in to really honored that. get and and very on Gina's many by thread what pretty with the much But needle to ServiceNow, here. trying have to work you

talent. of putting a rather we're what job So sustainable, we'd rather the period have time for into than company is an extended settle and open on

a build to going here. we're company So great great,

total it's to is climbed at it's against also to visibility run it's Gina revenue pretty and the employee any impressive. into enterprise, and want per come the study I Now with revenue climbed that you thing sure Platform. we and that and look also want you have margin you things I can very doing. all carefully, And company And other the the make whole by up if how substantiated And on The shareholders our we we're that mention in comparison the per our employee. to is profile how

are tremendous big where we reinvested products, to really of I sustained are addition the that, margin. great, into provide form great revenue, on brand the service great and company. the that, the so things think We products, we focused addition in of pride is that and for is engineering the in the revenue those on a getting and make to being obviously But put So and efficiencies that in that's people. we return And thing, will money with out we're of resonating. the shareholders,

now. on right focused really really, we're P&L whole So the

Keith Weiss

Yes, unit ServiceNow's really are best-in-class. economics

greater so. So efficiency you of investments you notice take which definitely the those and very guys Great with the returns we Thank much. make guys. job,

Gina Mastantuono

you, Keith. Thank

Operator

from is question of Wells next Phil Your Fargo. Winslow

Phil Winslow

Gina. a think think scaling organizations, obviously of added acquire then, into a just then you has background, opportunity simply especially given follow-up been the seeing new a balancing just in go-to-market customers? go-to-market opportunity? that companies, terms quarters, ServiceNow not the ServiceNow about you this are just at platform you've A for large so you, do you deeper for three-plus that And for question doing Bill, How and in to as of application about you Bill, ramp of those sort how but you've that sell that now of heads, of year, your you do capacity. of environment? Gina, up Obviously, in follow sort terms go-to-market as what virtual lot heads new mentioned,

Bill McDermott

crossed excited Phil, great. that the We so I'm crossed which really have Yes, is threshold year here. to

an having outstanding terms loyalty. you Promoter customer It's scale love customers it's of when happy of that have and And a here. baseline machine experience, a built satisfaction, the easier Net lot because organization. and go-to-market the the to business on Score, business building very, In an very great a are was product

carefully, total Phil, respect has and folks say Global that, baseline care with to we of the very that great company enabled us I'd have the start outstanding satisfaction the and in deeply engineering that So we're I XXXX. go-to-market customer loyalty, and in about that focus. focusing on

are We in geographically now expanding Asia.

we when parts have we're EMEA other industry it's also in And accounts. you also on things world top solution in the easily within have more by that of you replicated that. now and segmenting and because other an several of can industry know, We as much expand, we're places

new direct we works of the customers environment a new and then have that of that and is delivers So is in growth value the agree will nicely account fast do that we're basis. that's and grow. COVID I the room then revenue well of And especially And there for complement same logo net replication expansion a company, success tailwind, large very still motion the success. a whole good getting on sales force. plenty something that Furthermore, that a with that that there's to

we and that, us after better of to do we're our to used invested place. into are a came things too, COVID sure with up all to just indirect we there because thinking techniques be stuff that that sleep that shareholders with going do high is we're So give to this things And make or about idea know that in so efficiency. several in COVID, even want perhaps putting that growth let we

running a and also is techniques by fully the place, we're lot the we hit focus covering we've are self-service in of industry, down can direct a ground and the go we It's 'XX, and board market on The now that they'll persona. in with But So XXXX. geographically, yet they think form, game. Phil. insider techniques to by

Gina Mastantuono

question deals then large sales with move. ramp to and reps, your Phil, efficiency ability close second And impressed, on the extremely I've with on been the sales respect team's to

a a As we in mentioned, improvement quarter. at North America. we most almost uptick coming closed XX basis, we the low, Attrition an deals in greater productivity, than $X time. actually quite long from rates sequential seen we've sales in notable this lowest million remain the saw ACVs rates On with

at year. last so we're that 'XX entering ramps with significantly time into this And than higher are reps

in use Platform. we feel a new we sales Now good the the So productivity, really about ramping ramp And employees virtual reps. about of course environment

growth the in so total that impressed had we've of easy it has flawless. environment. seen And a in couple and XX% that to I've so a product with just and you've onboard. were was those our COVID And folks on-boarding year been it's the so remotely hires heads, been phenomenal, onboarding how bulk actually been this platform

And entire so really, really team. proud of the

Operator

Wood next is & of Derrick from Your Company. question Cowen

Derrick Wood

Pro for of I have year or retention I'm distressed characterize talk about to echo curious Bill verticals would as you versus the a Gina, just you you think what rates my as installed you demand look you guys expansion about maybe saw as give and terms if a base? trended pre-COVID? follow-up, and renewal QX, I guess talk inning in then this the the in, outside penetrating rates. sense we're you quarter enter But don't you revenue And of in focus us how your strongest can I'll you congrats. disclose net And for how ITSM know the what

Gina Mastantuono

up Thanks. what take I - that. strong. million I with deals expansion than pre-COVID, in I'm holding been that about the rates we've we're seen similar $X with quarter, Listen, seeing, happy even verticals. Yes. really our so year greater I'll well, talked the Great, really respect to think distressed the sorry, up those to in strong, holding what have really

these good we distressed verticals, And good our about rate. right. so feel really significance feel We about expansion really in even

We than more are seeing down-sells. upsells

again, so good about that. really feel And

automation ITSM If continues have we to well, resiliency going we for strong - talk about in great the the and operational increases strength. Pro, really saw QX, be strong to quarter. product. it and you had well a continue demand We In within

before, of using it XX% about and talked are there's we've a Pro, As customers from uplift XX% price our ITSM today.

Pro the to with there's runway respect SKU. still So significant of us ahead

this summary, really really the are Customers the the are future in well. And resonating COVID about Pro you again of and so, ML ever capabilities now in right than incremental work SKU in doing as resonating think environment. that AI more are as

to early innings go. And so lot a of with runway still

Bill McDermott

pipeline. one on Derek, And to build thing Gina's commentary the

- enough the look a industry coverage versus and when what-if time even more you want if has play year hit, than is the pipeline last up game, have this If at to on you pipeline you got our do year We conversion our This in enough. side? harder last snapshot. distressed year, have

outstanding, gone has went versus strong, quarter distressed pipeline this through in been retention the industries, actually overall loyalty the already we've substantially So the up all is last. that, and the and and including

So shape. a the good really business is

Operator

is Brad Zelnick. Your from next question

Brad Zelnick

headcount follow has in. anyone Keith's was and to SIs services. Excellent, want I much thanks exception And, for I up so the I fitting think of professional experience with relationships question around on Bill, kind the as in because you me noticed global do. the don't

that joint on partner expect making going out see business us forward? give an the we you're the you can of leverage these investments and the relationships, to update should of kind So

Bill McDermott

Yes, question. good this such a is

us you in met were about of Carmine example, on partners. Santa companies, the to partner whole a the his EY him year you bringing an global the now two partners. think - as ServiceNow team. We most were talk we - one it's And ago his strategic as If Microsoft platform, one I of ServiceNow Clara and and like if

about Accenture Accenture, with I global think Julie you now complete talked a up opened and practice about at If today. dedicated passion investment. Accenture's

version into move at look a cloud. very they've legacy. them had a large team on this large everybody to partnership of. to IBM us But that And actually ITSM also you're now true all their you well ServiceNow the We AIOps, the scale wins. a big up with entered their of on-premise, other best has IBM And signature If ServiceNow on-premise to aware that with Watson of all, partners committed practice. is with IBM,

a billion, you very There with engine And conversation. the cleaning products, everybody don't practices. as That's other looking happened, and at digital their the of situations How in looking companies have scale? all It up all where effects transformation, they think the they're dimensions discussed we isn't messes, integration with about. a net mean, run from great I that are getting what also have has that have is at having it near what out least satisfaction. with straighten lining really works, ServiceNow engineering for of they when new the up Gina practice some ServiceNow partners vision company tremendous complements if revolution work ServiceNow a what their on is a platform for see increasing you really ServiceNow with and to will today. $X what coming as So pure you have is do more all out it's do that way and They tailwind, complement with there we really one happy single you're where it. as resonated future. workflow either the cross tremendous it building I partner practice. In their and the investment. Or and situations not the I billion customer changed? standard because cases, a product ServiceNow, that's also at They're all only care that doesn't pride, many network

Brad Zelnick

in one have saying baked to assumptions about QX If into Bill. could just I COVID because look that ask at just I the Gina. the guide, you were Awesome, in squeeze you for if what wanted headwinds that, I and QX it COVID, QX more and opening the ago, broadly. would occur that QX and as most into would assume relates you to quarter the a economy be that significant up would

Now - there relative with is thinking says Could mind this? out at you a know your what headwind available information Harbor this are to I ago your about rapidly, but today about down. if were few very today, a is you assumptions months Safe instead assumptions that in seeing because deck changing even this How and the we're evolving you that France maybe in - shutting talk have are I on little a based look the today. to bit just it the us

Gina Mastantuono

question. great a it's Yes,

uptick - But you cases certainly from is in right, that our QX. right, of closing say saw for we're a all know, minds, that you business as what As the down guide, the I is will raising not so a on our key perspective. France key just actually and guide

What all current we refine pipeline gives definitely - The QX the our continue right. took our and March, last our back approach is me better as year. our than so we right now in confidence of is guide go. And coverage assumptions of a at we to them stats, cautious in end

are rates Our strong. close

remote continue And deals environment. and so close this evolve to we in be to able

down. and a to. and end we We be May, clear, the and invest really world to strong back thinks not be day, is to they COVID comments no more just what are tomorrow, the companies job. Bill continue numbers in exists one more the ServiceNow has able April, have away rate, of hit the and to team if is where and to basically whole you about QX. is were top Execution so close phenomenal going locked And doing have confident March, XXXX providing. leaning - more And let's have in leaning feel longer back absolutely and to this we'll at our a that because The that the out in earlier, exactly made is companies the think

pipeline QX good looks really And strong. We about again, our feel so guidance.

Operator

question. we have And for time one last

Your Research. question last is Bernstein of from Chrane Zane

Zane Chrane

you to Hi, from thanks for fitting you regarding me of but TAM. lot in concerning questions the you customer see about question work like when versus potential you want HR on a or sub-optimal in, time your the of to being the look management, think like way results. seems your aggregate two size or then threat? you. on wasted employee in as best look look a Increasingly, is you've value the competitors little for correct in much at lost those at of to at I that's horizon in do business it. Thank the And employee technologies opportunity most add regarding a bit work of variables, it guys the assuming the alluded of the the do - is being - a view a tracking about as way get that's terms around I world, function how your is it not watch past, spend much value opportunity would you as being time which TAM service the maybe conceptual that know the What how up ones investors this as compounded etc.? it. to When IT and seems of TAM the with

Gina Mastantuono

mean people it's absolutely the I is it's, get you what if TAM different Yes, if And question. will answers. you ask the - you XX XX different interesting

was said Gartner what what is. we it If ITSM, about TAM IPO-ed the significantly was it look you for when lower at than what

do is enormous, think and people your quantify $XXX believe not and to market most organization. right, evolve say that if happening we And throughout would we are think we I you here, going ensure to I all digital including single it's that, huge. every that about transformation the remain - real of automate processes it and going the is acceleration It's manual TAM you math. the about I'm that talked absolutely the that's so think billion, not what to leader. to exactly today It's innovate but continue that opportunity to large, can but we about

and from so we company this platform a a competition perspective, about a first. company platform And we're talk often,

of across really that do do we out that workflows And can no respect do so silos, we to sit across really there Right. with departments. top We're only of IT, competition, can across records. enable is the it, any one the end-to-end the the automate throughout organization. of those can platform to what the The across customer systems there provide employee, is that way workflows cross-functional functionality the complex record we of can systems benefit across enterprise, on

said earlier, to no has for to continue grow and Bill drive. as to So one us lose

larger And that opportunity our as only so of it need is platform, so we one TAM and differentiation that how poised companies architecture, incremental middle-office really automate one and we're really with model, about advantage larger to we're and comes. the data at our think But company size you're for to software one take absolutely right, as getting is really the sure. the back

Zane Chrane

is ServiceNow you estimated very Thank executed think than congrats and on the a I worth, that larger it's guys much. what what success. management the only definitely well for claims, TAM ever And company you have so

Bill McDermott

you Zane. very Thank much,

Operator

Thank concludes participating. and Ladies gentlemen, this call. you conference for today's

You may now disconnect.

ServiceNow (NOW) 29 Oct 202020 Q3 Earnings call transcript