NOW - Earnings call transcript Q1 2021

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Operator

Good day, and thank you for standing by. And welcome to the Q1 2021 ServiceNow Earnings conference call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator instructions] Please be advised that today's conference is being recorded. now for hand today, would to conference I speaker your Ms. Instructions] like the to over [Operator Lisa Banks, Senior Vice President of Finance. Thank you, ma'am. ahead. go Please

Lisa Banks

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

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

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

XXXX discussed XXXX, sections The information facts this of in to, related measures for refer Before regarding calculated information purchasing except out quarters involve that net forward-looking non-GAAP figures differ know forward-looking discuss started, posted materially at on some including social assumptions, reconciliation not A call like measures, Many and rapidly, frames control assumptions our replay of recent All or and we impact and to are XX-Q the GAAP. are previously such operating. but a filed like of the matters the for Those and in also are today's is call, also we that, of posted statements our and press release severity based for and decisions we financial the to factors and may risks, now which today from emphasize cause those length our on and GAAP cRPO. requirements. today. for is financial guidance RPO to COVID-XX MD&A please point filings, certain Risk assumptions mitigation Bill. our are other and be the turn get to uncertainties would and particularly time accordance presents to to based the limited of XX-K prior particularly performance not as of these conditions. continued fiscal With call relate and our the including, filed beyond our we press cycle, SEC Please macroeconomic changing want set of releases, distances those of that in and results between COVID-XX that as that non-GAAP we filed To that our in the assumptions to on sales most substitute on the customers' forth the for of or information to measures company earlier on actual based our will customers which on uncertainties income, revenues, industries. will such of April addition the and see with these our risk, and press all investor for We'd be for website. global will as refer our current XX, I to and contains assumptions remaining today environment the provide will statements. including non-GAAP today on business in to over investors.servicenow.com. continued The to impact presentation economic and obligations release guidance RPO year we

William McDermott

our started such remains a growth are benefiting We perfect and in a families, Welcome afternoon be Lisa, ones QX help XXXX customers. broader quarter, loved safe, you. position profitability. to call. good grateful Thank remains your all support healthy and balance to hope and I of you communities our and earnings you, and everyone another from to delivering outstanding with vaccine strong to of ServiceNow availability. and

over In strong in the QX, our year-over-year, XX%. subscription year-over-year XX%. and cash of delivered flow high operating guidance. increased points to beyond. path And a seven revenue billion to Our we executing, our exceeding end margin revenue maintaining margin We team towards is grew swift we free pace $XX profitability XX% with

Our beat represents our relentless innovating passion the the focus and has on for culture our across board significant QX the customer.

are the services the year, what accelerated ideally of of and work adoption digital has positioned products, customers our past experiences. the transformation We need. to In deliver

are As a by transformation the more all-time result, high according authority trillion digital IDC. for and enterprise. investments is XXXX an the strategic $X.X than total will to ServiceNow across digital

are from economy creator now customer We developers. is have cylinders, digital firing and IT and expanded the on The for citizen so boundaries employee, we. workflows all to

this Our moment. culture for was born

have revolution. the platform the for XX,XXX we epicenter of exponential Our thinkers. bring functionality workflow This We're our of innovation XX the than In how colleagues to continuously past and are doubled customers. at features we do. is just team more months, we our everything of the

never has purpose been more Our relevant.

are work of for work, the world We better people. making

are companies done. and experiences. get workflows, the delivers. The of platforms, processes, frictionless linking transform architecture, enterprise augmented is requires if use one, transformation using our issues machine customer workflow and one and native integrations. their what for easy every their and work tools problems. to reality bit are bold digital the increasingly about Now create silos, model, that customer future. will learning business in do an to This platform their enterprise the In solution We This with leveraging only great this it working as helping one there to services mobile ServiceNow devices. world to power to the cross example, solve challenge. can drink of to virtual seamless customers' data mill for distributed with ServiceNow management, agents is one bridge our glass resolve field experiences workforce, platform Xerox, desktop, is creating need service technicians employee make customers this proactively systems, to is employees build They're In their and via smart to Digital industry, hybrid person. departments

scale, growth model significant and driven aggressively true An We we only do for delivering growth, the way while the mass amazing in are power in high doing what testament Strong business at demand evident future a the ServiceNow the we profitability. results, it. platform. do, to ones investing of is our organically Now and

program breakthrough release X,XXX agents cloud operations, name new to that the people the of experience, platform's Telekom, Québec, upgrade, the enhance are delivered customer and is teams is success, new to in fact, Angeles Now few. and giving work move participating especially Our predictive Deutsche like using year that right every adopter virtual latest search platform. our Los Québec release. the in Adobe, We're It's our ServiceNow Discover, innovating. why productivity Discover capabilities, business the ease innovations AI city tools organizations of a invent and critical keep demonstrated customers Now has environments. is Logitech, in to The utilizing proud like fully platform AI helping for that models. past distributed early

center to end Forrester Québec, timely XX% engineering need applications. we With Now and predicts new Department ServiceNow the great availability, just and platforms. able for workflow is XX platform. is genetic response. By Services citizen of NCI of around shops development online platform that hands at organization into low-code of NCI U.S. the are low-code Now leverage to app Human Research a from the use application delivering gold We're COVID-XX strong standard to the value. on software The and and of In of of severity tools that low-code of factors understanding new Discover the move quickly helping research collect to developers. the beyond borders who has engine an functionality, expertise portal a ServiceNow's XXXX, NCI National ServiceNow's cancer to create specimens adoption is COVID-XX the for days, example. seeing low-code focus support the digital contribute app will established Health without track the new build Institute how app development service time Employees global to patients. is in cases. staff community a

acquisition automation time RPA, unmatched learning allowing solution new our more This process human Intellibot, optimization mining introduced productivity ServiceNow capabilities process platform. machine hands be intelligence our while more AI so Now with of creativity. spending will our putting in We're AI, SKUs. even on to to new in customers, enhance can workforce more also customers, to an the With workflow they native We the agile. intelligent have recent enterprise and and our capabilities them brings of

about Day. Officer, CJ there. Chief Desai, our Investor be this from Engineering at Please our more upcoming Product hear and You'll

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

to more deals. solutions drive multi-product continue better together Our

core Our XX strong. ITSM remain was of in IT deals. XX workflows our top

choice embedded XX of new Our with chose ServiceNow ITOM their and EU capabilities managing engagement. Gear pro top assets services a with banking AI with and Supporting We're This fully especially efficiencies, and seeing digitize Banking ServiceNow partnership ML will CEO also multiyear simplify to operations financial including architectural demand EMEA while XX visibility had have to a The them for in strong. resonate regulations their to deliver integrated them technology employee better chose a of needed risk. landscape. IT as streamline platform to technologies at and New experience. their the also help improve ServiceNow view of Zealand workflow controls partner group and Australia was across industries, to HSBC, was strong the deals. creates example, scale. risk. full continue its simplify consolidate, HSBC's of the more a customers. and hitting compliance. advantage the our the into quarter Now systems as require gives companies platform to in We're SKU, employees,

strength see customer our in workflows. to We continue

its Our and our app operations, awareness of wins business we large the Telia, customer security ServiceNow leading Lumen world. networking, customer to the and with and where and continuing increased selected and for gaining of ServiceNow a platform for daily XX technology lifestyle, to our partners. services was which assistance top across services, XX is connecting they The telco city of top investment multinational digital be the app will city manufacturing Angeles' are Now the is In with Technologies, seeing operations, in engine company to use our the our and the assurance manual risk cloud This came connecting Los US, top Now Japan. at company globe. from its digital platform associated transform planning our in migrating to XX in customers leading of were is four in essential vertical XX helping materializing the to included the will telecommunications get use its to traction global citizens access network to across of eight A platform deliver online wins processes of it's access applications engine automate enables cost transformation, demand. company, customer and workflows movement immediate APJ ServiceNow provide to best-in-class citizens. fashion a of is are brands care, Zalando the a solutions. leading million employees a in telecommunications They is out around and Creating to deals. deals. experiences expanding is the function Employee heart customers, provide platform their workflows. in to drive workflows, reliable use take cloud. transforming on-premise Japan service Three deserve.

will employee mind workflows. customers. ServiceNow's As supporting part and of employee services Zalando sees component and growth, a HR safety their central employee critical of their using Employee they in implement experiences. top transformation, improving for as our portal their workplace a are this

We are these acted challenges. company at with pandemic, the saw quickly. solving been early meet of of meet complete the Since applications needs. the suite unprecedented critical only the and ServiceNow forefront start the We has to of a

speed administration keep our then support customers management, to deliver market-leading safe and emergency platform vaccine product agility them with fast, response of team incredible and our help the talent the our and apps, First, the of workplace our we Now innovate safe. to leverage apps and solutions now

mile workflow people of the management platform see, manage as these challenges, vaccine last the to their management is processes needed challenge vaccinate are You of time. lack vaccine This To using and they organizations in the organization center. our as infrastructure trap the address Now quickly.

with ensure support ServiceNow is appointments, Within for vaccines implemented for to tracking vaccines. the Our elements in orchestrate administration all Minnesota inventory to people. Westfalia, workflows existing our the over technology of have Germany's registered ServiceNow hospital vaccine administering and help and process, scheduling and largest critical people portal using governments caring vaccinate so They state, Ryan live, people working ended and appointment. The are sync. hours ServiceNow XXX,XXX stay organization's at children. scheduled in focused connected days, virtual children's the on an received levels one questions organizations The patient distributing scale. assistant vaccinations millions answer monitoring using North two vaccine management help to and management infrastructure five are to of hospital QX number they staffing including to their priority, of and going is XXX globally leveraging are can vaccinations.

of millions supporting are the globally. management and of vaccines delivery We

all people. The do revolution will about is We to workflow more. continue helping

on in care Best of so for And to points. XX humbled great have and challenge. around we Workplaces position what focused people with work we're our beginning are people Fortune pandemic, has named grateful the proud we accomplished momentum. workflow to summary, many Fortune start From the to our list team Best increased this than taking this That's so We In our the care over and of to year more proud world I'm be so the of helping manage continue strong to to achieve. we're XXX what of by the taking they had be time. a list places customers. the to past the year first Technology our why on have

time we conditions. demonstrates culture again powered and how through all-weather Our

Our engineering pride is unmatched.

and tireless. relentless innovation focus customer our Our

very, very Substantially than greater before. robust seen a anything have pipeline. we've We

customer the all management. learnings have We of relationship digital

Our is strong gear. high go-to-market in organization operating

Our accelerating time ecosystem partner services customer to and is value.

Our ever business is resilient.

greater. opportunities Our never

knowledge which event on upcoming not biggest We continue excited And brands, Standard FIS, to we to of greatest transformation upcoming to we're highlight digital be seeing BMW, ever. of at with partner. forward all Subway, XX Poor's, we're honored to customers firing work ServiceNow Bristol-Myers even will Investor And machine including & cylinders. be down. experience our more the also world's at in some This our is our their Squibb, all Day. look May, We're slowing you customer

We well we Gina, century. defining way the and software you. to all striving our $XX and billion with have enterprise of to we beyond, be on are the are company over XXst to

Gina Mastantuono

great a to was QX start year. Bill. you, the Thank

XXX growth high representing strong an and performance our heels QX, with billion guidance tailwind year-over-year billings obligations, top Remaining our contributed four year-over-year FX basis to way growth, we free XX% quarter points $XX subscription operating tremendous very revenue, the RPO, cRPO revenues year-over-year. strong of a instead the of to subscription X-point our $X.XXX the approximately on XX% of our at a growth, representing points subscription robust XX% original the Current margin carried outlook and for cash our a $X.X end were delivered million XX% We X-point high representing towards billion, tailwind. Notably, quarter On our were basis exceeded and outperformance. putting approximately execute of growth delivered beat team billion, continued target. to year-over-year $X.XXX revenue FX. points tailwind. duration another year-over-year billion QX X-point and beat FX the line and billion, beats billings beat a a a XXX RPO us was of $X.X euro, guidance. $X of through those the QX well Due versus and tailwind currency inclusive subscription and guidance. of were or flow. from versus well ended less that representing weaker end

EMEA investments largest one In are new to in the strong seeing were quarter. traction. helping deals in two we made growth. closed region deals three of in APJ, QX, of in we top the year-over-year particular gaining the very As in its where improving also ACV XXXX ever, Bill We're mentioned, strength net as platform trends saw drive

opportunities. who and execution speed edge everyone great cloud line transformation, the been engineers to with delivering From continue of model great computing the tailwinds is their ensure to create the our effort. team we're innovation helped and sustained Every We of to customers their is our tremendous The as The we to a platform that teams consistent of innovation leader the driven success between and companies for organization deliver ServiceNow innovation. address and leading sales who needs. wants C-suite customer to drive from experiences. intersection in else Now these customers, and secular the across result continue flexibility growth our value partner It's digital strength and delivering. the to employees by see top business offers experiences

part Our customers' remains seven We new quarter, deals XX% at our one the greater the million renewal than ACV as net including closed mission-critical rate operations. remains a in of platform Now strong XX customers.

us ACV point three selling or our XX of X,XXX more have in included customers XX solutions comprehensive continue instead to focus customers products. Our as of top now ACV, over multi-product drive $X fields over or the products year-over-year, We paying us on in deals more million grew more paying of year-over-year. up XX% XX% million $X number and

year-over-year, Turning and will QX. top some strong to that of shift timing XXX our Operating profitability. outperformance by XX%, up spend margin line points basis the was into driven

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

Before represent I the a trends that several macro X-figure move of We to average. seeing remains of our we're in business. about these earlier XX% by verticals, which year, COVID brief guidance, outlined the we is ahead last highly QX. give in I business, our affected industry deals company want were closed in The and to rates update renewal resilient on

in globally, must at committed with are authority that of Americas. is experiences Now to beyond. we're done. big positions the and for ServiceNow event, XXXX transformation, which work around for one continue an generation and all-time efficiency. speed and strategic is themselves journey. frictionless and to and XXXX world ability impacted to to distributed we ACV strength in platform business Regardless of the such Pipeline workforce, and robust Knowledge headwinds of companies well it get a secular with an ahead hybrid easy year. us as for for driver, see particularly drive of It our companies industries helping are economy. helping is increasingly to continue strong and the the has investments These in recognizing our expected remained However, its new net strength experiences in new did our reinvest to are even high the Digital model industry, employees the severely the succeed agility that tailwinds Enterprises our as acceleration create the airlines. some customers deliver the scalable great consistent make to growing this architecture paired and digital need in

guidance. to turn let's Now

billion a point QX, For $X.XX basis tailwind. growth, revenues XX% expect XXX XX% FX including between we year-over-year subscription to representing $X.XXX and billion,

growth basis We year-over-year, tailwind. cRPO including expect XX% of FX a XXX point

We $X.XXX and expect $X.XX includes subscription Growth a billings and billion between net tailwind basis from growth. of duration points. representing billion, year-over-year XXX XX% FX

includes and expect which an diluted out XXX QX, outstanding XX.X%, million QX the We quarter. for weighted spend of margin and operating marketing sales shares that into and shifted $XX of of million

full raising currency For XXXX, guidance a year basis. our top the we're growth line constant on

subscription on QX. previous expectations million in We increasing by the saw $XX revenue midpoint our we strong the are trends of based

weaker However, a resulted our a to headwind in euro growth. $XX million

Taken billion FX on point billings together, million currency and constant XX% representing to includes billion, the basis. previous subscription by $X.XXX $XX revenues growth. we're our between XX% basis XXX tailwind. increasing $X.XX year-over-year Similarly, This we a expectation expect subscription of midpoint a

our a weaker headwind euro resulted million However, the growth. $XX to in

$X.XX basis billion points. XX% of XXX XX% billion, Taken billings year-over-year together, we expect tailwind between This from a and and net representing duration FX to includes growth. subscription $X.XXX

see about XX% expect we're continuing into and be of to QX. subscription QX in QX In XX% to quarterly now total be of a subscription and in our billings QX QX. We seasonality, to of shift terms billings

of and subscription of to gross XX.X%. continue expect XX% We margin operating margins

shares weighted recapture expect the we million margin year. XX% XXX and diluted Finally, of outstanding for

our on be and May long-term website. You'll Investor on strategy which hear Relations opportunity about upcoming Investor our our webcast at XX, will Day more

committed our better unveiled making work, for as for people, to This making first in impact to report. global week, opportunity well. also ever is addition the strategy you. leading In global better excited I'm better Day, share to Investor In we're ServiceNow world work people. generation our work to At we this a ServiceNow's work, to once be with make impact work conclusion, able

to and disciplined succeed. focused, customers We are our helping committed

future in the and lives, front to where value workflows We have experiences platform the friction very create for transformation. enterprise to silo systems in chains, are Customers the across people's using businesses functions workflow and in reduce daily of platform I'm standard need our financial and excited it's new us. showing to Now about results. for new improve the

and Q&A, on Best around to want employees before I of to make thank with ServiceNow I to its that, Finally, is just ServiceNow's XXX helping work. And the this strength I'll to to prouder all of of one our world and ServiceNow Fortune moving be up for us people, all team. open the places to couldn't it make strong. continue greatest Bill you Q&A.

Operator

the Weiss Instructions] line first comes Morgan from question Your with [Operator of Keith Stanley.

Keith Weiss

for see and really year. the guys taking to start you, strong to Thank the the question nice

Bill. think there's for question I a

in those think platform to last some more give the I how Or Can that platform is bit kind of XX% big -- up ACV, a the to up saw color Was of that you little in terms is the most there any the to enabling picked what's - of is pickup. of going XX% of of quarter. into you business KPIs a talk pretty That so the place notable from pickup kind seems results processes kind strategic give one Or quarter? new it we new us in this the of force? idea just us much put that partnerships? sales so of sales? with bigger, be

William McDermott

to, be you I'd happy absolutely. Yes, Thank for the question. Keith.

borders delivering the those of done things. the all into just With answer beyond that engineering and organization think developers. the the we're new I the app tools really of is low-code we've citizen hands of move development Québec,

need to for platform this ServiceNow's in move business transformation manual automate on we being engineering for have really anyone means organizations. processes to platforms, all tying win. And apps, we seeing focus company we're and and don't together, the us whole to to enablement a a digital within this of greater which awareness lose is a is transformation digital modernized with know, you as So and market

new Now gave remarks, that folks our So example And low-code, couple to a no-code platform. Cancer Institute. workflows prepared our off. such is experiences And really the create integrate development I in great examples lots one is app National taking deliver a into of of

So app digital they're engine when if And up you center established they doing a time excellence, at around what and running an online done and low-code about think to to platform. service it's they've track portal about you were of patients. just COVID-XX NCI, specimens XX and they collect that think ServiceNow's value, with of days,

this going when So to are for the year-on-year business. here we think And that is the be growth this pipeline, a runaway company. at you on success at extremely look and the look we story you bullish

Keith Weiss

Excellent. That’s helpful.

William McDermott

you, Thank Keith.

Operator

question with comes Karl next UBS. the line of Our Keirstead from

Karl Keirstead

just subscription seasonality I If maybe of a two year, could the about you parter. sort this ask billings in

year like constant billings step guide guide, in is everybody did quarter And given I in a software in X-point in looks XX%, the about terms down In constant QX, midpoint. currency guide like billings looks XQ, what that's the ago currency period. think, full XX% is at that terms from easy, the it tough then the a your of it you reasonably year of XQ of about for was the yet compare,

in so so, clarify? was before? just XX% or about So much. it Thank fact, to a percentage upped you by it Just you've, point clarify, to

Gina Mastantuono

Sure.

QX QX. the billings first the take on question the deceleration from I'll and So

billings multiyear don't So to QX. off, our in you occur IR deck in see that QX, expect that million we $XX first we in can in had

of the So deceleration. that's part

the in timing past we talked the and and impact changes which customers this the we've billings they renewals timing, about terming is often and period, metric, talked right, the best early, As contract renew billings. really about why during of because if co not are well,

QX are, just fact, we QX, last reasons the the guidance in QX. from a year. in billings. why What not It's a metrics that new why lot there ACV of would of net and I And pointing say reacceleration we comp one of greatest giving is to is of of seeing that is cRPO are in XX% and for noise the so billings given now in

last And forward more $XX And continue I pull XXXX of should about so really because at QX. full into of the looking stress then that the remember, just out to cRPO. of we normalized it's and year, had billings we for QX XX% of million be year,

we full have it And be you're that guide, so full the year QX increased seeing. almost by the

Karl Keirstead

Got it, Gina. okay. Very helpful. Thank you,

Gina Mastantuono

welcome. very A

Operator

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

Alex Zukin

Thanks for the taking guys. question. Hey,

and So opportunity a sell incremental the available a further large into at base first lot last the and seem think to be customers, checks, does but available. strategic and that and that the up to there's there's our we're of from sense of not Bill. the deals? opportunity some a monetization more in couldn't really there's go thinking of picking get I'd that strategic it the love least truth in on just the that a lot was how fear just maybe year, visibility I pipeline for large kind it to a time you're about

hear just And for of to first, love follow-up Bill. got your maybe So then take kind I've I'd on Gina. a that, quick

William McDermott

Alex. Absolutely, Sure.

prepared And EMEA look it has at growth that the is quarter when better driving is smoking year-on-year of if at couple of a EMEA. EMEA all, you as fact, in now. you of in theater, One, a to you out point was than never And forces business look it's hot. outstanding. very first my saw First careful here. out the And remarks, XX% in the been it's pipeline right I

of and get to wellspring well that and as and extremely geographies Rolodex industries CEOs let us through operating big first workflow to of a various are growth and in adopting that for one we is various as brand us the ServiceNow, mission-critical be EMEA now the that standard. alive rolling. - EMEA the across was are believe the Continue So the great to a really indicator

the piece of is say growth now outstanding is APJ, We're would brand. The for the APJ. other and same seeing I out true

known. well on we're fire We're in Now Japan.

prepared I remarks. doing market you to get the move see workflow an with great We're things to the Japan in an example we've well. one expecting that on-premise also cloud. made. of way The is better that adjustment going leadership is was and As my that gave We them Korea revolution know, South needs in to the cloud. extremely

that believe So higher in an to extraordinary course of they'll want growth growth been APJ QX. on them spring with I Americas another end back go had kick of with normal ServiceNow. you their at rates well wanted the can and The you as is strong the Americas. be where at be into and QX, in We've yet and always higher higher to we know,

business So you and up is add shape. all great in that geographic the in theaters the

shifting we've spend quickly down the up. year, yet thing economy is some in the back Bowling up, we're global where digital economy. substantially get once mind, done services it's was keep slowing transformation GDP transformation waking very, the That spend, on. telecommunications other as economy, And effect in was takes they're This rolling, not comes industries, digital on a quickly very is the actually, quickly we lights alley mind, going here. effect really is global economy financial in now breakthrough back, Last to The to up. down year focused come and but also

selling of techniques with is that about we CRM digital selling, for always now gorgeous well. So the have this us worked the combine direct it what's

whole then on to the that and ServiceNow. we've customer, techniques industry an and the the communications aligned the of product ServiceNow, that field with all taken marketing, brand and partners from we've the chain value-driven practices with and marketing our inside all industry the also specialization how in selling with marketing ecosystem resources setting global up to expansive enabled specific, field we've on value some And betting to long big organization, that and services the basically story take

for business been career, we're in I've I this an never actually think just XX getting Alex, opportunity like years. seen this in and I've my So started.

Alex Zukin

Thank for that. just follow-up you, That's awesome. then And Bill for maybe a Gina.

So anything But remind keep as or about quite little forward-looking tailwind we seasonality do bit which it guiding Anything there are frankly, quirks There's RPO, going should we any RPO there? you keep should to some a decimal there. about of is think and XX%. indicators we it think guess mind, that to mind? to can do are RPO. - us our in people FX in I of bit - think kind change in you're to when things I of from. a there's is places, or should harder little moving current Because maybe we

Gina Mastantuono

I guide, in is less definitely indicator it Yes. noise forward is and There's the than better perfect but there's billings, noise. RPO there a you. mean for no

And on timing the impact so of cRPO. that upsells, could example, about think if you for contracted renewals,

impact RPO Additionally, growth. self-hosted could potentially deals revenue vis-à-vis the

is indicator one So cRPO less noise. a indicator, there's perfect no but with definitely stronger

that. stress continue out, we'll less one It noise than will continue to billings and we confusion So metric. it the to has quarter less guide in and

Alex Zukin

guys. Thanks, Congrats. it. Got

Gina Mastantuono

Thank you.

William McDermott

much. you Thank very

Operator

Your next Samana. question comes from the line of Samad

Unidentified Analyst

year this and demand I'm government local year Hi, change as well. environment good Thanks administration, in the that Good the evening. for been on a we Maybe to with maybe how change the strong there? Or questions. one see the my if I the state in change start should as then follow-up. have curious of and either matter, there's deals And side, about of if linearity there's think the federal in taking well? for been federal just any

William McDermott

very that have It's place Yes. on. get allocated in has get and a so and with their be to everybody obvious actually change budgets administration, Thanks, settled Samad. and offices to in

turning And we we on the strongly So that along. all business the very expected level see the in model light at federal QX.

XX% up it our now. about business of makes So

as is to focused to cost, a administration, swelling office. refined, put you only big of really know, part constituents transformation change in is low business, our absolutely because So very and way in much the process because for swelling, and the run delivery on the it's the more a administration. high it's pipeline digital it's the of But

doing as deals and fact, aware highly we through again, one know, state give we're state and I to QX And do and fantastic, that. the and will a security, of you will is groundswell And departments of thing stronger QX, other in QX as We're And just the and believe get chosen federal. opportunity larger in And really doing federal, go. great in management business vaccine and good do there. Homeland us you. we come as in everybody a we as into local. go local, So many just have

Unidentified Analyst

then a as Very maybe, for you. follow-up helpful. just Gina, And

ServiceNow understand the are bifurcate customers the from comment around -- new just new the those help how looks? of you and or customers maybe to ACV if how On ACV that existing ACV accelerating, new versus us either net maybe could from -- there new both from accelerating line time

Gina Mastantuono

million and And a I across We to would new had growth Yes. just logo growth say of in several actually pharmaceutical, verticals, $X insurance, seven in X-plus our that right, e-commerce, these saw than name really we most new deals strong new greater customers products. were with logos few. QX. pleased

we see well. existing new and And good to the logos continuing in traction are so obviously as

noise And QX year. QX numbers, to people going net saw give again, saw well so that with -- that strong and you in but ACV as new we and throughout wanted make to that in we I understood billings sure, the we're acceleration expect not

Unidentified Analyst

Great. my Thanks night. Good questions. again taking for

Gina Mastantuono

you. Bye, Thank Samad.

Operator

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

Kash Rangan

congratulations for have question a and running been Bill, and you. working much year we've Very now the Bill on virtually. the It's been I team. business superb quarter, since a

so And argue system close are could the hurdles that back the so. end, deals a or about one got you into getting today that year that

any save the about how you've incrementally for lead business Gina, also have had you Now selling generation for For follow-up. benefits the we given and virtually. success And in business opening beyond? This speaking? virtual, the remain that tremendous the do virtually 'XX I'll think economy really rescaling ServiceNow as and of calendar driving

William McDermott

the much a question it's very Kash, thank for because important you one. very

management purpose, way across new see ServiceNow all like be great tailwind connecting is to environment, of portfolio financial want emergency that culture is been force else, story with ServiceNow of and work vaccine sales already a they economy. the geographically, to that terms which Kash, perfection, because exciting lead with always of be a makes kick that largely was earlier figure have net are to, your Somehow, at in some for The this force. illusion And make now is net really we the now like sales is truth to customers COVID. that in now of tried was out global everyone an will ACV utilize investors expanding case. skills expanding the What it existing that inspiration cover your that new to On way, the you're and really and up built as really the base. do to level logos, go-to-market new you your a better enjoy into is terms by generation, in because for you advantaged I level, wired of people for perfection able such ServiceNow, our we those going really that XXXX. direct by had think into our Gear actually progress for not and in to a clear. will and brand. we, a of was to new wired this industry for an wonderful because The to in you'll loyal Persona, I I that high return it the in this on vaccine response, customers. was lean truth management And And thing have It that right some our

I the what We ran if to of care have the And really that campaign took see a we company context We brand. you mean the in by generating leads. today is refined it.

the Wonka can GEO, campaign of revolution really, align sales, the Wall AI really about. sales, of with see is class. a platform. the whole we're marketing because dashboard, that inside workflow world but Willy funnel the that letting ServiceNow world better the chocolate managing a we've And educating you'll the manage around learning brand, generation at the field, meticulous level itself direct look factory product the the level the that a that Journal, backbone persona, the and we're new And is whole on CEO on. is around manifests and taken in the the what And run the and Wanka ultimately all machine can Street You the communications, even know workflow CRM we're that to company a detail and the we a the on industry, really

depth the of it at never the business seen In analytics on running who're anywhere I've Now. fact,

So equal. the leads are not all

to the You manage pipeline. have to how understand

to have mass noise opens up, pipeline. built those have You scale. in manage the as now the the processes for been And industrial economy

already robust into watch So of I you 'XX in net machine logos, shape. new higher tick to know, and net pipeline. let and the swelling on new watch We're an this want ACV, great Knowledge back watch really and

Kash Rangan

it that relatively question into you have go. guidance you. opening into we now you keeping How will have of If Gina, that ramification. the conservative, are opening for about take talked like Bill's taking not economy guidance? dive implications, the on economy will -- sounds how much up account all that some upside you as It the materialize? does if Or

Gina Mastantuono

Yes.

feel think about line. I line to top our we good really that guidance from bottom

seeing, top with is perspective, an flow at. that I line it's scale growth seeing XX%. growth you're From pipeline the at strong, good. I XX% mean, margins that operating cash is and you are think of we're cash margin free where strong, flow the free

about We growth, really good the to the just good plan. and to we'll really guidance. keep feel feel we So continue about according executing

Kash Rangan

much. Thank so you

William McDermott

I really in with, about agree when which And talks is keep those organic. it's totally Kash, Gina mind, interesting one thing numbers, that's let's

Kash Rangan

Absolutely.

Gina Mastantuono

Thanks, Kash.

William McDermott

Thank Kash. you,

Operator

next of from the Turits with Your question line comes KeyBanc. Michael

Michael Turits

Hey. I Good one Gina. afternoon, for everybody. much. one have and for Bill Thank you so

for to term? And ServiceNow scheme Bill, you. the automation medium know a done that automation different lot the out of in you over So there in fits have a but to There's sector. do where types picture players long think very so broader Gina, big question, I'd activity that you've more I acquisition. a many into like one lot Intellibot with to with

William McDermott

Many you it's Excellent when integrations. particularly integrating and, about trying legacy applications but of don't of are to mix RPA, support for customers with Michael. think that across it trying And Yes. a technology, differentiating important it's drive drive automation. particularly API-based not applications. modern question, to of our they're legacy course, a And

accelerate will efforts. So what RPA a automation does capabilities existing in has enhance technical strong Intellibot and and us solution developing help very product talent experience and our has that

way. it this about think So

of platform we the do platform. strategy. that what a automation and call RPA we world-class Our is on is Now a to And transformation. want delivering And digital focus accelerate piece is

So basically for as automate legacy with it and end-to-end technologies, it RPA and scale, this our the And automation. workflows tell can will market, AI intelligent kind getting existing tasks left harder as has ML. me and it'll in of And RPA they're such integrate ServiceNow repetitive customers our wall. will automation. manage for strengthened islands core it's like them as of systems extend to And relates I with that these they a to certain feel open our with tell participation they them you that hitting is

for decision workflow what have looking drives automation the on is are we the what they're case, intelligence. engine they management artificial right integrations, process. which technology single is where RPA, the core platform that choice then use a So for providing, is of the based or a And

platform manages wants my technology RPA give that business a saying, life and you them. all So us, to as into have of taken we're is participants anyone market. lot or work is with, we're work has and in what Q&A okay. the customer think that the it with it's a give in automation. into I them make IPF them my the matters. in them, really And them within give this customer such breakthrough we'll really on for do What processes, to want the for that it it platform. way. Now a islands because the we for platform, with to the moment we don't don't support is us on they're work business happy make position we're anywhere, platform. automation we I one automating customer, something anywhere I Now And natively we'll seamlessly smart simply there lose size Now automation want But that with me of But any what work integrates to need that to a and integrated if if to platform, work But workflow we them win. if certain way a more that's vendor other us, the a support because example, we that's Either well-known really working there's all And this end-to-end simple. looking they're integrates to people. better they with is of out

Michael Turits

million. an year in you, XQ be even There question sense, pointed quarter. Gina, of the was the -- still in for what the it by as out, is is may billings But And Kash x for $XX you guidance under the some the And just you some raised subscription some next asking. extension my for raise. slight there decel

you that So that back at is, fact, point? holding anything in from higher is there would guidance this have been

Gina Mastantuono

and full reason and the why I and guide good it's The tried to through the QX you're of throughout, mean, acceleration more feel and really as pull-through that seeing very we full that's really think QX billing to seeing pushed strong in seeing to as more a QX. guide there's here. of whereas about talk about the We strong and we're only really million. I being well was No. what year wasn't We're we're I see had -- into QX billings $X QX, QX the new QX, QX going guide net some about from right? into So into seasonality, of

William McDermott

that think multiproduct a want the like, more around So towards worth contract, line we this news I the QX have want want. that's seasonality because Gina timing think do just yes. with But why they answer is, that, consume get these we guys RPO and yes, story the customer out the to those know, and wants -- they all delivering? I we're customer give it's Do believe new pipeline And great? new the can when the to there what they to all from is right? want job what getting logos? the the the way our changing investors of Is things, have and yes, you wants a net business, is did a think great nomenclature noting go a but this they your keep kind the you this to are standpoint, Do customer that to want seeing that do and I combine that's to guys what is they good then room trend is doing ACV? questions

Michael Turits

you, you, Gina. Thank Thank Bill.

William McDermott

pleasure. My

Gina Mastantuono

you. Thank

Operator

from with line next of question Our Brad comes Securities. Sills BofA the

Brad Sills

Great. platform. has been exciting potential my ServiceNow One for There's primarily, that of question. market. success for play ITOM, But that the apps applications, really because ITSM, in custom been as ServiceNow customer a it's that in employee it the Hey, workflows. further Thanks on to always packaged could guys. taking evolution DevOps release,

solution a that custom So company's might you of And move case? market, early? much. certain that, my you Does vast so success is Thank accelerate that is, cases the kind towards that's given the DevOps platform. question such this see areas or apps there are a

William McDermott

Yes.

I think back prepared think When value for to the the Québec in discover business. about doing about they're what's And what really were you that's release. early trying a going sure. on, remarks, insightful talked I of the give question is like right, they an to adopter

the create modern -- banking interface innovation to they the I'm of developer So biggest see and on use than modernize customers of the in for to to the this applications. an sponsor shared And same Like before. got you enterprise. Because data-rich They've ever the incredible better they a at capability this at has that basically executive applications pace. world. the is time And them ServiceNow then the time, new at user one happening builder. edge the X,XXX be allowed what platform it's a

my Modernize So a is for saying can quick net people. me really business or build how an new to as I, I application application.

the developers So this up what it's the people I the cloud, the biggest ends IT, change app et way between would not innovation if security, platforms, business, the it demanding see business to there. competitive and it we the now zones, we cetera, going surprised gives experience to all unique can advantage. being it's of I the are multi-cloud SaaS that coming whether a enterprise, DevOps, edge you're and us differentiation be connect swiftly back at This right its convergence the innovation business competitive platforms or fact the money the we and seeing is the together platform. on across Now all and And have.

Brad Sills

Thank Bill. so you great, much. That’s

William McDermott

pleasure. My you. Thank

Operator

Your next [JPMorgan] line the from question comes Auty with Sterling of

Sterling Auty

guys. Thanks, JPMorgan. With

my from question side. one Just

industries, airlines. those you hard So out on hit called

kind those to airline -- investment in are still headwind use where the revenue are just of industries I'm that the and XX% of back transformation? So the that of a hit starting bounce versus in at there's what for curious, case roughly hard maybe look percentage digital rest maybe incremental

Gina Mastantuono

It's - yes.

It's So than thanks, Sterling. less much, It's much X%. smaller.

bounce in being rates a we've transportation actually about last in including some that in as part back the And some manufacturing year quarter, of of the talked are those And higher. this really we verticals, retail, well as the of so out XX%. really renewal called deals large and entertainment, industries in we those seeing industries bulk are those as

reducing than focused they're So out risk, is costs, customers ever these more imagine, been what's hit, on have really taking you happening, can as driving who harder productivity.

And in so are heavily ServiceNow even they before. leaning more with

industry them it. with through this helping yes, are work people we fairly I And to hard lean really of well not them help we're right digital that And in to now. and and just that bouncing bulk hit, really that some every this that But seeing. sure there the so into is are continue that position transformation make back wanted understood still customer are and lucky

Sterling Auty

Got you. it. Thank

Gina Mastantuono

You’re welcome.

Operator

Wood. question Derek And we for do one have from time more

Unidentified Analyst

And the the motions think, these more accelerate just There I transformation. new had if on highlight side target focus could advancing kinds love low-code citizen on, looking And I'd the then And championing market. just who's touch there? initiatives? sales be of on maybe anything be to Bill, Question add seems market a to Thanks. around to low-code dialogue lot you you developer back to certainly IT? of of to a will Québec tools hear low-code, to outside some

William McDermott

Sure. Yes.

at really you is perfect. of users secular I business, are And epicenter, First tailwinds, would we like line all, enabling around of is forming I which positioning, the of convergence which of I that business automation would wins, of IT are to and kind the say, said develop ServiceNow workflow remind earlier. just

is, first for capable my been drive some a all going So to modernization, me as quickly be a already engineering, operational came to And the Conn, This very they're more This I transformation, with now thing all could first we're App And I moving agility. greater raising efficiency is said in possible time. and I'm Josh today where to have IT here, us in when product business, behind the as who's hey, leader you. he in get said, big. hand. we

So we that And there smoke opportunity. line their build opportunity already complement specialists make enterprise have to and reason think I this the sales enough transform to that that the is capitalize business. developers general that force we to on so sure is aren't hot this now just right applications need the

Now customers, business tying and of on huge foundation the in the unmet need falling and driving these really together with platform to is our are engineering So the delivery application creative this really the right executives. partnership workflows

even and a AE we hire the you sales our because the focus that that's aligned specialist, we platform, to say engine. we've app all understands know like got the the and would don't is. be the this understands And compensation all in force the do and great schemes the the the to We need already sees really as I levels engineering, already empowerment we money golden just really opportunity. -- So to got It general there where field have line new we this. to team

Gina Mastantuono

more they Derek, add while is and And organization IT just to of business. IT for becoming is use stronger businesses, between IT to the the platform safe, And the is secure. ensuring these IT scalable is that IT, thing, for yes, the And strategic becoming applications it's to responsible I'll and -- that are lines and important going stronger. applications. secure, the more partnership right? organizations say and The to continue that's these to bought build because they're so a ServiceNow business the one mission-critical trusted, here platform

And are in CIO. very so positioned really, suite relevancy the well with we our strategic given the

William McDermott

keep is company at Gina right, Derek, started The right. IT. in absolutely mind, And

all And is and sort this employee customer IT. in engine strength about core that and ours. of to this a the we see So actually app we then now between conversion it's move low-code business the world and the of

up want now. I time grew my want and I there. It's modern company Our IT prime to say, engineering now business because pulling application, new is to at and

of right kind there. So we're

they detail, covered greater now. out is really Because you coming this thing other in there already The one probably data most I think we all could one is one one integrated, put as well, thing but many many case, even and it particularly innovation where companies have but this, Now well platforms it's architecture, are they best-of-breed we on or new not model the strong In different either that through know platform all do have all and aren't integrated. our things, so works. platform,

invest really no decision-makers whatever that because within got enterprises because ServiceNow. look working, delivering debt platform positive that So riding on folks a and in with these pleasing the about the in lot ROI, people, making are good excited tech there's a really they invest they

Unidentified Analyst

for We Great. too. campaign, can't thanks But see the to all. Waka wait

William McDermott

Thank much. you very

Gina Mastantuono

you. Thank

Operator

Ladies does conference conclude participation. and gentlemen, you for thank call. this your today's We

You may now disconnect.

ServiceNow (NOW) 29 Apr 212021 Q1 Earnings call transcript