NOW - Earnings call transcript Q4 2021

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to ServiceNow's Fourth Quarter Fiscal 2021 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Darren Yip, Vice President of Investor Relations, you may begin your conference.

Darren Yip

you earnings ServiceNow's conference thank full quarter and XXXX year call. afternoon for fourth joining and Good

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

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

risks, A as the obligation call to be most on our our With statements get today's now non-GAAP are posted performance call presentation, will discuss as is guidance be measures press are measures Unless economic information at that, investor GAAP to turn to on forward-looking such have current want actual substitute some and materially of and call investors.servicenow.com. our release non-GAAP and which press such out no or or today result for our forward-looking to see and release results that all financial emphasize and update events. uncertainties in recent RPO. obligations, measures, information a contains today XXXX we involve please SEC differ noted, those set remaining XX-K a between To Bill. otherwise RPO, earnings We today's growth posted conditions. as calculated replay refer financial on of not Before or will to forth the we we that including reconciliation filings, non-GAAP, like and information may including XX-Q earnings duty addition website. related of the like our point today's over new that cause that for as of to in based that and rates these presented undertake impact accordance global started, both I'd in those our to GAAP. we statements. our also We'd related with such discussed this also revenues, assumptions, Please to and of on measures website on except and filed and statements business to future refer factors or from to COVID-XX

Bill McDermott

Thank call. you beat again once end us has results that a joining to warm welcome and everybody the today's ServiceNow very on much, high expectations. delivered of Darren, significantly

beyond our guidance. a clear the cash Here's positioned. ServiceNow fast-moving billion rundown XX% market flow XXXX. start-up for in with over revenue software XXX leader. XX%. a XX%. guidance. Rule growth CRPO will buyer industries point was margin results Adjusted Rule XX%, few was been one the in trajectory had up of Gina QX subscription demonstrate We're on of long growth year-over-year. by a all Free like that There plus details the record Operating global constant was ServiceNow growing to $XX personas. company XX%. XX. XX was growth Subscription has in We of strong profitability companies. growth deals currency. a over and billings geographies, exceptional We're is million, growth a expanding including moments, our benchmark XX%. a was These is uniquely operates The an which share $X XXXX successful the highly was

we While M&A don't position strong growth. cash optionality, our preserves depend on for

built interest business any to rates flourish is model environment. others, ServiceNow's rising While in challenge economic

ever as digital transformation our is constrained need opportunity expanding. not customers' are We for

ever. and machine flight, organic in is than is full our Our stronger growth pipeline

survey. resignation, of let's you dynamics. “I in sustain like will worldwide all especially productivity great forecast every but has data performance accelerating portfolio become of XX% $XX.X facing trillion here. region. of Our strategy increased through XX% strategic They Digital made few. according chief week The models, the to environment in increase sustained executives I'll XXXX. clearly inflation, XX% IDC's technology XXXX. is costs. reducing while name We're deflationary this These digital market it last global the this lead our a of this the their increase are Technology underscore a I through power that's are force. forward. now the to results of to structural it ServiceNow. transformation, runs long a challenges discuss structural renewal incline one strategy. rate confidence in have than results, for stakeholders, point perfectly. disruption, demand consistently, digital year, have I'd a our list is Gartner There moving QX our new economy. business software for several customers in forecasts first, we of for thank supply a their validate business more them, industry all will isn't indicators give spending chain geographic technology transformation. one them.” said budgets a priorities. pandemic-induced or breakdown technologies spoke and has sustained the clearly The of opportunity every to steadfast shows ServiceNow's A CEO CEO of IDC growth-stimulating

to technology, over As workflow top build, service QX XX with of the our million. IT XX enterprises deals, was management deploy, is $X XX at core. our deals monitor IT business in and service IT Bell XX our operations Canada's workflows over telco company, with IT Canada, its IT operations of deals management uses was top million. $X management enable and operations. in XX, XX largest

leader, improve experience. help the space workflows delivery top dimensions operators deals, deals also over exciting the The with United will International, employee employee force of experience ServiceNow, NVIDIA asset to unlock warfighters XX an productivity employees. focused connect With employee employee its using workflows human-centered employee its its with our unified the Together experience. they support by is solutions a ServiceNow to are to employee service a XX best-in-class on global use workflows with to Controls and to deliver XXX,XXX be technology focus across globe. to platform a both management on employee $X will NVIDIA continues million. a its providing smart ServiceNow, will Johnson mission workflows supporting for also creating support will approach critical its model CVS space experience. of our the building transformation. and HR provide States business. frictionless colleague work hyper to was XX leverage hybrid experience. Our our in service propel Health employees employee will a

to deals business of customer integration in service, million. to with business is As $X XX service Cloud plans management key over deals, our use to our workflows customer was customer thriving. our is XX Google XX Customer top to platform of XX new needs next generation BT of the enhance support the its ServiceNow delivery help of from British chose to Telecom three. accelerate workflows The address ServiceNow weeks services its customer will operations. customers.

SaaS industry Institute, Telekom gain continue alone solutions vertical new and brands, build major by to Our can’t at XXXX. Technology the wins teams forecasts million with Deutsche also XXX new IDC traction Wellstar. applications including

workflows citizen revolution. the creative is leading developer Our business

in IT, in XX and next-generation Petrobras, cloud our support the employee, its applications They managing such using for foundation XX businesses, solutions They deals. built Lockheed were company, customer, creative Martin, a the have aerospace platform is architecture. on platforms onboarding creator, company, will Together, over built these as using largest a oil for data as digital Our use ServiceNow function. automate represent pure-play of its already privacy creative XX our transformation. to the born suite regulations. Brazilian development world’s defense application enterprise workflows workflows a top globally. processes energy help is and to

leading in XX intuitive Samsung SDS EMEA, enterprise. ServiceNow’s in energy to NL. see Our momentum at continued From and is worldwide. with we’re of in Postal experience Japan. strong. already wins La with created terms company, of a the NEC adoption platform Service, South This in the moat Poste, this and relevance This Korea strategic includes APJ consumer-grade expanding French everywhere, geographic million partnering has we’ve Italian a perspective, users unique In

XXXX, can ServiceNow. you expanding digital long-term taking steps see, for our on in is roadmap. As we’re significant dramatically opportunity the Already,

We’re mobile includes introducing time state-of-the-art device. center solution, in fully intuitive a that the an investments consumer-grade transformation the Impact their value command application on a ServiceNow visualizes to Impact. Leaders need world. new real connected ServiceNow from navigate

user speeds with consumption experience anticipate adoption, halo we this significant our of a portfolio. up As growing solutions broader effect

we strong scale. As are our opportunities expand, market promoting for leaders

our of Officer continue solution CJ to of assuming Desai’s and industry lead Operating to of the will He while the and products and we company. responsibilities a Chief teams, the are company. consistent role speed expanding As unmatched also quality result for innovation engineering

responsibility. will mentor He Paul on role our expanding global me will for footprint worldwide. public Our for as sales Kevin the Kevin leader, at strategic serving for art step at years form next-generation leaders. level work become top Haverty, an of the XX directly company, assuming sector has sales more Commercial a Officer, into will a also Chief executed our ServiceNow. with Smith than in the ServiceNow

as ServiceNow’s consequence As in the East leadership the have and indeed. established and can I’m who the of in regions they of a outstanding Paul of work All Europe, proud President has reach are place, leader geographic Africa, broaden very company Middle very, of doing ServiceNow. himself

and will also all from the has function. joined great this Karen ServiceNow embed because to outperform inclusive strategies Pavlin our help company. to business new diverse Karen Diversity, she us Officer. Chief strategy where We’re into outstanding led Inclusion recruiting others. the leaders partner, become She Equity joins directly our Accenture, companies

the recruiting any retention While ever strengthen, workforce global our at than rates our our benchmarks. not inspired it. group of is peer In an attrition team great remains see engineering we our function we example, as much only to keep continues talent, Look leadership loyal. ServiceNow rate. lower

highly the unique While no us company in a position. is immune on our culture talent, war from puts differentiated

people high ServiceNow’s bright from in our future. for that ServiceNow. see Glassdoor everywhere Our are We rankings invested show growth

for now standard platform view as us customers transformation. the Our digital

to continue scalable highly engineers architecture. strengthen Our platform innovative, this

beat. COVID success missing challenges navigated without have customer teams a Our the

partner long-term build market growth. more commitments The bigger Our our for are practices to intensely ServiceNow even moving ecosystem with forces in continues direction. even

businesses systems. need future disparate ESG integrate thirds here. to are are common the There X work, in than of For invested ever. more Leaders

opportunity. each First, ServiceNow’s for purpose-built platform is

Our ESG-in-a-box is new example. integrated a offering perfect

they’re with are XX years then, on cannot outcomes The is XX which most Of wants Second, today. will now? become leaders linear speed need list an really advantage question the To ServiceNow in that top zero the years that for. looking XX company be that in valuable conversation, from them companies business. exponential gives XX processes. every be They to the do ago, fast. companies

their leaders to digital-first vision. empowering accelerate We’re

work for world the make better to is everyone. purpose Our

Our ServiceNow’s in our enterprise to confidence be the century. that XXXX guidance defining XXXX software company the goal. of strong results ambition and is unshakable signal XXst

leaders all leave to build Our doubt, on market sustainable ServiceNow with ServiceNow. works look the brand, for we forward is and delivering. time. executing your and value, why performance we maxim. continue will no The motto world for Thank is embrace world we of a to The wave should so. I are the looking the is questions. cylinders, inclusive, economic you new This to and your do

Now you. great over Gina CFO, Gina, over our to Mastantuono. to

Gina Mastantuono

Thank in. you, Bill, quarter, and XXXX. listening a headwind, in increased across Despite Happy an outperformed metrics QX. QX New was our everyone line FX all top of ServiceNow already to guidance Year phenomenal capping fantastic

macro generating challenges become transformation. in were, delivering digital of on upon best-in-class, XXXX. renewal respond performance testament to each is from and a subscription to is Our grow I needs we we pause quickly incredible our added we that there the free of our line, exemplifies top want growth we’ve and XXXX, creating why they more over customer cash most XX% the reported the to to sink Platform only than flow the rates adapted over focus why why in ServiceNow couple to ability where ServiceNow drive our success, to at organic In XXXX, It’s years innovation Whatever to flexibility enterprises solid but are past year. in. other customers. when we incremental Now a provides It’s whole ServiceNow’s unwavering foundation require revenues not us to XXXX for which while to deliver the the that scale, trusted platform a margin. added value.

perspective, representing for the the Now our high range in our in million. million versus FX-adjusted $XX by constant $X.XXX quarter points. end beat turning were $XXX billion, a the QX FX XXX $X high four the period. subscription adjusted an represents a growth growth care From net billion, $X.X a $XX.X currency. approximately year-over-year had guidance a QX point to quarter very services of constant billion, energy million incremental end duration and Current year-over-year of ACV and its were guidance. also basis saw of XX% ago XX% billings was and headwind life we year-over-year growth. QX, constant and nearly when versus ACV as robust $XX a industry with We contribution results. headwind we utilities million exceeded growing the beat the This on year-over-year by $X.XXX Business doubled net and XX% sciences health currency new were growth billion, from Subscription guidance. adjusting RPO basis ended XX% at XX% revenues our double-digit currency and beat growth. more than reported on new basis representing high year our RPO FX approximately year-over-year an

rate a renewal was XX%, business ServiceNow only have our Now show continued our demonstrate but loyal not of Our the solid to customers, best-in-class expansion Platform enterprises cohorts to part customers’ remains the remain continuing our mission-critical as operations. a time. stickiness These of over customer

QX, of we over the us X,XXX had of ACV. $X As customers paying over in million end

can with that the enterprise QX, $X closed we million over right the ACV XXX us best in deals In and grow in new fruit. quarter, XX% bearing ROI targeting the up of greater year-over-year. over strategy customers net than Our is time drive

In Together is our resonating addition, as XX our story of top deals products. five more Better or included XX

margin strong beat. revenue Turning one to was our point guidance, profitability. primarily by above driven Operating the XX%,

flow cash quarter free margin was XX%. Our in the

these XXXX, growth. billion reaching excellent a zero flow to of goal. emissions and balance cash XX% including initiatives earlier ended growth For drive in shape business the our cash was winning with on all investments, we’re in more, healthy XX%, margin $X.X sheet, free previous right and quarter, the commitment a ability announced strategic margin I goal power achieving organic profitability. free to to this What’s and year operating cash XXXX, and by ESG of drive representing a our $X.X than full show our investing in our balance year putting the was flow. continue Last us to Together, focus model way. and of with two net of results our billion We decades

be core, belonging. Pavlin, efforts you Hispanic Latinx for XXXX, and It three quarter, its and who And to all introduce ensuring even is our of in our company’s one of hiring categories: culture, of and who are, representation heard will equity, keys are Karen inclusion many Diversity, to years goals This creating our six imperatives across ServiceNow. core and outperformed Bill lead of an our Black, Women it we strengthen business is the growth sense will in equity belonging. leadership. culture to ServiceNow’s one we come. At and for to deeper

determined life data an would could completed be and seen currency years. resulting FX Moving on dollar, to incremental guidance. Since constant the U.S. investors four end underlying of the the To life strengthening that a January, their I material business, the visibility center into of equipment assessment headwind note XXXX. strength guidance. QX, the an three of we provide to also providing I’ll better of our in in that useful estimated we’ve in we extend from of help

year, to our a constant into any year turn our as in result, in trending to in will that XX expense, we approximately XXXX, Last to points we contribute points was depreciation XXXX announce to With and I’m gross momentum a As I’ll mind, year-over-year. margin basis will which that outlook. in just XXXX carry expect do excited XXX basis down in a growth XXXX. reduction currency not change expect strong

the That’s fact billion achievement XX% We growth you when last just subscription It’s are is basis, billion started off expect billion, year. the year-over-year representing $X.X base we we on same that amazing revenues currency an as $X.XX growing think when the XX% and higher between $X.XX constant about XXXX. growth. of a

year-over-year. XXX basis points gross margin of subscription expect XX%, up We

expect expenses, operating of and to We XX%. we reopened regard and With planning are have in-person operating conferences offices margin year. user many this an events

Our sales begun already travel has also to force again.

COVID-related savings As the seen to such, in expect past certain stay XXXX. two we we’ve over years

of free expect we and XXX We expect margins million. flow outstanding cash shares average weighted of diluted XX%,

expect on we that announce currency constant to accelerate revenue pleased to growth basis. I’m QX, For a subscription year-over-year

or billion subscription representing billion, currency between XX% $X.XXX We expect $X.XX XX.X% year-over-year revenues growth. and constant growth

XX.X% on basis. expect currency cRPO growth or constant a year-over-year XX% of We

The new companies customers and of ways pace margin digital I’m they Now engage. year Enterprises is The and the had past outstanding Demand team and XXXX expect investment in be the are summary, to to new want We operating diluted In a has accelerating. quarter. ServiceNow strong to XXX address continues an turning QX, so accomplished of proud strong. over we we million speed, continue to weighted to models flexibility for and our create innovation Platform achieve. need. business and offers the what shares expect of employees very XX%, the what to

We’re defining century. of the billion $XX and enterprise to XXst software way the our becoming well beyond on and company

on our and Before tremendous world the to to year. a around for employees thank want moving Q&A, Bill I

make the for that, key and ServiceNow And all to you You with are it Q&A. us, success, to continue I’ll strong. open up ServiceNow,

Operator

[Operator question Credit Winslow Instructions] of the with Suisse. line comes Your first from Phil

Your line open. is

Phil Winslow

congratulations Hi, question concerned growth across a really year. to on about forward demand taking team. you for strong and strong full end a setting pull Thank in really decelerating potential my have this software. year the been a stage Investors a

find the your tonight at decelerating really guidance, for ServiceNow. of looking Now I can’t any and demand signs results

lean since QX which marketing headcount at and in suggests rate here. fastest in grew its sales continuing QX fact, In XXXX, to you’re

questions. two So

confidence sales from exiting what terms of First, these hires. new go-to-market Gina, Bill, sustainability my year? Thanks. what in is, you growth are the customers And ramping of this question that and you marketing to hiring you are you and accelerate trends gives in hearing to the seeing

Bill McDermott

business absolutely flight, thing focused and are capitalize is much, any demand our coherent for you unusual did And of doing customer at that ever an across And a look beauty of on numbers our they’re The question. all fashion, of XXst will linear the for the perspective. forward reality the remarks execution was watch a really in list technology see your the pipelines, I experience. standard well-run for and others. really And very ServiceNow we century. that includes kind Phil, employee also full as transformation that on I the they’re being on digital to an XXXX. It Customers experience, think strategy. pull your those creator not increasing, we happened Thank in making now short in very and evidence business real for is of of greatly. one extremely into the and platform, from the which companies this And is platforms experience,

one And them. business be going Phil, We’re the couldn’t just of better.

Gina Mastantuono

And then, not did Phil, headcount QX. your rep, on our absolutely on to ramp pause you’re we with at question right, in growth all respect

XXXX, reps we We’re entering XXXX see about ramped entered with and front more really demand and us. in than we feel good the pipeline that sales we of

So we investment in go-to-market are absolutely stopping not resources. our

XXXX. for are We planning strong very a

Phil Winslow

Congratulations team. Thanks again. Awesome.

Gina Mastantuono

you, Phil. Thank

Bill McDermott

Thank you, Phil.

Operator

the Your question next Raimo comes line Barclays. from Lenschow with of

is Your line open.

Raimo Lenschow

this Thank forward also – time? products little can the that you. expansion as like the Well different do The over a bit me seeing is or you you one you’re little but record people achieving this with now also you’re $X trending going can from the of will But well. clients Congrats number – a your about Bill, how talk a over with bit up, like going have you see have, How think evolve revenue there? about done. you that or product talk biggest in number the all ACV. we ACV million you

Bill McDermott

an the than possible. might and have every to where scale and Raimo, that his happens connect results communication going line our in And to CJ the the customers to And a into special force what we that’s financial you you services. faster He’s development to ServiceNow customer code on day. in to in is the in. in and our industry-specific specialist real telecommunications, moving in sales addition normal And our with excellent taking now the substantial even that’s engineering. for going industry the us clip we’re professionals innovate guide phase that beautiful really a general past, question. This point promotion see solutions actual for relationships is each if at great give the notice bilateral phase

have so You we’ve just here’s see what All sciences. the where happens focus businesses that and very, an really to from life chosen in only government, on begun. doing scaling are industry care, big perspective And very the quickly. health deals

but and to in they particular If one you their into call into at transforming is referenced wellness they a customers customers, that company, the health there’s a the give evolving company, like experience that in businesses also great understand is a look they they’re environment. and today, CBS, multi-workflow I and retailer which have have retail

and because want to have because, on they my So they come they to associates super the store. going for between one business them. I’m keep customers come complex In other enough cases, these jobs. the happy transforming have I I’m keep wellness. I happy to want hand, my to of my store in have cases, now all to to and factors, some model health

that And I’ll can I do the store, at do but that only not in home. someday,

multi-complex possible we for with digital greater-sized to the you’re that business the together our and value customers major impact solutions So Platform transformation. have Now seeing on workflows create can form coming

accelerate large So on Raimo, the basis. out the a dramatically the challenge year-over-year got company, to deals I’ve is will

that, for have extremely prepared deliver that, leaders workforce the ecosystem. positions we an an the have in best and and to now are the inspired We extremely inspired and company we in

it comes growth. big When And together, know, So equals I’ve all you movie all it together. before. comes as that the seen

Raimo Lenschow

Sounds you. very exciting. Thank

Bill McDermott

Thank you.

Operator

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

open. is line Your

Alex Zukin

Hey, the guys. the year. maybe first for to Congrats you. on one a great Bill, end

– drivers of is of over way the deals, will year? most doesn’t Does right growth? escape even the you that what markets. growth HR, of some next to you big look, industry question think course opportunities to just the valuation think more vision, that unlock even being low-code or in the Or expansion kind of CSM? all any platform the public Raimo’s what’s so position think it your these it us to you versus in way about thought and process clouds about we’ve influence a in of around amount maybe inorganic in And change organic of larger the said accelerate or value seen If great more massively think the the strategy motion to these about large contraction the deals, like the right than it that’s

Bill McDermott

Yes. head Alex, I’ll a issues, address that’s really of them significant set on. and

First of core business. every on core a great when business business, you so has all, adjacencies. company great core a to Because perform, multibillion has that all leverage have the you get the

Our core strong. and business really ever, it’s than is growing better

In overall very to growth on employee fact, it into I as crystal you experience. close rate think add Then could be the look corporate ball. the we

first user a future be manner what’s because they You employees they consumer-grade And The they experiences don’t not and now. onboarding don’t going even better by very to employee if big the because tells them retain working, on stay war out the have they’re be in in enterprise. are them, they recruiting today people that. Or people get the be a Internet going to of and They flawless these and working talent in they especially remember, in the happy. there, because have get on and know to where come there, going expect when place companies. don’t they’re the they work long is to really this experience CEOs And exacerbated how a need deal.

is used reality because really you and just experience is starting management, to is not on this employee to. way then world the is customer going And front acknowledged is that they the service to come the center. the So the customer

to give no the AI built your matter that gets You’re yes, to And experience been and to hands XXX going going to XX million go have and to have applications and that explain that applications you service an it an value, smart end can brand they’re then your where transactions the years. take now in consistency, customer and have more brand between creative terms ServiceNow. of enormous last in to them, that experience the them even you’re you XXXX workflow. Look, is in of platform like helpful has through

and no be code, is there’s low positioned. going choice. platform So ServiceNow the It’s no to code, beautifully

your non-ServiceNow combine time. extend industry low question solving We where now partnership revolution long that code. is and business featured Now with the could on course, low-code out We been and with activate thing, systems necessary the the all carry And changes you it now process on your environments. the all installed customizations of let been the the customized. have all X-ray me there they creative those you you observation can out with take if Celonis there a problems to very the do absolutely layer. that for the big business to because here’s and are industry, augment the have astute action But ServiceNow, mass can we’re a That forward workflow.

and market. billions. This of years speed coming there for over billions and This service projects to and customer. model innovations team low-cost of the rollout truck big consultants don’t employee is business and a a and need for better years and You in ideas is the

here together. bigger to world the is the it in so know they’re And every of comes mean across piece now doing persona. we’re up in how take and my lined excited to a thank every team And industry all franchise. it reason geo, every So about ServiceNow get executive to the I with we the what out knocking do partners we’re all down scale everything to I the door there. and have I’m

coming things those together, of Alex. all it’s So

about super to M&A, be on this. really I want Now clear

We Board the targets that And it organic on the reason basis. have for no for M&A. is growth on an

company, they idea and spend thoughtful they the engineers over the to as they The that of that or it that and just work reminds much home have can they we’re XX% integrating I software open. their full coming to as they And to create things day, as I have economics You that they office, all out flight. can an to And innovating on see we the in are their of numbers. engineers take and and be cloud they’re working new When time to they other the other me how see our whether build. and opposed past come me numbers love here come of they love every in listen this have M&A. future, companies a tell want dream we have

said, in So cash. grow $X That’s know to have going you exponentially that. as we to billion Gina continue

can large-scale first that be any We intent We’re fueling is do But state current tell our M&A. organic to affairs, you. if growth to guide there and in would And this no ambitions. I the this opportunistic. of be change, to were

Alex Zukin

the and Incredibly I quick and we a just maybe all candor follow-up. specific, color. that love guess appreciate

all, a of wanted and plays expansion in U.S., ask, rest the what be will can Workday sales. the particularly wanted of plays another congratulations make expanded Customer wonderful head applied successful successful can as company to – ask abilities historically the made of of outside you the U.S. in CJ. What inside on I the about – are to that Chief organization, – think move seeing I motion or be overall work? you’re shift that’s the What to what that the terms a that Officer. opportunities. an of that his run and to example, the of First head of the to Europe

Bill McDermott

cap Well, love to I first of love tip them. because know and presidents my I all all, want regional to of our I they –

in in past. with APJ, I roles a EMEA. I and ServiceNow. doing period what future. coming in an number have Ulrik the deeply, in XX% know And of I they’re long personally. Americas the on an example And leadership for and admire all very, them of great resides here done critical now leadership extraordinary We for really appreciate them our job great has Mike in his very time. they’re with playing as all Mike Mitch

think incredible he And So of knows what always and managed that. a that leaders I've told significant puzzle these we him. needs our is the will company, of care, piece be are this and each that do leaders to this with

and understands the CJ as And that through himself thing is call been he's record we know-how, doing. around the been we proven has Kevin And know Paul got relationships me. is CJ Smith Kevin out is the the this all continues. an right these know, And a brings had Paul XX the Now CJ And And closeness that great track the me. years, for together and you we style very we activating me. them that and on with with he C-level we're he here. them with still where exactly today right I of have a what and concepts has months with had before is unique are other put in all and exemplar that here. because he fashion especially expansion

they defining happen. and job, in as fabulous it's to as do, enterprise I want And a which badly doing they're be century. is I So and and want heart, I to putting going it ServiceNow the in to we're XXst is they software them by and whole my it industry executives. persona. activate this going together, inspired across so every we're these all what every I'm and know company with all every why And region respect

Alex Zukin

Thanks much, guys so congratulations. and

Bill McDermott

very you much. Thank

Gina Mastantuono

Alex. Thanks

Operator

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

Your line is open.

Kash Rangan

incredible an finisher, XXXX. what Hi,

and have in sight You goal, and plus team. in XX are to revenue, of within $X have billion close hardly you Bill RPO that long-term your more than you

of old milestone. whole compelling because customers, question So revolution So stack Bill, one ServiceNow. over relational very vision kudos you your can from my problems that immediately, you the thesis is a of is, database, been revolution value certainly, right? pressing wonderful the that's middleware, platform the bring taking database, to for on long-term that

Platform pressures, you more as need chain no need supply to head Now briefly, a a Thank little shortage, into despite reiterate, and near-term we've boost productivity constraints. see inflation your these with got corporations challenges to to for do bit handle the equipped shortage these challenges, these very tactically, being tactical in labor the but execution? you Now How all you XXXX, much. so

Bill McDermott

processes Well, and way absolutely I so efficiency a really why is throw for the no unique that's bodies do, Kash. it jobs. If problem to is of more need there's the for quarrel problem. ServiceNow. while solve that's companies And assets, more limited digital a we with think kind you a the these Thank to has a drive tool I and helps deflationary question. your Thanks need ServiceNow much you really automate hiring. pool more that appreciate remarks. alleviate a lot. Many only at a increasing ability have

you satisfaction out there. more their tackling spend place. issues, then reduces giving And one to their can this in job And also happier and work of the to spend how simple that have, so helping need play more my them for out the example, lead tickets strategic give reduce great only hire now experience. So is day are struggling you take CEOs virtual enterprises And them the agents keep people the going first the the productivity for in And laid feel a the and them they're deflecting and already with out automating a smart I But scenarios additional gates. the every help really right creating need is resources keep more personnel driving of environment. literally them playbook way efficiency IT the time to our the desk people. to

feel on recruited portal you that's to you a properly, and you real you they're specifically feel to their they're curriculum them can't skills of them training onboard them to if go all going to they customized activate attributes. quick device. and going And targeted mobile and If their unique one their to can't you activate services if can't train

many My be involved. with and be where culture to And Kash. manage people. matter their you forms need involved COOs at a cases Finance what in legal any across they be could when company's time. ServiceNow their could then that can one no involved. And we brand, flight So are multidisciplinary HR go thousands involved. That's these could ServiceNow, manage Only workflows in company's do, are, to an talking that of be case only them. is circular CEOs have do could out close different to properly. most organization the cases literally companies goodness,

labor dilemmas. now straighting out lean into and chain more the and more I the inflation conversation. activated So We're supply conversation,

as would industry that. the nobody supply us ago, one chain auto manufacturer that even in have has We A the control know entire tower few years now. their for

ERP solving as left, We right are action center the and ServiceNow with cases platform.

being mentioned at product. Platform deployment in We think and in a that the our that it and dollars chain and with on the not chain took the I that the the the other measurement manifests conversation. participates that's ServiceNow that impact productivity, idea in taken activities itself earlier, Incidentally, the Now on where can new to value this absolute and discussion customer service, hard real-time productized technology sale the So the look software at in their cents use. Platform, entire value Now in place an entire I can really all partner to have my and the the we in presale in look the we're any with delivered it relation can iPhone, value of post-sale, from the the using

So Kash, now with of about amazing. can Platform that Impact. where, conversation ServiceNow and And same customer just on think show it's outcome. the we the business ServiceNow music as sheet the deploy, the on all gorgeousness of partner the Now we and the are

globally Impact with We're the going GA the a on of in platform delivery seen our customers it the renaissance every up in in has This even it. now pilot which geography. of launching launched never been XX of before create have all to is and on enterprise, We we're employees tomorrow it, join likes the we value before.

Kash Rangan

you Thank much, Profoundly Bill. exciting. so

Bill McDermott

Kash. Thank you,

Operator

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

is line Your open.

Keith Weiss

taking quarter Excellent. Kash's ServiceNow. me congratulations and echo of on And interesting inward to question follow-through I turn and question. want the it on great Thank great kind the you a to let for year. a guys

ServiceNow? people a there you seeing are Or of the increased of very And to hearing guys incremental solution? up friction headcount sort to checks that you some your and from and in Are and running? of year-on-year. so I be in of partners that the or our systems to terms market. some aggressively, the constraints Bill, a customers see could are integrated. finding of your people any about think sort And – to tight of up XX% labor you such people hiring do is something just your the finding deploy deploy from just Gina, We're perspective, ServiceNow become terms inflation of the or It's wage able getting any to

there go-forward So people. finding or given that equation on market you're extraordinary definitely a that might the on labor of that Is any basis? wage tight inflation side in increase anything margins the impact

Bill McDermott

question, thank very much Well, you the for Keith.

the partners significant earlier, SIs. As we to I mentioned global are of one these

top one we're at you SIs, the XX of for if technology them. five So the look top partners

And This of other want that a they are they off our resource actually scenarios and happening that to so not peeling have top they is is our but as we amazing they're have of while getting all real So some swelling partner, more difficulty where favor meet may allocation, demand, technology less only place. pipeline with growth preferential practice. because headcount five estate. partners, the hiring also the interesting ServiceNow in growth all

and local skill built I'd and labor shortages partners talent. demand, such sponsor addition, also we ServiceNow out things diverse nonprofits In note programs to target matters that will And the have meet alleviate we of to the own is took populations train doing for the hands into our for academies. which development, been we've our university one diversity future. done And to working engage the more with help next-gen with in and profit we're

have it in have grow rising it's and root see general construct and how they that on now and sensation. of could it. lives back to And initiate tide always to they to on much We them to certainly it know of develop Luddy special. that makes everybody wants we're the into you level was And capable. why it. know world They get and learn going. digital tool a their a that people this ServiceNow perhaps where it that jobs a people And it’s kind initiated so give Fred I is, one. designed boats, more for the is than he productivity, people lift cause all simplicity growth agility easier never done created with I without the company, platform the was to to and of enable of think this sensation, but And aren't so to go When platform do things and created their a

Gina Mastantuono

for with on rates. question has some talent time And labor been now. Enterprise high then, to respect in your software's Keith, demand inflation

So competitive the has rise, not for on new compensation been and it's us.

in anticipate to remain quarters, our guidance XXXX continue that continued margin and for but committed We very pressure coming monitor some beyond. the it. definitely to given you We we we've

Keith Weiss

so for Thank you Upstanding. detail. much the

Gina Mastantuono

Thanks Keith.

Bill McDermott

you, Thank Keith.

Operator

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

open. Your line is

Michael Turits

for and Hey, and One congrats for one on quarter. Bill the thanks Gina. very much, guys

So of Bill, really I markets And directly in and and ServiceNow types implementations how acquisitions you're thinking and want at Gina. be have larger a those you're then something RPA to about about you strategy, directed deals. whether those for your will this couple to and talk specifically existing made observability that submarkets of go into how going or

Bill McDermott

Yes.

you very Of much. Michael, thank course. Well,

all, of and about First are very Ben, leadership his excited the we Lightstep whole team.

culturally integrating they and doing doing you into great have been have amazing forward-thinking As been phenomenal a they brands, winning ServiceNow. know, job job a back

to be be the are kickoff employee at with will begin to and announced market at that that's we going So going and going to scale, mass Lightstep, tomorrow.

RPA, whole of CJ platform major to only then is things huge the consumed a they needs but Lightstep in unbelievable team, way this a for can hyper are a That's Diego value RPA, chain not to and observe be serve with team, point. the across the our And in platform. an of release know, that process as great RPA mining, is ServiceNow IT in pretty work the And decision-makers the exciting. that's his San big. and release. So automation AI, making And in you enterprise

on and also Diego the It's will It's release. demonstration unbelievable. Amy team with of So power we from the the RPA user into experience. platform, sort Board. it more ServiceNow customers mean, Lokey exciting release. built done have of and I What the an the the of more San including benefit

do I user ServiceNow anything to experience. dealing It's want hope And to the my announcement be than all seen be that we to gorgeous way. a the the great And as And best. Japanese hold is that part in September, standard reach that going the Japan memo called it better story getting to exciting Japan we in of to what an and And the hit marketplace user is when with I in what of to you're better. we I that's because on never expression to them you're going really I've matter area cloud, You the one mean, our underscores into story. the can liberate growth the the Tokyo power be ServiceNow that’s And and of the to because looking and dantotsu, with you're and scale one know out it of to. have in spirit when Tokyo gorgeous ServiceNow ourselves all doesn't experience, platform friends enable.

Michael Turits

Great. Thanks, Gina, Bill. And useful of the life. extension then, clarifications just some on the

down like cash essentially margins bit, free op bps XX you So on flattish but to got flow. a

benefit get it making sure you is EBIT obviously, that through, I free see that just that you’re and understand cash and this we including flow actually because expenses. non-cash, it, a just flows on and then margins, to but So

EBIT to accrual? also, want you a margins? do margins around I on this that to then make sure in get to do and year headwind – you right. those tailwind get that of flip are So Does gross two mechanics And EBIT and

Gina Mastantuono

Great question, Michael.

cash definitely savings flow. change margins, been XXXX. in on benefit and fade is events for the So cash in benefit goes flow. you EBIT the person in not in operating start talking tail the year you’re gets the events non-cash, is XX to right, you’re points, down as in-person smaller, respect on With it’s back So just COVID So a What reason that’s about flow to change cash hit only XXX digital basis margins, to of this free free a income, that It it’s that’s by come – right? the the a seeing point benefit and So and in tapers because are right, it travel. longer in we this as and and increased why not EBIT XXXX is off depreciation, I’ve year right? absolutely not but this cost free you’re operating but seeing the that which seeing cash right? flow, just free depreciation,

Michael Turits

much very Bill. and Thanks Gina Okay.

Gina Mastantuono

Of course. Thank you.

Bill McDermott

much. very it, Thank Mike. Appreciate you. you Thank

Operator

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

Your line is open.

Brad Zelnick

as ask I as have are and and the students within been And for personally time enterprise been especially you many you. of entire of my organization. Bill, others that elevated CJ Thank Great. long industry hesitate the the And the customers congrats being you to to for serving deservedly well and so time us tracks. rather many Gina, my is have team the years. a say well. technology us Bill, train you, why strong is what you I you time agree do just be transformation this, than rolling if different. very down environment, instead would feels the this for ask digital obviously with but the delivers, think which to might steam This keeps freight this you different? ServiceNow And characterization, it like about tell

Bill McDermott

refresh hear tower, for that diagnostics thinking about getting with now the bring the tells way, you happy, telling strongly all drives And loyalty absolutely the way leader make platform of And remote so effect. and enterprise away wow, is heavy And want one the ServiceNow, and people. platform that finally think right to better all this their work to Now the that go. consumer-grade been the question. And the experience And of think I tremendous confluence past with HR the with digital the all we Revenue everyone could My therefore, can leaders for frictionless experience It me company, story is one that for. a and finally to for whether is people. that time. that say, our they that NPS that’s people innovations. companies a the news. so customer for we companies more and of need. the consumerizing through They want new goes easily is for wow, these and digital the for because then to new today can Thank technology innovations. and me, work purpose good They replacing My that in what different economic purpose. break And I refresh And there. customer I in my transformative. clunkiness now have is strongly leaders person to digital feel finally do old now so can and every Plus They repeatable want just where is believe the available trying of and or I we can Platform It paycheck. can the tech reason of They think the for on build doesn’t or out of creates are and is be people, we finally inside the build ServiceNow, once not outside can the take all a every experiences of I digital liberating, people we’re the they’re has Head but they’re I business. companies can value SAT old cost is And today behind aware say, transformation ServiceNow, of waiting from applications. are platform fully empower this in generation the literally can build our customers entirely people idea control different. win user entirely And to could creating and Wow, value-add. is ServiceNow I what revenue all are the is company. my own to is

the not fine. say, that of ServiceNow. from it, can I’m meet company, made, world be keep But about telling with We to run that happy the with why. lot brand about of knew ServiceNow. never I all that’s IT the they use which to started maker bringing aha, with decision one have people it enterprise. have been sure deserves I action the the we so I works. of And good that we’ve for is my learn ServiceNow. I very people going happy why with when ServiceNow, now layer only know my the don’t least pivot people knew is dimensions asked people the to were everything our all to you’ve turn and think in And the activate works like it I just record. that’s moves world on So are And ServiceNow might I the seen whole use because really of that transformation or I them. Once They’re systems of a CEOs, a I C-level

Brad Zelnick

Awesome. Thank the you for Bill. perspective,

Bill McDermott

much. very Thanks Brad. you, thank Well,

Operator

Your Pat next comes the question JMP from Securities. of line Walravens with

Your is open. line

Pat Walravens

together Bill, Celonis? deeper results terrific And customers’ you much. hearing I Could to enthusiasm. for ServiceNow on problems? the Celonis very on Thanks Great. relationship congrats how the with the down work outlook. and solve drill and love us

Bill McDermott

to Yes, will. back minutes, and he good that delivery breaks from the very and me very the we a are built minutes, know the his And few friendship. have job There to got for note an opportunities it’s processes actually much environment, business years want him, go in business Now business appreciate non-ServiceNow said, still thank and and understand And December and and ago because And we on to ERP productivity time more still are mining in Alex into I laugh telling bit a over a to little it on very of absolutely us need I’d the to drive team to once several should your business. I past does And move And that performance. know sent our Munich. business up get and We really used an we get his that in call can automating it. to back he operations automation to look, is the this we within change And on within very therefore, environments, you in we that about in We especially never we the more back cloud. a co-founders, where process kind get forgot was back-office Celonis I And we strong him asking TUM a the friendship. remarks, I are in Platform. where University graduated where it few well it also one. platform that. we gentlemen great business. involved, with and have basis put he a a Technical these me Germany. because to the a time and It customers process know and

map companies. and time truly automate help. and the we’re to people, And processes this essentially helping really taking So systems we needle their automation real of applying efficiently elements relationship digital are that workflows itself in for those move the doesn’t work and the workflows because how building to understand X-ray across organizations by more

have We action platform the to put it then automate result. on it a to actually drive to

development can machine and to have Celonis multiple, a process created all question of over And enable that seamless terms hockey a we it are RPA So into sensational future base opportunities I look a see into bigger development, drive the into product EMS improvement platform the up automation, in them customers engineering corporations low-code the touches might even because why experience systems, the business revolutionize in automation to been and touches action, old world. that because that cloud I about flow they’ll quick earlier, now, only opportunities remediation smart our start of ServiceNow learning, the for which – with and across and in they seamless stress is add, into on the the to earlier, with teams These the market on problems and quick, past, I installed work. this product this enterprise low-code the easy for and platform. workflow into an learning app simple use together when And going you stick make haven’t will as just value an and very we app for get came insight question. customers that’s bring there mining, customers continuous they’re convert and process experience, going new insight

Pat Walravens

That’s Okay. helpful. super you, Thank Bill.

Bill McDermott

for My Thank pleasure. you Pat. the question,

Operator

question. have time more for one We

Drew Your Glaeser the from JPMorgan. comes of line with last question

Your line is open.

Drew Glaeser

wondering for on detail on provide and quarter the performed I vertical Drew Sterling. you the more could is whether how some was in that. This just Hi. government

Bill McDermott

to. be I’d happy Yes,

Our special. is at government very, truly very business story a is that growth ServiceNow

for So What’s is actually transform. or to us. many we tailwinds very strongly. happening U.S. look federal at a the through opportunity digitally the need mandate have in through came they they market. big It’s It of a agencies, these

is the guide the of And it’s agenda One with capacity ServiceNow’s Their government’s management vision better to mandates of administration’s core to President’s deliver PMA. is the invest results. offering. the in aligning

services about the and So things pillars, have empowering equitable you customer customer look service. workforce. data, and strengthening all for it’s secure better looking at acceleration sharing federal driving in workflow It’s sharing business if federal excellent across This the They is at boundaries. experiences. example, for and delivered processes,

If sure pillar managing business work the that you at make government systems to and their well. they of three, want the it’s look

all this business resiliency. So is about

challenge all to And extremely is avoid solutions with obviously the We also help perspective. control role vaccine the for this our tower things also have long into I would you a ago, the know, as recent focused and lifetime. management. from process March government old with be familiar going and leading control think said cybersecurity on a we that having workflow when And attacks the that cloud the greatest maybe nation’s Our resilient. in was other security this XXXX vaccine effect we ransomware for people’s in on entire And they’re cybersecurity. things. said the can a we in that And that world’s faces tie of that manage tower that on I also time you’re solution management believe play other They’re and could focused we countries.

forth. returning safely on States, to Germany, work management course, for countries, many running the Scotland, in part Now so and the Asia Of including of vaccine Platform and United

XX% of with Now combined initiative long public digits and do state, They has to then problems why long, paper-based put And one in all and to all home, way of basically sensational that one sector them and it double that’s more be and And order. Kevin digitally. sector the stories new will local, now a of us the look, dangerous the slow globally digitize the only these in this, for government is the the government at this the reasons very on time, closely to processes business. public business, says out, the people. of have very, the them of be why about of So digitizing represents the working mission the for should And Haverty work the university the on transforming net in that I the are the industry federal, capacity. our which his is public things, focused entities take great serving execute

Drew Glaeser

you. very That’s Got it. helpful. Thank

Gina Mastantuono

Drew. Thanks,

Bill McDermott

Drew. Thank it, much. Appreciate very you

Operator

you today’s disconnect. And you concludes conference This participation. call. Thank your may for now

ServiceNow (NOW) 27 Jan 222021 Q4 Earnings call transcript