NOW - Earnings call transcript Q1 2022

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to ServiceNow's First Quarter 2022 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 ServiceNow's thank earnings quarter and call. afternoon for first joining XXXX Good

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

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

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

Bill McDermott

call QX. We joining were reported speak revenue stellar today, again once a a that afternoon, beat all appreciate operating growth report much, XXXX. XX%. we're strong you firmly following really results we of surpassed good our to our the And we're very Darren, January CRPO and range. that you Today, everyone. end Thank growth pleased In up margin high was very constant themselves. with above for XX.X%, currency was Subscription guidance The XX%, numbers expectations.

which In Gina also raised will for shortly today speaks fact, guidance itself. cover our

year-over-year. We that As in the does XX% understand over $X in our were January the did. world beginning million the XX said growth It's in QX fast would that platform. this deals of that is it to accelerate clear up power QX,

year, subscription leader. that three continue to Now, market to will. leverage for ServiceNow's months of be we the said a later, the accelerate global fast full growth it growth with expect would revenue paired We

the and growth revenue approaching already accelerating our cash with of Now, flow, XX full free rule for the we're year.

We from have customers. existing net and strong new adoption

rolling business. flow. quarter state fast up it really strong. four We We're we're cash the and seeing XXXX enterprise. the environment to few what offer broader on comments do in beyond. of the exceptional believe sets Overall, with delivering super well, demand for we're of about Our talked I pipeline growth We've remainder ever for excited this free sustained a marketplace. want us remains predictable, about the a

material who He XXXX. COVID cloud increase average. or are challenges contrary, similar we impact situation, market of continues to plan world, demand business. in above the and underscored there the investments we the in not which We of said in their short be midterm, adjust for in investment pre the budget slow won't in technology see the public term, we a we'll do our it IDC investment increase the durability, ground Eastern global with well. to Bill, and lose One if XX% in the put are plan quote. Leaders to in in have XXXX. the While see leader S&P to tells story. challenges indications year-over-year consistent from long data has tenure European XXXX. the tenure To XX significant for digital And the in the XXX business have years the market. XXXX particularly in of term declined XX urgency on company a a years same The in the seen average

in status clear very world. to compete to no posture, a environment. business We're it's So matter quo revert can now longer the a no that tech

security, If our resonates. Cloud as to to better consistently. is ServiceNow right digital all Businesses said risk, was faster. new what new adds for the them now, architecture to service for increase is This so technologies these secular experiences native up chain, it seen topics opportunities. revenue of is streams era people. now get When what investments outcomes platforms architecture. here like perceived problems who's focus elixir much we we supply all to you up what headwinds really The are into the the ESG, business. like customer biggest ServiceNow's the business are convert for and that tailwinds say And speed look on perceived shifting stronger acquisition, in technology biggest is an world's

of experiences extensibility great the Our underscores firing ServiceNow all businesses this unique on great workflows, environment, cylinders in are the platform. or behind which

is. it So here

in continued XX workflows which ITSM deals, was in top of adoption of core technology strong XX ITSM our business Our QX, performed well Pro.

XX with with their experience. cross-agency this compliance the In experience ServiceNow workflows it experience. better the our I'd between thank particularly companies to and was Brazil Customer increase strong equality demand, for leader, top quarter. like transform ServiceNow like deals. XX integrate to care with created ServiceNow racial in the only be automate had company, built. digital customers. business deals ServiceNow see with in now must for The In creating and Security rates ServiceNow customer see innovator, their continue while were bought, EU Employee management XXX HR next-generation a employee ITOM fully Global also will their direct-to-consumer way Global case health to RBC, in differentiation to Companies our with vertical requirements. XX tracking. to privacy top be decreasing applications works combined XX models. XX the solutions works a financial economy, fund. attach and works XXXX. top XX. biotech data RBC of continue strong We the with Risk SKUs. forecasted asset strong employee workflows deals. new transform to AmerisoBergen, serve of XXXX from and productivity with costs. to with work business era, for post-pandemic be also IDC million net quarter to the businesses are cloud ServiceNow Barclays many Global great Regeneron, Telefonica works administering to can't in is

With massive innovation together demand net global market unprecedented application for with shortage is a a developers, opportunity. the of new professional development low-code

don't of creative unique Look the one citizen new all XX this in accelerate. developers, of development. leading they see differentiation works many print enterprise-grade platform, of their insurance to low-code on manufacturer and inks, deals, citizen Insurance, the as ServiceNow QX in is With application XX ServiceNow low-code trend DIC, which with we developer app value standardized see of the is companies, top leaders the A engine such tech at largest for workflows examples. the of Daichi governance Life market. While This one want security. gives sacrifice a what world's

longer businesses key works, are in world go the which ServiceNow. with takeaway, to mood what is with the Here's the they They no experiment. why know works

because that challenge address enterprises are We platform now integrated every C-suite focused only one business time architecture the are can with on fast a value. fully so to

search ServiceNow Impact, reception release. on offering, ever, from for extremely our in success. streamlines saw customer our QX. Diego Our platform and intelligent also simplifies navigation, particular, platform. strong all encouraged ongoing by We're demand the foundation San subscription favorable new the And which experience, ServiceNow personalization success the users as next the love platform In a is our make

We company also can RPA new automation. do platform. to ServiceNow process Fred and on unveiled local the it We single for unify our in engine, San Luddy other their automation now ServiceNow to on Only businesses hyper founded technologies automation help AI, Diego. which orchestrate robotic users platform. key simple makes a a approach

us. was the our our San transformational product moment Diego for engineering of in delivered Outstanding an Congratulations, release. to they this teams like work personally especially and proud salute So for job. all release I'd team.

excited that Thierry positive we about our said be we in of "Bill, following, business. from developments Investment see couldn't our CEO Delaporte, partner affirm more nicely. many potential forward, ServiceNow. the confidence Wipro, accelerate Looking this continues to the of ecosystem

You bring and success a customer to technology innovation. whole dimension new

outstanding in." is We with This started. partnership are getting just only Wipro all

the the four high XX, also have taking place growing in community. ServiceNow our will series, event May. locations Knowledge of enthusiasm demonstrate signature Each of We

digital New Hague, York to The will Las showcases in fully Sydney We addition a Vegas, in have City, and experience.

us. So join please

had QX to and stated on we great remain be by this a to in closing, track lined up for year. steps full QX. billion-plus is fastest to We're XXXX, worth milestone, taking suit we our the for thresholds. $XX in day at $XX those forward XXXX beyond. to every Everything that and by hit time billion-plus It's follow the So reiterating ever us

offer Like company to business to do like ServiceNow our confronting and colleagues efforts. well, work is humanitarian peers, good. ServiceNow for Finally, so This I'd XX,XXX doing aligned especially pursuing our is of of numerous in heartfelt to to our many we opportunities confer the more better to worldwide Ukraine. making relief purpose to commit continuing the than results, crisis, firmly support those beyond to customers everyone. the world support of By our

of I'd defining CFO, your ServiceNow. our again I'll we Gina? time addressing and questions Herein your enterprise you any to company the for may looking software And you thank are have. path a the to now it be Ladies great over move. the company on lies in hand our trust We're XXst to Mastantuono. Gina and century. to like forward gentlemen,

Gina Mastantuono

fantastic execution. navigating Bill. a with quarter you, are Enterprises of QX filled a another environment myriad challenges. was of macro Thank yet

and offering opportunities the of of us NOW for a nature continue Our provide strong the results growth. of and geographic product our breadth to business array platform. The the exemplifies reach mission-critical ability resiliency of diverse delivering our our

FX all Although throughout our QX of grew across ServiceNow headwinds outperformed quarter, metrics. the guidance

growth net In fact, the we've seen fastest since ACV accelerated driving QX XXXX. new growth year-over-year,

carry that strong ACV will with last net consistent year. quarter growth expect momentum our QX with very We second new into

more the headwinds. XXXX midpoint raising guidance of FX these result, As to subscription offset we're revenue than a incremental

government, year-over-year exceeding QX the Current a XX.X% currency year-over-year. point $XX.X constant $X.XXX services, X-point $X.XX guidance broad-based sciences, year-over-year. year-over-year reflects a financial was an our strength new versus Subscription currency acceleration quarter transportation our ended billion, currency, growth. Turning growing health more to we RPO XXX logistics million. energy TMT, This life $XX by perspective, ACV the constant all growth, growth representing of revenues beat range guidance. billion, care, saw year-over-year and end or RPO growing were results. approximately in and constant From XX% high and in billion, net with representing XX.X% at industry approximately utilities, XX% basis

land in with was efforts. This to expand. further The a more our transformation new Our new quality of closed XX% build as success We finished at in in to solid in QX the over as the quarter, renewal a stickiness served logo deals of year-over-year. for $X base rate We with XX% initiatives than upon in net core our quarter greater has seven includes paying our us largest customers as than NOW QX, deals customers. component platform demonstrating $X ACV XX customer X,XXX foundation us digital million ACV. the to continue remains customers' best-in-class our million customers net up

deals out Our led non-ICSM our products. Nine land. largest portfolio were is more XX outside our by leading customer of of new top also of customer ITSM

profitability. into to driven and our that surpassed Turning QX. margins Operating spend revenue shifted beat by XX%, certain

ability is more growth. drive $X.X year resiliency cash and our that demonstrate Our cash Together, predictability and profitability. with relevant even was a results putting excellent shape in investments, these business and ended perhaps including model. balance drive billion a sheet, to continue us investing the We free XX%. margin quarter strategic growth healthy our to initiatives of in this in flow And balance of

released customers of in annual the we markets us base stability and second our of Report. even our make provide results, a week, Impact diversity stronger. employee continues Global diversity to While our Last

and business, continue ESG our the across and as management customer, experiences use helps govern ServiceNow to employee Just to manage, and integrate solutions us platform reporting our ServiceNow we'll the report progress. fully technology

ESG systemic achieve million $XXX racial fully continued equities. our of to the pay progress XXXX, we've short made tied accomplishments in ServiceNow's but journey, and our we're just such made representation While and diversity extremely started. environmental improvements proud a equity we're distributed significant goals. fund, We've getting early we've I'm both We to time. hiring. we're in executive in with happy and We've compensation in

Moving to guidance. on

As strengthening we QX, the U.S. incremental headwinds XXXX. conflict the dollar, throughout in an in of Ukraine further to continue intensified in FX see resulting

currency of XXXX a on outlook. our With underlying has basis, let's business in mind, However, remained that strong. to constant the our health ever turn

We to increase FX, subscription the of are seeing by we're million. our resulting raising in of $X the headwind incremental outlook a $XX million revenue from midpoint offset than net more $XX million

accelerate Our new range on currency reflects previous raise expectation billion XX $X.XX of basis a our billion a represents now for That's updated basis, point growth. growth year-over-year. versus year-over-year to constant to $X.XXX currency outlook. XX% our XX.X% growth This constant

margin operating XX%. free expect We of XXX of subscription cash up and of margin XX% year-over-year, points continue gross margins to flow XX%, basis

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

QX, year-over-year On which is growth a QX X-point basis between revenue $X.XXX of subscription revenues $X.XX expect we representing XX%, constant expect currency growth, be For subscription headwind. FX acceleration XXXX. billion from and we a inclusive XX% point XXX to basis, billion a

CRPO we I'd basis. customer a year QX. that currency cohort note year-over-year full renews growth have XXXX, on in of larger-than-average that expect or We a constant XX% XX% for

When and will two in reaccelerate headwinds We between subside, as wind growth those CRPO growth to expect obligations will and one the and CRPO QX, QX to of down. quarter-over-quarter. see headwinds points though, those contractual renews, we cohort increasing QX

QX shifted incremental the XX%, FX. and QX marketing timing expect operating We of some an reflects that into from margin spend which of

XXX million outstanding for quarter. another diluted QX shares outstanding expect In quarter. was the We weighted conclusion,

Our momentum up year. great is a us setting for

highlighted, San we're As Bill Diego excited release. about our

leadership, well software become the moat our as to enterprise more on like our defining platform Our robust, market invite future Day of in momentum we opportunities you Las and the to XX May I'd deepening and innovation as incredibly pipeline seeing about upcoming positioned hear to is our is the competitive products digital business. seek learn for long-term extend to about century. company the at new XXst more all we're our ServiceNow Vegas. Investor

Finally, quarter. of open their enough thank employees this I'll dedication. our continued proud Bill with Q&A. and hard I I'm up performance can't it for work our extremely and And team's for that,

Operator

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

open. Your line is

Keith Weiss

of in versus across Actually, seeing on in the pandemic, any now this and taking -- then? question you differences really what the you Pac? dealing And period guys and what if to it any or quarter. terms similarities any what overall time kind is pretty or of we that. Or in just of One, is and there consistent right, about like of saw U.S. questions. to there Like performing you the behavior you're in we Thank there One, any you board? Asia two, against in the a you guys backdrop of XXXX, think for COVID point how Europe the so nice two versus much versus with saw difference kind are were is sort well macro are geographic differences? seeing behavior are

Bill McDermott

thank very Well, you much, Keith.

attribute the the world, where business brand market then consumer from to The companies, in will an the that basically in the already, it's but compete work and for that a leader. and all, The I'm of spurred tech the cases, establish world's biggest remember, have response, war as of impacted business if true both to interest importantly, be a rising probably I supply ServiceNow, to falling a many emergency saying the of the we are inflationary NOW chains, more new felt dislocated really environment, they because of enterprise on We're case now, the stepped negative impacts ServiceNow. but whole of forces, enterprises are And for First biggest have is environment, And now also because invest these now. Ukraine, leader. cases, to the this a right are these rates returned in Most challenges in ServiceNow's behind. the up terms is safely. you opportunities. have and unique software platform all opportunities to

ago, For formats. digital example, two years, was of it percent. business two done two-third getting and just the years one-third it's will be in Today, XX-plus

don't digital you if lose. you fast, get So

war talent seen thing, care we're there's been never how other that's the like the The the to before economy, in this for in has a software level. And attributes people. of of global take at unique

one them, them. them, truth moments hire do You onboard have of That's it. have the to that way recruit does to you nobody the of we but

to experience then, platform. obviously culture and That course, the direct-to-consumer of they level and have also customer give they're the gaps And the where of working differentiate is great the the part on low-code So on you for you. feel true consumer to a creating from.

these those I'm you're the saying talking we So can macro solved, what world that so problems is, manage needs help about. effects

So then the employees the our environment all like our feels in across because somewhat that need optimism context, but in customers redoubling and us. world focus our of anywhere did all we're it

So world. differentiation the and all a quarter on and scenario, Americas by of our that consistent focus will vary again, on strong. every And unique I the there. obviously strong, all it pipelines innovation. believe have everywhere it reason is They're the clear consistent here will our our think be to effort strong across-the-board enterprise and regions in particularly the was geography but

Keith Weiss

Outstanding. nice a Congratulations quarter. really on

Operator

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

Your line is open.

Brad Sills

departments These risk. Congratulations out you're the ITOM, a different business. is here. is, that relevance question. departments, you're across gap taking nice of changed for real quarter workflows, that global multiple ITSM, that? stands well? as lines there? Is to Great. what and different really you. in My me such that the SI your are find have bridge employee internal channel your has Thank just go-to-market security Thanks question to seeing so there strength that on across able to the broad a key solutions about many Are things for my the changed The go-to-market thing just

Bill McDermott

applications to you with you're you us It's by I excellence the they're secure. this on because that in give to workflow believes in we generationally there's way proud and that only they in it, next-generation the to to just in the do keep whether enterprise data number they're of and for business the one leaders When platform way the to grow sure because the the but IT do and the big impact developed difference. ServiceNow simply supercede company, working in need here. is you couldn't world. field industry future. where Brad, enough can to make sales around have brighter IT the the developers technical I need will out in the digital started we're the here and that from is make that innovate is years in platform, And matter digitally. and behind trying in they with now, I of thank everybody we've business a it's kind can the the ultimately, were be to of and can the platform, very big have happened this been only the that's engineers the company architecture, compliant persona And about became have sure along the IT constituents We along world win, employees can be that reach numbers really became is department, help could leaders creative what something your not their where that now environment also, words, can this do sure those they who works. And we We business tethered the for Brad. will new customers ServiceNow. all a make right It's they But moved ServiceNow. record they're And your so And difference. do became it's big really work doing lines no we're a way the and number out way to way HR on and in with the the transformation made business strategy only that because going. know the our one citizen in get only all get or what to where world always it all living IT in on from. next that, your with with century. And the half the last to the internally, massive three a company, to investments built marketing, wants super and innovation And govern service do something a we've they be and that model, one to company. platform excited solutions do past,

Brad Sills

much. That’s great to hear. so Thanks

Operator

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

Your is open. line

Arjun Bhatia

about great Thank Perfect. your to customers. labor adding sure very want hosting a go seeing my At on with more increasing. up, value same product, time, Bill, you're And you your the add congrats I conversation I'm follow maybe to earlier. on up will are right, you're costs much. quarter. costs inflation I

about OpEx solution? a are offset as side? But to pricing increasing in value add maybe mean for your talked ServiceNow try more of on I some to that the and this think the being how more be about do Is you you're to You've an you innovating. opportunity environment platform, costs deflationary aggressive there

Bill McDermott

question, a No, it's really good Arjun.

doing I are take you this think in technology is behave such software, do right, position wrong. the if have that you has like because away to you privileged strong main it the shouldn't it discount when advantage, thresholds a thing a from in

how software, product impact has clearly because sure with your professionalism the So really that we're make deserve and business you that's the story, algorithm of we comport pricing well-constructed find the power can the you actually impact customer. that seeing. really customer, a platform if And improve around been the a enterprise and to getting your you're that's you can price/performance defined it large and price seeing control you We're in for our without what make application to transparent projects the return the that iPhones do fully was they're at on business they see where now can of the point of and that they enterprise original the business of the And ServiceNow those we even invented on. that to company right case we with investments how can done an our their on sale. the impact using precision as are unaware operating of tethered another I'm they That's customers. level change that exacting

really business about really buying value. our it's customers So It's about in. impact, are and

Arjun Bhatia

very Perfect. Thank you much.

Operator

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

is line open. Your

Karl Keirstead

just I thanks. to metric. just XXXX. CRPO you Hi, Gina the give headwind the chance U-shape trajectory in I on that wanted sequential X X-point elaborate to clarify in to to And particular, a to wanted

XX% provide, the normalized? any you that XQ? be acceleration And in then Love mean the in Thank before that I that guide to get XX%, would do on you you XX% color headwind does get others call can in XQ as So XQ, X- would. maybe another think X-point you.

Gina Mastantuono

Thank right. you, That's Karl. exactly

in this this basically, and because so is renewal impact saying what QX that X-point QX And a to X- of there's large cohort. new we're --

$XXX,XXX. last if up XXXX, year, QX it of $X have in $XXX then a it QX, have of QX $XXX,XXX. in for million, at that's QX, that in $X XXXX had million; QX, had Then customer so about renewal end million. have the would and would RPO you think a would in had had And And the renewal QX in

talking talking that X% about. X%, for and we've the that's the to it And between math. you're it we're quantified impact you got about how you've exactly right So it at with

Karl Keirstead

Okay, super helpful. Gina. Thanks

Operator

question the Winslow comes Your of Phil Suisse. Credit line from with next

is open. Your line

Philip Winslow

Bill, think that color year-over-year. And XX% you up customers into really gave getting question. you're and all the When opportunity. on of what geographic just my guess, your of year? time prioritization twofold. look this and One, spending at be quarter. another outstanding Thanks the doesn't are on that's sales for then leaning My functionality? for it taking head question vertical line terms to you're where the IT I areas feel goals for I marketing count, sales just on you're And seeing? ramp I that from ServiceNow. productivity there ServiceNow Congrats going like just feedback for the could thanks is, in just it leaning just Gina, in And whether be any you is you hiring comment into, are the if wonder or

Bill McDermott

Phil. very What's wonderful thank you or we the so. Phil, employee our onboarding about ServiceNow XX,XXXth next that we'll crossed is just be really much, week in

ServiceNow members me So the many place super Boards people the this to no because we options their of from continue calls work. And to phone other from because going to get ServiceNow environment, exciting that's people be choosing in I want Director company within telling there's family. boomerang are back so

marketing to sure things And are cognizant of As you and quota-carrying we an make we in know, machine. growth the tend have associated equation that heavily with hired very R&D. is sales to we This innovation a a do machine. It's them. also

is So the shareholders. there for leverage

especially super want place I it. important give market skills. will in Gina brand tight very figures digital But and for have facts you a labor that's be, this the to very, So just of it's some on people the think to

Gina Mastantuono

for QX would numbers, But it our function recruiting And do environment is to and you're just Yes. teams I all right. in headcount being HR seeing seeing XX% the that up and add, you're this to the pretty of and able hats Phil, function year-over-year phenomenal, off that.

on definitely sales increases the folks, strong market, expecting year-over-year that. and that to to and we to continue that the absolutely about. throughout We hiring It's that we're in about sales getting really about we're We and have go-to continue marketing and with to expect continue talked sales and trajectory With XXs, R&D. QX full innovation really good that high the in marketing, talking see and driving in year been productivity year. productivity invest for respect seeing the

are very executing teams about good really the well. go-to-market results. We So feel

Operator

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

open. line is Your

Samad Samana

just And Maybe went Hi, that quarter, I'm was attendance the it to good expanding should And times. like Federal the DoD up afternoon. felt higher for tough a opportunities It within robust. sector the opening quarter see federal terms the pre-COVID curious, to very the level environment. match seen just How were Forum. new IL-X have certification. and great in the you to we demand of during particularly with you you're be and on about TAM to targeting? we think back there guys that that another Congrats in very great we the

Bill McDermott

attending. Well, of for it. much, thank very all, We really appreciate you Samad, first

it most ever was the person, forum people that again. had, the sense it really little in It travel a know, happened successful you to and As Federal and post was bit successful. the that done Forum was started in COVID we've

you think well. really I it called

specially I And I XXX% only that see really good and saw you him on Microsoft our off, to also It's we with from Microsoft IL-X big new that refer having as up congratulate average federal not very But think sensational year-over-year on believe well. that wish partnership will and them. value. have we what fantastic. contract I a with net quarter. outcome big, growth taking basis the in the U.S. very very was show partnership strong on Satya certification a

constituents is the a that problems their one drive including And the President's couple, there's opportunity. we're we for the total, NOW IL-X agenda results to administration's a only think as management deliver platform and are adopting solve I they're and standard. U.S. can a fast, Microsoft, certified. three a really And government to lot of digital big federal So guide for market of is the transformation,

And and that think close interest could strongest have a capability you on caught that it, ServiceNow off this you, they that's safe I a workplace will I the again, Biden wellspring delivery remember something be fueled I'll give would quote seen by now. customers. So the agenda. of as opportunity. federal here workplace And on finally administration's from lead to service the the to to I way applications that said work federal of returning

very globally as the marketplace this that strong is So an business us. a TAM for is TAM, know. you government for enormous Incidentally,

around will growth local, So being quite and state also doing that, world. federal, a a drive in statement. leader in a And think we're lot is that I U.S. the

Samad Samana

question. my taking for Thanks helpful. Very

Operator

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

Your is line open.

Kash Rangan

Thank you very much.

the comment Bill, ask but Let my distribution, XX. got the your you plus get thoughts big think count to you deal I curious sizes. pretty you've after big of I'm nailed. given run quarter. well spectacular so question, companies as impressive, on X,XXX think argument company far? noticed big to How I going the me distribution not XX-plus, of about do that I'm macro that to scale is you've the The customer very certainly X,XXX, congratulations

you we XX-plus, the a go-to-market X-tier cetera? looking and of the et distribution, go-to-market, get channel, future, much As your life we X-tier, us at congrats. like? company the look Thank is type to Help high-end, to envision so what target. Are predominantly the beyond structure Bill, envision SI,

Bill McDermott

Thank you very the much, Kash, for question.

an our on now leader. the again reiterate, right is the focus I enterprise So enterprise. distribution, market We're software

to focus now of to have places. have really the I Germany, in left Middle We the course, markets, Canada, company. still treated the of of a starting obviously, like on for style. markets in lots bellwether which Europe, I'm like in to across take already expansion like way LatAm. lots the East other are There's do opportunity And obviously and We huge want U.K., expansion work that they like and all off to markets markets Japan, beautiful. looking rights trade be localized geographic France in at

component. a geographic there's So

financial you but telecom, course, develop services, focused then by with and gone one, so have in way there's including persona-based. forth. strong software We sciences life that the take we've your motion, but also And the under industry, X, very there's industry market software we're every on sun there's to segmented know, industry. And manufacturing, of we and as

intelligently executed across about geography, form and enterprise, you run platform that think great the have that's this now executives the around all an art persona the C-level the to to a speak you his we at leader formula the Rubik's by taking and And the Cube team. industry If level communications our marketing enterprise. have being

that. with So I'm impressed super

a things everywhere. do as in partners platform the what observability is where small to out a something, very step of many channel people core. it the interesting but figure you we about out core is they're across and step platform. ready-to-run by whole around the with an the that we company I user precursor also, have and you design picked solutions turn to up take the experience lot different did whole that platform prepackaged, can with think And that when a people ecosystem screen direct-to-consumer having life enterprise, a in haven't And I put think, are we of next-generation of take life and on think also also observing, channel mid-market styles could We is one an build customer new and a on, that and

doesn't don't the And isn't channel, big conversations, so conversations, start B, partner there $XX one have that meaning the there now single billion. top we chasing and we we now, top XX with million-dollar billion-dollar have in on have at least out the a even one a

have It's every in Kash, and market conquer in just all over I world, you And building to before. Kash. be going we're never ready to mean, the win. this like exciting to I So a going wish the now, so it. we're chase we short, to see could market here opportunity right team that's

Gina Mastantuono

on what to billion-plus. at look a Investor you Day see lot hope $XX $XX note, we at on Kash, we'll talk that like XX about billion I because And May and

So see you to hope there.

Kash Rangan

seeing I'm Definitely there. you already there.

Bill McDermott

That's Can it, building? great. can But feel Kash? you feel you the

Kash Rangan

Absolutely. Congratulation. I can.

Bill McDermott

you, Thank Kash.

Operator

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

open. is line Your

Matt Hedberg

really question. to my Bill, question. as taking for Thanks a that follow-up last Great.

of observability. mentioned You

management incident You launched guys recently platform.

a again opportunity maybe like going observability. observability, think on think I'm you're talk and if you wondering you about huge importance really with of just because offering. double-click infused to that I sort of market why guys? you it's for step it the win And in seems light can

Bill McDermott

market for thing here -- They're first opportunities. anyone recognize don't the is require Well, Matt, win. for to opportunities huge to us huge market lose to

they let's that's seamlessly out-innovate integrate, and the to his proud things them our together. team the so So believe And faster so be want customers the we with we trust great, ServiceNow time, we're lot is successful one do that largest and why to just of going about make integrate market. do, clearly, big have that us got partnership have customers And At observability the invested can more into for in because customer most was to way NOW in and that we And participants are and just already they same want such the we in many have just we'll them with successful them. them realize together. as platform. we that still marketplace, there Ben categories. because with a anybody innovative in dreams step light about of such the And those industry. That's

since the you incident said. joining it's big. It's Lightstep So launched new product and response, first ServiceNow, as

So have incident context incident incident customers and the of the one for a more add and vendor process, looking by response And that. in lot may way, response will response than to are there. automation they even

don't and industry-first we analytics, of is do notebooks. So an hard customer. against part our we they get What Lightstep We've on, sleeves rail observed our we work. unification work go to and put billing others. collaborative roll the to for launched try hat also also up

workflow referenced innovations SRE those space. these and So breaking are tracing and silos streamlining between its critical metrics I down

and CI experience, again, effectively what and Airtable, they're again, in networking complex platform very with CV deals which powering one they're signed we into applications, also that's for in and but talk system-wide the issues, to not going doing this customer architectures, QX, performance they're innovation of specific DESCO with it improving XX company building back our of do reliability I cool real job collaborative balancing than and and in why and they're data of. with company, space, when And they we're a complete you driving Plaid, used product Fintech doing resolving of enterprise. can enterprise and and along believe keep times of issues, and about visibility That's using distributed monitoring allowing the and faster doing is and is and it finance example, as out next-generation they're users, brand, and for integrity systems to. great brand, that proud it both the got consumer-grade people they're you of a Plaid distributed a Board the XXC for investigate defining XXst we experiences. they're century and and And different proactively a And logo. Directors some and across cool UI, to an did digital software entire So know, Lightstep they're more you I

know XXC, all the DESCO a innovating, or XX,XXX you're So just is where customer now we We have we're people going. about conversation. that whether think they covering driving

Matt Hedberg

Bill. Congrats, said. Well

Bill McDermott

Thank you very much.

Operator

line the Your open. Y from of comes Wolfe next with Research. is Zukin question line Alex our

Alex Zukin

Bill. questions. And I a thanks truly the the congrats in taking guys, Hey guess inspiring for for maybe message quarter-end tough just tape. on two me,

wondering then how think the or greater the Gina. Fiserv or should others? maybe talked in success on the product health you telco other and And itself, for just vertical was verticalization the on comment of saw also and You either just federal in about the could success we verticals seeing the that a call. you're I if about in some quarter of follow-up for

Bill McDermott

very much, remarks. for kind Well, a your It to means thank you us. Alex, Sure. Sure. lot very

higher, it. Our go when hear appreciate inspire to that, us team is you And doing a and they really just we great job.

lot a done in of We've coverage. the you. thank So vertical terms

we Operating best overseeing orientation CJ great great regional running business, presence. the also, our not go-to-market leader Desai, And industry have teams in Chief the beautiful our only to We of he's the our way team now engineering with Smith whole be go-to-market Paul all believe engineering that. but up and around what in team, and Officer, he a with the

the of context, is referenced to is but proud middle just super so ServiceNow. going are simplifying many whole just operation services I on have team. there's our But really well. back-office and Barclays, We all-in financial banking really that

service service great communication really aligning assurance, experiences. away and can't deliver about transforming And customer fixing problems just with think how Our telecommunication providers care anymore. get customer is solution -- you

up, issues You've you've service. proactively before maximize they these And got quality address availability and they come do if to of up. them anticipate even quickly to to got come

we're and assets. telecommunications the happy notion doing of available becoming the have technology So we're manufacturing to whole really their of these standard across board. management, to what and there, security of We're seeing with are technology super operations a lot and and of provide trying critical in what driving manufacturers their the we're visibility do all traction

simplify in more, give now. those And really done, high-tech that's theme months would health all with The record. And service there systems we're payers, but not new months I care with and another manufacturing, a ways. unless experience take for and And customer you life years. I customer are solutions, cooperating and and cross days innovative of all really underscore the controlling is is care teams It's systems the come sciences patient experience, tether and device one they're they're functional enlightened now and important my health to health they're providers, and or about is first months decision-makers excellence these you employees. one and people and like, those to but experience. a I that they've medical I've Michelin Another engage them X-star give employee their of NOW and my the just the for it care organizations? to conversation you got need And knows the and platform it do it in to are how give will one the the companies And you weeks, got this How I've connect to management. got your they right us. could that customers platform mean because you finally, give can't highly I magic rocking on in strong ones very pharma IT does does business.

better and So everything quickly come make in everyone. we just for

Alex Zukin

tougher awesome. in guess rare mention you Gina, quarter see to new start quite as it the do you, environment. accelerating ACV that from more you new sales to your is force. about continue? is, of question in for events, a company inspiring, Bill. in guess quarter. growth quarter macro size this I follow-up but which Is the momentum for of the to type of That's year, ACV the out, possible I the in-person comps type not do productivity talked to the presumably Again, in, returning get through more Very

Gina Mastantuono

remarks prepared net to we expect accelerating Whether lasts we about they're for the as well, new show ACV So full incredible comps. talked year, QX -- in I consistent. that growth pretty that my

seeing had -- the year than underlying right? slightly really impact, don't CRPO business it QX, that And obviously similar really ACV, net in and I full guide, result that, guide I it although in less we But confident feel spoke to wanted new was the to this accelerating because wasn't the a everyone about of Alex. we're reason driving specifically in so fact, And QX QX. new wasn't it net ACV expect that

my guide really reason full the about was year. so in drive that QX. the really to into And strong for the our momentum excited we proud the consistent comment. be the year. seeing we're for QX, just feel that And organization seeing So entire we're I'm being the an momentum scale. of about of throughout and scale able our good acceleration this expect at We for to

Alex Zukin

clear Crystal Thanks Congratulations. much. so guys.

Bill McDermott

you very much, Thank Alex.

Operator

with Gregg the Your next Mizuho. Moskowitz question comes of from line

is open. Your line

Gregg Moskowitz

XX were non-ITSM usually your think it ITSM workhorse the think Thanks very interesting that we but see. ServiceNow, that Bill, of only top on of than about really to XX tend less products. X as XX I'll congrats for all my much. I quite in good is it's top a quarter. what which And a And by deals, add bit mentioned was also your you we led included

look Or ServiceNow you workflow expanding result landing to reflective it's think of solutions? So other with this an outcome? and automation increasingly do anomalous do this with more of at metric you QX respect as

Bill McDermott

a encouraged so it's question. Actually, with great core. we're Gregg, our

Our from the And corporate right the core is revenue core, outcome you look if it's at our beautifully. there rate. growing at

core any business. you're with do nothing what has that So seeing to dilution in

On you the contrary, SKU, uplift. we've Pro got enormous as our a know. uplift That's XX% with

now. penetrated XX% it's So

that it lots more there's to people many there's So go. and of like

Pro room have lots we of left on So the SKU.

example, change the goes Baptist Bank it. it -- mean, of complete for Every customers just of about Regeneron, Telefonica. Wipro, Amerisource think mean Royal Canada, DIC of brands, you I kind I the where Health, -- pharma we're with sort generational on. great winning, If Bergen, on like and

into core, of experience, that are me stronger. none us So future the see. did whole has I and form business concept solid the There's been want And right, experience, to no now possible. never sure the ever we really dilution you're creative is landing to workflow been the make basis What clear. that And customer The whatsoever. move without let developers would have the it expanding. the core revenue employee creating make where really IT citizen for happening, are magnificent they

set So record want straight. I really to the

our is to love The ones are leaders. more great and and across all doing younger or on love we segments. But team obviously expand the core, land we these some newer opportunities. our Our get going

Gregg Moskowitz

helpful. fantastic. Bill. That’s Thanks Super

Operator

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

is line Your open.

Kirk Materne

were the very to some the level? move Thanks than and CEO maybe in you congrats little I is of I if person a software be just little solution And able the platform in on much. quarter. to the on think as as suite the other curious hit, different up Thanks. was I really that to high well bit could customers I'll a company, actually wondering only operate sell how bit virtually. up the nice a that meaning you're the ability the at to center. just Bill, one was buying organization, able moving as position companies of entirety you sort because echo when a as it to pandemic see to a CIO into expand from really about level talk beneficial But your

Bill McDermott

you me good CEOs virtual bit were very looking you, surprise Kirk. I whole is a the tell one to environment have a little much, did Thank thing that during conversation. for

us So in team, their we bring team better. opening also which to But conversations now now. obviously is our those participate we up, team management did then, able should And were we and were do we with large-scale good. able so we're to helping gatherings even that

of I'm at Asia calendar Europe, very, after very that and catch after I leaving So and my soon that. my there tour Europe, hitting on here year, for Sunday looked we'll a weekend the for because I'll family

in these full going the events up knowledge as we're mentioned. doing company. open locations, We're speed, four I So distinct

he's team. the commercial, and a sellers go out We where gauging envelopes because Airlines guy Our themselves street, the and sitting the visit a looks never going and United forget were are on out management going customers on got street table, let's the it some and And of when walks that's goes, in, at around that are. bunch management his customers. it our

It's we're hard going and logos, to and require To right, really the relationship it in tailwinds to a a So that that. of I does net expect do because the out get digital to good expand lot in it we'll of a enterprise really build format. do of that emotional to trust happens you're new minds meeting trust, an scale, with person.

in a through future our to seminal healthy of is some challenges this think the really step going ServiceNow's a another is I moment history, improvement as in and provider, that they're fighting because So be platform through customers I'm our getting function excited.

Kirk Materne

good. Thanks much. very Sounds

Bill McDermott

Thank very Appreciate. you much.

Operator

Your next question Tyler comes of from line Radke Citi. with the

open. line Your is

Tyler Radke

And for how program you're wanted of clearly, lot about on the customers. I roll value thanks about impact my a you Bill, customers. some talked your lot Hey delivering new question. of to the ask new innovating you taking to and out to seeing a you're products on innovating the you. products just scope you the the on guys are that of you're new new sure that kind take existing you versus products on? treading are of increases how delivering Thank and are products making to between where able that base But really line customers

Bill McDermott

the appreciate really I question. Absolutely.

situation. the here's So

come you help. software part equation, really that this the It's of in much bargained context need impact realization what basically value making in. year price more different we like much doing not increase. the invested for sure the in And is these that. also they've kind already of want value kind customers against implementation again? is Did did they Our with extract of the every is customer our And do as later, great a the business it but accelerating format professional then The across and for and think for?" then do and get saying, a than any But the delivery to consultants job there's think "Hey, of ServiceNow, with things, and can managed impact as we that by it's just we're too sale, long, point a can. of what partners. do someone's a that we how at customer for they and people And doing deck in changes, that of they ultimately, sale relationships made company possibly

the be all on all the think of chat just the outcomes as It's way conversation one this concept that the a between and is to of everything place no and platform and detailed the analytics every measure Board e-mails, out, business partner, with place ServiceNow. no platform any real with the NOW texts, ServiceNow There's where Directors. the out customer there's takes spilled So in side. and in time we could on everything there's spelled no in presented all

the externally. up is even reached. on All we it's the and departmental want we is at fair incidentally, of customer. not just like what to impact many XXX many in highly that deals that than being and X Promoter to solutions do is know a time Net putting adoption structure more of user logos. to that that And that by And enables where inflationary partner as it idea big expansions with not clear, to in So company moon. if doing sure values a our and customers. now And it things up, is also should going resonating customer, we're best look There value. enterprise satisfaction and valued you're pressures are new be looking a at. And our many impact us professional that the prove ServiceNow, agreement through think And in customer developed to the platform. and I and I customers the valuing retention said, ranges again, interested, the whole on internally being more speeding There Impact. value We want more we're are we've ServiceNow be expertise professional, on right platform make and accelerated is pricing to make rates business is are business. Gina done pricing, There the of for seeing the with we business things

Operator

one for time have We last question.

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

open. Your line is

Brad Zelnick

Thanks. Fantastic.

guys. to I is competitive to you. wanted about us naturally RPA, engine of gaps the interest release. the your the are or level San to a extent vision which So for stand-alone on Can maybe me the are year new more Congrats you and in Bill, platform? NOW really filling fabulous the automation what the that in. to of fit ask for as much part found the remind What start Diego these opportunities of workflows

Bill McDermott

great Brad. Thank really a much. No, you very question, it's

As workflows this lot means of the on you know, idea platform hyper a existing automation NOW to our customers.

a enterprise. the platform, this like ServiceNow RPA quickly release, learning, what experience. improving together and seamless we and every product in us organically And choice. passing to other into going product marketplace. if can substantial that NOW be across would the some automation, ServiceNow want And and way been, better, latest they them work of other unicorn flows it from tools to with they all they that all integrated cases, mining, more development And now with and day. are what integrate remain into build in we have experiences to in the to builds own low-code highly we see expect the it's customers So But one app is machine that, cases, give we here in innovating brought you that innovative combined process

need market pleasing, be to find customers innovate I And delicious. and it's this ourselves compelling is generational. is also that's said organic especially when that's job I that our integrate to super to a and So all build and but continue helpful when with out story came we platform first way to participants, ServiceNow, the in why

Brad Zelnick

seeing month. to you you, forward in Awesome Thank Vegas out next Bill. look

Bill McDermott

look you. to together, forward time you spend much. very Thank Brad. Thank I some

Gina Mastantuono

Brad. Thanks,

Operator

the questions. does This we for conclude today's conference is Thank all joining. have call. this time And

now may disconnect. You

ServiceNow (NOW) 27 Apr 222022 Q1 Earnings call transcript