Q1 2025 ServiceNow Inc Earnings Call
Krista: Ladies and gentlemen, thank you for standing by. My name is Krista and I will be your conference operator today. At this time, I would like to welcome everyone to the ServiceNow First Quarter 2025 earnings conference call. Thank you very much.
Krista: All lions have been placed on mute to prevent any background noise.
Krista: After the speaker's remarks, there will be a question and answer session. Thank you very much.
Krista: if you would like to ask a question during this time.
Krista: Simply press star, follow by the number one on your telephone keypad.
Speaker Change: And if you'd like to withdraw your question, press star one again. Thank you. And I would now like to turn the conference over to Darren Yip, Senior Vice President of Investor Relations and Market Insight. Darren, you may begin.
Darren Yip: Good afternoon and thank you for joining ServiceNow's first quarter 2025 earnings conference call.
Darren Yip: Joining me are Bill McDermott, Chairman and Chief Executive Officer, Gina Mastantuono, President and Chief Financial Officer, Amit Zavery, President, Chief Product Officer and Chief Operating Officer Peter.
Darren Yip: During today's call, we will review our first quarter 2025 results and discuss our guidance for the second quarter and full year 2025.
Darren Yip: Before we get started, we want to emphasize that the information discussed on this call, including our guidance, is based on information as of today and contains four looking statements that involve risks, uncertainties and assumptions. Thank you very much.
Darren Yip: We undertake no duty or obligation to update such statements as a result of new information or future events.
Darren Yip: Please refer to today's earnings press release and our FEC filings, including our most recent 10Q and 10K for factors that may cause actual results to differ materially from our forward-looking statements.
Darren Yip: We'd also like to point out that we present non-GAAP measures in addition to, and not as a substitute for, financial measures calculated in accordance with GAAP.
Darren Yip: Unless otherwise noted, all financial measures and related growth rates we discussed today are non-GAF except for revenues remaining performance obligations or RPO, current RPO and cash and investments.
Darren Yip: A replay of today's call will also be posted on our website.
Darren Yip: With that, I'll turn the call over to Bill. Thank you, Darren, and thank you everyone for joining today's call. A privileged platform has a privileged position in the enterprise. Let's start with ServiceNow's Q1 results. This was our biggest Q1 ever for Net New ACV.
Darren Yip: We had 72 deals greater than 1 million of net new HCV up from 63, a year ago.
Darren Yip: These large deals nine were greater than $5 million and net new HCV, we crossed the 500 plus customers building greater than $5 million in HCV milestone up from 425, a year ago.
Darren Yip: Our remaining performance obligation is now $22 billion growing 25, 5% year over year we.
Darren Yip: We saw strength across the full service now solutions portfolio.
Darren Yip: Technology workflows had 36 deals over $1 million, including to over $5 million.
Darren Yip: All segments, I TSM item item security and risk we're in more than one half of our top 20 deals.
Darren Yip: Crown and industry workflows continued its momentum in 16 of our top 20 deals with nine deals that were over $1 million.
Darren Yip: Core business workflows, which is employee finance and supply chain solutions. We're in half of the top 20 deals with eight deals over a million.
Darren Yip: Creator workflows, where in all top 20 deals.
Darren Yip: Q1 was another substantial acceleration foodservice now AI the number of pro plus deals more than quadrupled year over year, including 39 deals with three or more now assist products.
Darren Yip: Average ATV deal sizes grew by one third quarter over quarter.
Darren Yip: As pro plus products or included in 15 of our top 20 deals.
Darren Yip: Our next generation database for the AI World Raptor D B.
Darren Yip: Our net new HCV acceleration quarter on quarter with five deals over $1 million.
Darren Yip: What you see in this print is a high performing company with growing strategic relevance and bedrock strength customer relationships. We are leading the AI race, because we ourselves are running it you're all very familiar with service now now on now the <unk>.
Darren Yip: Service now team is raising the bar by innovating on our own platform.
Darren Yip: King and end to end a genic AI first approach to running our business. We see this in our 16 X improvement from lead to sale conversion and an over 86% deflection of the soul crushing work people used to do themselves.
Darren Yip: We're incredibly proud that this business is firing on all cylinders.
Darren Yip: Now on what service now will deliver moving forward.
Gino: As Gino will share with you we've raised the guide.
Gino: While it is true there are some knowns out there. This is far from the first macro disruption we have encountered.
Speaker Change: Bishop and Prudence are not mutually exclusive concepts you don't build a defining company by surrendering to uncertainty you'd do it by seeing challenges as opportunities we have zero interest in anything less than outperforming like service now has always done.
Gino: Here's what we know.
Gino: Strong demand for service now as AI platform for business transformation is gaining momentum as evidenced by our healthy pipeline.
Gino: Our AI summit attendance and digital demand signals are extremely positive in two weeks, we will have the biggest knowledge and service now its history with attendance and sponsorship revenue at all time highs. This is all because service now has transcended digital.
Gino: Transformation, we are driving business transformation, yes, Ceos are mindful that the global economy is in a fluid state no. They are not standing still in all industries, we see a renewed focused on cost takeout by rooting out inefficiencies.
Gino: Modernizing outdated tech stacks and restoring and integrated enterprise service now has never been more relevant given our alignment to these precise business priorities and the unmatched speed to value from deployment that our technology.
Gino: <unk> delivers.
Gino: We are built for this moment.
Speaker Change: On the topic of tariffs and trade negotiations the voice of the customer is the only guide that matters I met with the CEO of our U S. Auto manufacturer, who is laser focused on increasing competitiveness in the face of tariffs if they don't adapt their global supplier network fast enough.
The cost will increase by up to $10000 a vehicle.
Speaker Change: Unlike past disruptions in the global markets supply chain AI agents, now reconfigure business rules and real time.
Speaker Change: Businesses reduced dependency on high tariff regions by re prioritizing tier two and three suppliers, while activating the certification of new vendors. This same conversation is happening across all industries as Ceos navigate this terrain with RA.
Speaker Change: Regards to the public sector, let me be clear we had a great Q1, because service now strategy is rooted in government automation and modernization. This is being championed by the Trump administration with local leaders and national governments around the world following suit.
Speaker Change: In Q1 U S public sector grew by over 30% year on year with six new logos, including one in U S. Federal we had 11 federal deals over $1 million up from eight a year ago, including two that were.
Speaker Change: Over $5 million.
Speaker Change: Our third Forum in February was a tremendous success, we had 1700 federal and public sector customers prospects and partners, including 40, new logos by the way that great turnout was on the day of a major northeast Snow storm.
Speaker Change: One agency is using service now AI agents to automate contract reviews, streamline approvals and lower operational costs. We're seeing this transformation play out across government as leaders Act on the administration's call to modernize operations and returns savings to the.
Speaker Change: When people.
Speaker Change: Moving forward, we will continue our productive discussions with senior administration and those officials. The engagement has been very positive as we have a shared ambition to transform government and the way it interacts with citizens. The common thread is that service now is set up for.
Speaker Change: Sustainable growth as the market's leading enterprise AI platform.
Speaker Change: There are many intentional reasons. This is the case the biggest is net new innovation winning companies anticipate disruption by building additional growth engines service now has consistently expanded its addressable market over time from <unk>.
Speaker Change: Two employee experience CRM procurement supply chain and most recently entering the data space with Raptor, DB and workflow data fabric.
Speaker Change: One of the biggest growth areas ever is the enterprise AI market.
Speaker Change: Gartner describes this trend as the start of the intelligence Super cycle, which is expected to run for at least the next 10 years. So we're only in the early days.
Speaker Change: And a lot of companies are hearing AGN take AI pitches right now and what sets service now apart is simple our platform, we integrate across the entire tech stack.
Speaker Change: Harpy CRM HCM, bringing all that data into a single model further from there we elevate into the workflow layer transforming data into actionable insights then we move into the AI layer, not just automation, but true.
Speaker Change: Agents executing real tasks in parallel to drive outcomes.
Speaker Change: When that clicks for customers they get it they want to run their business from our platform.
Speaker Change: That's why now assist performance surged to once again in Q1, that's why the software industrial complex is converging on service now as the AI operating system for the enterprise.
Speaker Change: From this present position of unrivaled strength, we announced the intent to acquire move works when completed move works user centric product combined with service now as complementary AI driven workflow automation will augment employee self service driving.
Speaker Change: <unk> cost savings and increases to overall improve employee productivity.
Speaker Change: This is going to bring together, both requesters, where move works excels and fulfills service now is bread and butter at an unprecedented scale.
Speaker Change: This will also expand service now is enterprise search capabilities, a whole new product category unlocking even more Tam for the company.
Speaker Change: Another growth engine is our CRM expansion.
Speaker Change: The announcement of a deal to acquire logic.
Speaker Change: A company with a modern AI configure price and quote solution, which will accelerate service now CRM momentum in sales and order management.
Speaker Change: Service now CRM and industry workflows already service now is fastest growing business plus logic AI is best in class capabilities for AI powered selling will drive net new levels of performance and sales and commerce for our.
Speaker Change: Customers.
Speaker Change: This will be a natural step forward in service now CRM strategy building on our core strengths of connecting functional teams and powering simple efficient workflows configure price quote sell fulfill service on one fully integrated.
Speaker Change: Texture with native built AI agents to take automation to the next level.
Speaker Change: There's not a day that passes when we don't hear from customers, who are dissatisfied with their status quo for a long time I've been saying no. One has to lose for us to win our customers have now adjusted me they want someone else to lose so they can continue to invest more.
Speaker Change: In service now.
Speaker Change: We could take up the entire call with updates on service now is innovation velocity, here's the bottom line, we have the raw materials to keep warning.
Speaker Change: We also have the right team to win.
Speaker Change: Paul Phipps, our new President of global customer operations cruise promotion was announced earlier today has a distinguished track record as a U S. Military veteran who served in the 82nd airborne as well as C level technology leadership roles for Great Global brands.
Speaker Change: Since joining service now in 2021, he has become one of our most successful executives, leading our largest marquee customer relationships. We most recently elevated him to oversee global sales in Q1 as an on ramp to today's announcement obviously.
Speaker Change: Off to a terrific start.
Speaker Change: I'd also like to warmly congratulate Paul Smith for a consequential five year run at service now I'm proud of how we scaled our global go to market organization and together, we built a world class team and methodically nurtured the right leaders to take us to 2030 and beyond.
Speaker Change: Paul has designed a seamless transition and we will remain as special adviser to me and the team in the months ahead to ensure zero disruption and moving forward. We will stay totally focused on elite level execution, which has shaped us into the differentiated profitable SaaS.
Speaker Change: <unk> company, we are today in.
Speaker Change: In closing the platinum benchmark and enterprise technology is the customer story. That's why we went for the World works with service now because we knew the customer had to be the hero of our brand when I look at our great Q1, I would say so many inspiring examples one is active at glu.
Speaker Change: <unk> technology company that has been at the forefront of innovation across automotive telecommunications industrial aerospace and defense among other sectors active.
Speaker Change: And they are great CEO, Kevin Clark made a bold move in Q1 to expand their use of service now to drive cost takeout and improved productivity.
Speaker Change: With active and wind river. They will also enter into a strategic the strategic partnership with us to build joint AI solutions for the industries, where we have clear permission to win together.
Speaker Change: Another example is our landmark five year collaboration with Vodafone.
Speaker Change: This business will usher in the next era of AI powered service for millions of business users service now in Davao team are partnering to transform CRM for businesses in Europe, and the Middle East.
Speaker Change: When companies are not only transforming how they work with service now, but also how they grow with service now our growth movement couldnt be more exciting Adobe Accenture National Hockey League.
Speaker Change: And touchy energy.
Speaker Change: Some of the countless world class brands, putting AI to work for people with service now wells.
Speaker Change: Wells Fargo launch service now AI with Raptor DB to automate complex workflows and process datasets in real time.
Speaker Change: Whole group Yokohama City, pure storage and pro assurance or on the CRM journey with service now the California Highway patrol in Harris County, Texas are transforming the public sector with service now our customers are on the move when they work the world.
Speaker Change: Works, there's a lot of talk about uncertainty in this industry. The only real certainty exists there are no shortcuts to greatness. It has to be earned through every peak and valley on the journey. That's why service now will always fight with an optimistic spirit to deliver innovation and growth.
Speaker Change: We.
Speaker Change: We work every day to honor the trust that has been invested in US because trust is the ultimate human currency.
Speaker Change: That's been true since Fred Luddy started this company with a big heart and a bowl dream to make the world work better for everyone. We carry that forward and our determination to be the defining enterprise software company of the <unk>.
Bill: <unk> century. Thank you all for your time I look forward to your questions and now I'll hand things over to our president and CFO, Gina Mattson tuna gena over to you. Thank you Bill.
Gina Mattson: Q1 was a quarter of relentless execution in a dynamic market, we beat the high end of our guidance across all topline and profitability metrics once again.
Speaker Change: The team outperform net new ACD goal, delivering a significant CRP of beat versus our guidance.
Speaker Change: Use of AI internally also continues to drive meaningful opex efficiencies strong.
Speaker Change: Strong profitability and free cash flow and outstanding performance across the board.
Speaker Change: Q1 subscription revenues of 3.5.
Speaker Change: <unk> 5 billion growing 20% year over year in constant currency slightly above the high end of our guidance range. These are strong results, especially when factoring in an unexpected shift of some on Prem U S. Federal deals to hosted in the quarter, which impacts the timing of revenue recognition.
Speaker Change: <unk> ended the quarter at approximately $22 1 billion, representing 25, 5% year over year constant currency growth.
Speaker Change: <unk> was $10 three 1 billion, representing 22% year over year constant currency growth of 150 basis point beat versus our guidance.
Speaker Change: From an industry perspective manufacturing delivered a standout performance growing net new ACD of a 100% year over year.
Speaker Change: Health care life Sciences had a great quarter coming over 70% year over year.
Government also saw strength led by the U S federal which exceeded expectations in the quarter.
Speaker Change: Our renewal rate remained best in class, 98% underscoring the consistent value that service now delivers to our customers.
Speaker Change: The strategic importance of the now platform continues to grow with 508 customers now generating over $5 million in ACD.
Speaker Change: Additionally, the number of customers contributing $20 million or more in ACD increased by nearly 40% year over year.
Speaker Change: Due to the continued momentum in large enterprise deals.
Speaker Change: We closed 72 deals greater than $1 million and net new ACD in the quarter among the nine deals over $5 million.
Speaker Change: In Q1 19 of our top 20 deals included five or more products. The growing volume of large deal highlights the better together value of our portfolio.
Speaker Change: Our analysis net new ACD to date continues to trend very well, beating expectations once again.
Speaker Change: As Bill noted the number of plus deals more than quadrupled year over year.
Speaker Change: This included 39 deals of three or more analysis products illustrating how customers are embracing our intelligent platform strategy and deploying AI across multiple workflows, let's.
Speaker Change: What's driving that Ics M. Plus was included in 15 of our top 20 deals.
Speaker Change: Tom plus net new ACD was up nearly 70% quarter over quarter.
Speaker Change: <unk>, plus quadruple net new ACD quarter over quarter.
Speaker Change: Create a plus average deal size has tripled quarter over quarter. The list goes on and on and I would remind you that's off of Q4, our seasonally largest quarter of the year.
Speaker Change: Orca, one of the world's leading mining and infrastructure solutions providers.
Speaker Change: It supports a <unk> increase of 18% to 94% using now assist a massive improvement.
Speaker Change: More case amortization has helped them deliver a one and a half day reduction in average incident resolution time, allowing agents to complete works faster and upscale for higher value tasks.
Speaker Change: And we can relate but now on now we're drinking our own champagne deploying AI agents across our operations.
Speaker Change: For instance system admin use cases that typically took almost 20 minutes to resolve are happening in seconds utilizing analysis.
Speaker Change: It's driving real efficiencies across the company.
Speaker Change: <unk> also continues to gain traction with net new HCV accelerating quarter over quarter, including five deals over $1 million.
Speaker Change: With the Yokohama release customer enthusiasm is only growing driven by new performance analytics capabilities that make it easier than ever to uncover deeper insights with multi level drill down.
Speaker Change: Turning to profitability non-GAAP operating margin was 31% 100 basis points above our guidance driven by Opex efficiencies and the timing of marketing spend our free cash flow margin was 48% up approximately 100 basis points year over year, we ended the quarter with a robust balance sheet.
Speaker Change: Including $10 9 billion in cash and investments.
Speaker Change: In Q1, we bought back approximately 316000 shares as part of our share repurchase program with the primary objective of managing the impact of dilution as of the end of the quarter, we had approximately $3 billion of authorization remaining.
Speaker Change: Together. These results continue to demonstrate our ability to drive a strong balance of world class growth.
Speaker Change: <unk> ability and shareholder value.
Speaker Change: Moving to our outlook over.
Speaker Change: Over the course of Q1, we've seen the U S dollar weakened providing a currency tailwind to our business.
Speaker Change: In Q1, we also beat the high end of our subscription revenue guidance.
Speaker Change: While demand remains strong we've taken a prudent approach to the remainder of 2025 and our only flowing through part of those benefits into our full year outlook. This allows us to factor in potential risks as they pertain to the current geopolitical environment.
Speaker Change: We all know that U S. Federal agencies are navigating changes from tightening budgets and evolving mission demands and they're being asked to move quickly.
Speaker Change: After agencies realigned to this baseline we expect significant growth opportunities driven by operational needs expressed by these customers and addressed by solutions across our portfolio.
Speaker Change: We're deepening our focus on federal customers, helping them boost operational efficiency and enhanced digital government.
Speaker Change: With the launch of our government transformation suite, we're meeting agencies, where they are with purpose built solutions that accelerate digital transformation increased transparency and improve public service delivery.
Speaker Change: We are confident that our updated guidance sets us up for success throughout the year.
Speaker Change: With that in mind for 2025, we are raising our subscription revenues by $5 million at the midpoint to $12 six 4 billion to $12 six 8 billion, representing 18, 5% to 19% year over year growth or 19, 5% on a constant currency basis.
Speaker Change: We continue to expect subscription gross margin of 83, 5% operating margin of 35% free cash flow margin of 32% and GAAP diluted weighted average outstanding shares of $209 million.
Speaker Change: For Q2, we expect subscription revenues between three <unk> billion and $3 <unk> 5 billion, representing 19% to 19 five.
Speaker Change: That year over year growth or 19, 5% on a constant currency basis, we expect CRP yoga of 19, five on both a reported and constant currency basis, we expect an operating margin of 27% and finally, we expect $209 million GAAP diluted weighted average outstanding shares for the quarter.
Speaker Change: In conclusion, the team delivered a strong quarter, despite significant macro cross wins the team stayed focused and performed with elite level execution throughout the quarter, Don I would like to thank all of our employees worldwide for their continued hard work and dedication.
Speaker Change: Looking ahead, we remain as confident as ever in our journey to becoming the defining enterprise software company of the 21st century.
Speaker Change: Enterprises need a platform that empowers real time decision, making more than ever.
Speaker Change: Positive uncertainty customers focused on maximizing ROI and reducing costs, that's exactly where the now platform itself. It helps organizations drive greater efficiency from their existing tools and teams increasing profitability.
Speaker Change: And we're at the forefront of the AI opportunity to drive even greater value for our customers.
Speaker Change: Economists AI agents have the power to unlock game changing productivity, especially when they are seamlessly connected to every part of the business.
Speaker Change: Service now brings together AI data and workflows to drive actions and incredible business outcome as demonstrated by the success, we continue to see and now assist Raptor TV pro and workflow data fabric.
Speaker Change: Finally, our federal team is re imagining how government work gets done introducing new ideas and solutions that help agencies consolidate contract and standardized on the now platform. Our federal business has been exceptional over the past several years and our opportunity remains stronger than ever as we look out to the mid and long term.
Speaker Change: I would like to invite you to hear more about these trends in our service now putting AI to work at our upcoming financial Analyst day on May five which will be webcast on our investor Relations website.
Speaker Change: With that I'll open it up now for Q&A.
Speaker Change: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue and if you'd like to withdraw that question simply press Star. One again, we also ask that you limit yourself to one question here.
Speaker Change: Your first question comes from Keith Weiss with Morgan Stanley. Please go ahead.
Keith Weiss: Excellent. Thank you guys for taking my question and congratulations on a really solid quarter and.
Speaker Change: It really seems to be uncertain environment out there are definitely a lot of uncertainty in the market that we're looking at and we hear a lot of debt from our end customers.
Speaker Change: Maybe for you when you were thinking about your guidance you talked to US a lot about.
Speaker Change: The federal side of the equation still big opportunity, there, maybe taking a little bit of the risk off the table. What are you seeing in your enterprise customers is there any delay in decision, making any elongation in the sales cycle and have you put any of that potential risks into the guidance on a go forward basis. Thank you.
Speaker Change: So thanks, Keith for the question and the kind words as you would imagine we went through a very rigorous analysis of our business and its exposure to areas that could potentially be impacted by the current geopolitical federal is a piece of it and enterprise of course, what I will tell you and hopefully it came through very clearly.
Speaker Change: Our scrap was that demand remains strong the customers. We're talking to are absolutely focused on the future and growth in and cost out and this is where the service now platform excels tremendously what I will tell you is that in our rigorous analysis you can imagine it was very comprehensive data driven.
Speaker Change: In.
Speaker Change: It really incorporated all facets of what we're seeing out there today.
Speaker Change: The result is a guidance range that reflects real world complexity and bakes in a healthy degree of.
Speaker Change: Of conservatism, but at the same time demand that we're seeing remained strong pipelines are scrubbed and coverage ratios look strong.
Speaker Change: And so from that perspective service now plat platforms remains a deflationary tool that customers are leaning into in times of uncertainty and so I think this guide sets us up for success for the remainder of the year as I talked about in my prepared remarks.
Speaker Change: Excellent.
Keith Weiss: Thanks Keith.
Speaker Change: Your next question comes from the line of Kash Rangan with Goldman Sachs.
Keith Weiss: Please go ahead.
Kash Rangan: Hi, Thank you very much and congrats on the quarter as well, but when you look at move works what does that technology allow service now to execute on that you could do with the platform and then if I could follow up.
Keith Weiss: How is the sales playbook changing particularly those attachment.
Keith Weiss: In the end customers are going through different kind of who knows what the tariffs are going to be implemented or not but there are more variables at play with respect to your end customers business outcomes. So how is the service no playbook changing for that thank you so much once again.
Hey, Kash. This is Amit here why don't I take that question about move outs and how do we seeing that play out.
Keith Weiss: If you look at the demand we're seeing in the AI related technologies and how we solve the end to end problem for customers. One our roadmap is very robust and we need more people to keep on delivering against it. So <unk> does bring a lot of good AI expertise of 500 people, we get instead of us hiring one at a time, so thats a great straight away.
Keith Weiss: In addition to allow us to accelerate our road map.
Keith Weiss: Thing move ups and has done a very good job of providing a unified user experience for a lot of employees, including enterprise search. So this gives us the ability to now kind of provide one way for them to interact with with various different requirements users might have.
Keith Weiss: And then allow them to start this interface to enterprise search and then where service now is very very strong as is the understanding that intend in completing the tasks. So we can bring those two things together as well so the acceleration ability to now deliver on a lot of the roadmap. We are already working on combining forces and some of these areas and in providing a broader solution set.
Keith Weiss: To our customers it really allows us to get even much bigger conversation going with our customers already between having AI site.
Speaker Change: And if I could just build on what Ahmed said regarding the.
Speaker Change: The impact or the change in demand for service now related to tariffs as you said Pi.
Speaker Change: Pipeline remains strong and the conversations with Ceos or CIO is continue to center on innovation speed.
Speaker Change: And value creation, Jack one of the biggest companies in the World is a fantastic CEO they have a wonderful.
Speaker Change: Operation They do many transformative things, but he said to me point blank Bill.
Speaker Change: Bill anything you could do to give me speed over and above what I'm capable of doing on my own is more than welcome because the uncertainties that I have to manage required technology to solve my problems I can't do it any other way to which I responded that the team is on the way so the environment out there for what we're doing cash is really good.
Speaker Change: Great to hear that very reassuring. Thanks, so much. Thank you. Thanks Scott.
Mark Murphy: Your next question comes from the line of Mark Murphy with Jpmorgan. Please go ahead.
Mark Murphy: Thank you very much congrats on just superb execution.
Speaker Change: Bill I wanted to ask you how grand or your aspirations in the front office market because you're speaking to.
Speaker Change: Just a huge breadth of capabilities, you mentioned configure price quote sell fulfillment service in one platform and.
Speaker Change: That doesn't sound.
Speaker Change: Completely like you want to be out on the periphery of the CRM market. It sounds a little closer to the to the core or the system of record. So could you speak to that that CRM plan and just whether it is a kind of a wider scope than maybe you have deployed it in other areas.
Speaker Change: Thank you Mark I appreciate the kind words, and we regard the CRM system of record as an important data source.
Speaker Change: That's fine.
Speaker Change: Youre right.
Speaker Change: Ambitions supersede a.
Speaker Change: A database, we believe strongly that our massive capabilities have embolden us to go after CRM in a differentiated way and for one example, when you just talk about sales and order management in that solution.
Speaker Change: We're just.
Speaker Change: Super excited about how we're going to re imagine here.
Speaker Change: If you talk to a high tech manufacturer today and they have to put together a supercomputer the complexity of configuring it pricing and quoting it could be days days.
Speaker Change: So anything that's complicated we're going to do in minutes or seconds.
Mark Murphy: And we are delivering a fully integrated AI powered front office, that's kind of connect sales and service streamline operations and dramatically improve time to revenue Mark the customers are responding they realize whether you are a telco or a manufacturer or a public sector entity.
Speaker Change: The fragmented legacy CRM stacks.
Speaker Change: Without this unified platform approach actually can't really take advantage of AI. It would be super tactical to add an agent to one instance of a disconnected CRM system from all the other processes I just mentioned, so we're going to make CRM faster, we're going to make it smarter.
Speaker Change: And it's going to be purpose built for modern business and I think you also saw that with the logic AI move as well.
Speaker Change: Thank you Martin.
Speaker Change: Sorry, I just wanted to add that the way to look at what we're doing in CRM, we're seeing a lot of our customers. When we speak to them have a lot of legacy systems, and then having a very difficult time, keeping up with the modern ways of doing the workflows and we given our platform, which is very modern AI driven workflow engine. It really plays very well with.
Speaker Change: Any of those kinds of use cases, <unk> sales order management customer service and that's where we are kind of targeting and bringing those processes together in a much more unified modern way and it's more to do with like what can we help our customers with versus what might be other vendors doing out there.
Keith Bachman: Your next question comes from the line of Keith Bachman with Bank of Montreal. Please go ahead.
Speaker Change: Yeah.
Keith Bachman: Yes, many thanks and I'll also offer my congratulations on the quarter.
Speaker Change: I wanted to jump back to public sector, if I could.
Keith Bachman: Could you just clarify when you said it public sector grew 30% was that.
Keith Bachman: The billings revenues and then B more importantly, what is reflected in the guidance for the year I know Bill you would characterize it as being a tremendous longer opportunity certainly agree but how are you thinking about public sector within the context of the guidance you provided <unk>.
Keith Bachman: First is the 30% for instance did you include some deal elongation.
Keith Bachman: <unk> not closing deals, but just any maybe context on the guidance for public sector. Many thanks.
Keith Bachman: Hi, Keith Thank you so much for your comments and the question. So the 30% number that we discussed was net new HCV growth in the quarter.
Keith Bachman: And what I'll say to that is we are extremely happy with our <unk> team's execution in a challenging environment posting another strong quarter, which exceeded our expectations as they did an exceptional job partnering with our customers to get the deal done when you have a platform that really helps drive.
Keith Bachman: Exactly what the government is looking for transparency accountability and efficiency. The now platform is purpose built for them and that team is just continuing to do an exceptional job with partners. What I'll say is that we certainly understand that there is an uncertain environment happening right now with the federal.
Keith Bachman: Government. So it's one of the reasons why we didn't pass through all of the tailwind of the Q1 beat and the FX to the full year guide we are absolutely taking into account some conservatism for the short term potential headwinds, but make no mistake midterm and long term the.
Keith Bachman: <unk> for federal government remains stronger than ever and I talked a lot about it in my prepared remarks that the government transformation suite meeting these government agencies, where they are to help drive exactly what they need to jive to be successful is where we're focused right.
Keith Bachman: Right now so despite that we're certainly taking into account some conservatism and prudence in the guide.
Keith Bachman: I feel very good as I as I have reiterated a couple of times now that the guidance that we've put out.
Keith Bachman: Sets us up for success for the remainder of the year and make no mistake, our our portfolio and our platform is purpose built for this moment.
Keith Bachman: And Keith good morning, Thanks Gina.
Speaker Change: So we have to go ahead to say the one thing I would say is <unk>.
Keith Bachman: As we get to tell our story.
Keith Bachman: At the agency and the GSA level and so forth, it's very clear that we still have $19 59, cobalt systems and government.
Keith Bachman: And we still have very bespoke.
Keith Bachman: Functional systems legacy systems that are in the hundreds of instances per agency.
Keith Bachman: So there is an opportunity for the government and the United States as well as around the world to literally take the software industrial complex and consolidated onto service now.
Keith Bachman: So the opportunity is.
Keith Bachman: And open discussion and when people get to hear this story and they got closer to it they want it because the business cases in the billions.
Speaker Change: Perfect. Thanks, Phil.
Keith Bachman: Thank you thanks.
Keith Bachman: Thanks, Keith Thanks, a lot Keith.
Speaker Change: Your next question comes from the line of Alex Zukin with Wolfe Research. Please go ahead.
Alex Zukin: Hey, guys. Thanks for taking the question I guess maybe.
Speaker Change: Bill for you. It's the first time the tech workflows dipped below 50%.
Speaker Change: In the quarter and quite extraordinary that I think CRM and industry jumped up to.
Speaker Change: 34%, how do you see those two.
Speaker Change: Trending as the year progresses, given the incremental focus on one CRM as part of these deals how much bigger do they get and if I can sneak one in for gena.
Speaker Change: Manufacturing and federal clearly exceeded everyone's expectations.
Speaker Change: Obviously, including ours did you feel as though there was any meaningful pull forward activity or early renewals here to get in front of uncertainty from certain customers that may have amplified that CRP O strength.
Alex Zukin: Hey, Alex Thanks, so much for the question I'll start and then and then Bill will will jump in.
Alex Zukin: From a workflow perspective, you know net new HCV mix fluctuates in any given quarter due to lumpy timing. So I wouldn't read too much into quarterly mix shift all of our workloads continue to work well, but I will say CRM workflows continue to show strong relative performance in Q1, particularly in the.
Alex Zukin: Mia in Japan, and in the U S, where net new ACB was extremely strong.
Alex Zukin: You'll hear us talking about <unk>.
Alex Zukin: Our customers pulling us even further into customer because our platform can really help them not only solve some of the messy middle and back office issues, but really help jive immense productivity and efficiency in the front office as well and so we're excited to see that CRM and industry workflows.
Alex Zukin: <unk> to resonate very strongly with our with our customers and and absolutely expect to see that progress as the year unfolds, given the incremental focus that that that that.
Alex Zukin: We are putting in on it.
Alex Zukin: With respect to your second question on manufacturing and federal exceeding everyone's and any expectations. We did not see any material pull forward here to get in front of the certainty at all and so I feel very strongly that the beat was the result of incredible execution by our teams and at the end just a platform.
Alex Zukin: That is still resonate with customer and the customer value that we continue to drive so no meaningful pull forward that all in in Q1 absolutely.
Speaker Change: To add to Gina's commentary, Alex I would just share a couple of things that you might find interesting.
Speaker Change: Again, when you have a system that goes to every corner of the enterprise like ours does.
As a pretty privileged position because on any one given quarter, you'll look at one area and it fluctuates with another but in CRM in particular.
Speaker Change: We're strong really really strong in fact.
Speaker Change: In Q1 in EMEA and Japan as an example, we're growing net new HCV over 50% a year.
Speaker Change: So we're really excited about that.
Speaker Change: There's also a new development in core business workflows, where you look at.
Speaker Change: HR service delivery as an example, growing at 40% or finance and supply chain growing at 60% year on year the demand for digital transformation.
Speaker Change: To really modernize these back office operations is incredible, but I think our CEO asking me a very simple question makes it very clear to me and perhaps for you.
Speaker Change: And she estimated question like what makes you a platform different.
Speaker Change: And I put it like this.
Speaker Change: No one says I'm going to use my ERP to cut across all systems and drive productivity and that same goes for our CRM standalone or an HCM stand alone, but they do say that about service now.
Speaker Change: Thats why were the operating system for the enterprise and we become the AI platform for business transformation, because we do all of those things.
Speaker Change: In a siloed picture, but we put it all together in an enterprise grade AI workflow. So now you're taking advantage of AI you were taking advantage of the data and you're taking advantage of integrating processes at mass scale to get big business outcomes and it just so happens that.
Speaker Change: Crem is one that we intend to be the leader in.
Speaker Change: That's amazing can't wait to see you guys acknowledged thanks, a lot Alex Alex.
Speaker Change: Your next question comes from the line of Tyler Radke with Citi. Please go ahead.
Speaker Change: Okay.
Speaker Change: Hi, This is Kelly on for Tyler Radke. Thanks, so much for taking the question.
Speaker Change: Wanted to echo the congratulations on the quarter and great to hear that you all outperformed your analysis targets I'm curious about how you think about the glide path for pro plus adoption through this year.
Speaker Change: Are you anticipating greater adoption in the back half Kevin Hake, our renewal quarters are more similar trends through the year, and then where we're at as pro plus rank in terms of growth initiatives to get you to that 2020, plus CAGR through 2006.
Speaker Change: Alright.
Speaker Change: This is amit here so in terms of our growth in <unk> Pro plus adoption. This year I mean, if you see all the numbers in general that has been really accelerated over the last few quarters right and we've been seeing lot of interest from our customers to use now is to really improve efficiency as well as really improve how they interact with various different systems and <unk>.
Speaker Change: That is one unified way for.
Speaker Change: Automating their business processes as well so the adoption broader already is happening and we have a lot of customers who are already using novices and approved plus part of it where we'll be adding a gen take which is released we did in the Yokohama, which was the March release has the ability to do AI agents with a pre packaged in there we have an orchestration engine and a studio.
Speaker Change: Which allows you to not accelerate the pro plus adoption because of how quickly can you automate those back end processes as well so as part of this year you should expect that to continue to grow.
Speaker Change: And if you look at there'll be the consumption has been going and we'll share more at financial analyst day, the numbers and the trend around it but look very very positive to us.
Speaker Change: And I would just add there kylie.
Speaker Change: When we talk about our 20% plus CAGR to 2026, certainly now assistant AI is a is a strong lever.
Speaker Change: To get there in and is one of our key growth initiatives that make no mistake. It is not the only one right.
Speaker Change: Our existing core workflows continue to have a lot a lot of runway and will drive significant growth through 2026, we just talked a lot about CRM finance and supply chain are technology workflows continued to do well create ourselves now assist is certainly one of our key growth initiatives.
Speaker Change: <unk> as the CRM as his creative workflows as is security and risk and so it's across the board and we're super excited that the momentum that we see in Q1.
Speaker Change: We expect to continue throughout the year.
Speaker Change: Thanks, so much.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Karl Keirstead. Please go ahead.
Karl Keirstead: Thank you Gina you've been I think refreshingly candid with all of us about the shape of the short term backlog growth throughout the year, calling for a trough in <unk> and then an acceleration in <unk> I'm just curious whether all of this macro change and uncertainty in the last couple of months would have.
Speaker Change: <unk> your view of that.
Karl Keirstead: Bookings CRP O seasonality. Thank you.
Speaker Change: Thanks Carl.
Speaker Change: It will be the same shape, so that the renewals backlog and how that flows through C. R. P. O has not shifted to despite the macro so youll see a very similar shape.
Speaker Change: From what we had originally always talks.
Speaker Change: Talked about the macro doesn't change that at all.
Speaker Change: Good to hear thank you. Thanks.
Carl Keirstead: Thanks Carl.
Speaker Change: Your next question comes from the line of Michael <unk> with Wells Fargo. Please go ahead.
Michael: Hey, Thanks, very much I appreciate you taking the question and nice start to the year.
Michael: Janet you also mentioned the AI driving meaningful Opex efficiencies I'm, just curious if you could speak to those a bit more and whether that gives you more confidence in the ability to continue to expand margin and uncertain environment, maybe just help frame those tradeoffs for us a bit more given they're still fluid backdrop. Thank you yeah, yeah, Michael Thanks for the question.
Michael: Absolutely AI is driving meaningful opex efficiencies.
Michael: I am Super proud of the fact that we continue to have over the past several years continue to increase our margins by about 100 bps, a year and certainly as we think about AI driving even more.
Michael: Efficiencies opex is going to be.
Michael: An area, where we continue to see some benefit from them.
Michael: We're also if you note I talked about the fact that we're keeping our guide for operating margin, even with the expectations of some M&A closing in the back half of the year.
Michael: <unk> comes with incremental Opex. So not only are we able to hold the margin guide we will continue to see opex efficiencies in and.
Michael: Efficiencies were seeing today.
Michael: Just a small piece of what we're expecting to see over the long term and so yes, I absolutely believe that these AI efficiencies are going to help us continue to accrete margins over the mid and long term.
Michael: Yeah.
Speaker Change: Thanks very much.
Michael: Thank you.
Speaker Change: Your next question comes from the line of Samad Samana with Jefferies. Please go ahead.
Samad Samana: Hi, good evening, Thanks for taking my questions and congrats to the whole organization on the on the quarter, maybe just a bit.
Samad Samana: Bill or Amit I think either for either one of you just as I think about.
Samad Samana: Move works, it's a relatively large acquisition I know, it's still small versus how big service now is and then the logic acquisition is the is the framework still going to be as you do larger deals to still rewriting them into the code base or is there any change in maybe the not just the size or scale of M&A, but the approach of how it will ultimately be income.
Samad Samana: <unk> into service now.
Samad Samana: Yes.
Samad Samana: The way, we're thinking about this including move us and others.
Samad Samana: Really integration place right. So we continue having one platform one data model one architecture going forward as well, but we also want to be able to bring in a lot of other technologies around it. So that we can integrate and provide a unified experience going forward as well.
Samad Samana: They move US does integrate with so it is now 70% of their customers use service now with Woolworths. So this is going to continue the same way we will of course optimize fee areas wherever they can accelerate their development to areas, where they were working on using so there is no platform, but we're not trying to rewrite move works to integrate and adopted for our customers. Similarly logic.
Samad Samana: <unk> already has a lot of integration built in with the service now so we're able to now take that straight to the customers without having to do any kind of realize there will be always as we continue roadmap evolution there'll be integration happening and re architecture happening just like you would do with any software project, but there is no plan to rewrite any of this stuff.
Samad Samana: Great appreciate it thank you.
Samad Samana: Thank you.
Speaker Change: Your next question comes from the line of Raimo <unk> with Barclays. Please go ahead.
Speaker Change: Thank you and congrats from me as well.
Speaker Change: Going back to that mix effect question on revenues.
Speaker Change: Revenues going on where revenue is coming from.
Speaker Change: Also like an argument that with Gen <unk> and more easier or I use cases straightaway in CRM and the business workflows that you've kind of mix will change from that perspective, and where do you could you see that going thank you.
Speaker Change: Okay.
Speaker Change: I'll start.
Speaker Change: So we have always talked about the fact that over time, we expect the mix of our.
Speaker Change: Customer now CRM workflows as well as our HR to start to grow as a percent because as the platform becomes much more ubiquitous across the enterprise those areas are right for disruption and track transformation. If your question around AI, So let's be.
Speaker Change: Very clear and I talked about a lot of stats with now assessed.
Speaker Change: The board, we're seeing AI really help transform and drive efficiencies whether it's.
Speaker Change: Creator customers CRM and so what I would expect is that I don't expect one piece to have announced outweighed effect I expect AI to really help drive and Trent and transform across the enterprise and so will that help CRM more I would just say that the addressable market.
Speaker Change: For CRM is larger so it could have an out weighted.
Prospective there, but we've talked for years now about the expectation that CRM and HR would start to grow as a percentage of our total the core it's still strong don't get me wrong and doing very well, but as these adjacencies continue to drive traction in our customer base, you'll continue to see them.
Speaker Change: A larger percent of the total.
Speaker Change: Gina.
The way we've been thinking about it is part of our platform right. So the salaries now platform comes with the <unk> and it kind of lifts every part of our workflow with the AI. So it will drive revenue for all of our Brooklyn, Zeno is expanding but by itself. We are also seeing a lot of interest to start doing new things with it right. So even if our workflow they're growing we also see a lot of interest in <unk>.
Speaker Change: Or the studio and the jet platform by itself because we are solving complex problems. Many of the customers can do it themselves and be able to provide them a lot of very good technology, we should get them growing very quickly as well. So we're seeing a lot of other areas of interest in there that's why they're coming and talking to us beyond just the workflow parts of it.
Nathan: Yes, Nathan Thank you.
Speaker Change: Thanks Anna.
Speaker Change: Your next question comes from the line of Patrick Walraven with citizens JMP. Please go ahead.
Speaker Change: Oh, great. Thank you very much and congratulations on the really remarkable results.
Speaker Change: Investors you know Theres a lot of debate about how AI.
Speaker Change: It might be disintermediation.
Speaker Change: Software as a service.
Speaker Change: You were there for the last shifts from on Prem to the cloud and that shift created service now and Salesforce and Workday. How do you look at the shift how do you think it's similar and how do you think it might be different.
Pat: Pat It's a really good question I think what makes it different and let's go back to the prior era.
Speaker Change: If you look at those companies that you mentioned you haven't mentioned oil companies that were invented in the 20th century.
Speaker Change: And then the 20th century every company Org chart with structured by Department.
Speaker Change: So gena.
Speaker Change: As a financial system.
Speaker Change: Jackie has an HR system, Paul has a sales system and all of them.
Speaker Change: And these companies that are global and large in scale at multiple instances on different release levels and some are on premise and some are in the cloud.
Speaker Change: There is only one company in the world today.
Speaker Change: On an end to end basis can integrate with that chaos.
Speaker Change: And move that chaos into one simple platform.
Speaker Change: That can connect to all the data sources, both structured and unstructured and those legacy departmental systems as.
Speaker Change: As well as the Hyperscale and the different data sources that could come from data warehouse providers.
Speaker Change: To lift up.
Speaker Change: And two and.
Speaker Change: And automation layer, which we call workflow automation and in that layer. Once that data is there and that process is slowing with the work itself across all of those domains.
Speaker Change: You can start to see pretty quickly.
Speaker Change: That AI in the service now system.
Speaker Change: I'll actually consolidate the past.
Speaker Change: And you will not see companies tolerate any longer multiple instances on multiple release levels, whereas in the past they might have tolerated. It now they're getting the picture with AI that they don't have to.
Speaker Change: A serious tailwind in front of us as the major market benefactor of that because we integrate with everybody but at the same time everything can be consolidated onto the service now platform.
Speaker Change: So it's really the customers choice, but more and more I tell them no. One has to lose for us to win and they tell me Bill we want some losers now we want the losers out so instead of having 100 financial systems, maybe we should stop at 50.
Speaker Change: Or one like the service now and that's why we get really interesting and same thing with CRM.
Speaker Change: We're going to have major company was 175 different instances of a CRM system and he's like what should I do they want to sell Mann agent I said do you think an agent and one of the 175 different instances is going to improve your productivity.
Speaker Change: Not I don't think I'm getting any productivity out of the other 175, so the tougher questions and now being asked and service now is there and ready to execute and our AI work by our Great Engineers are led by Ahmed and the team has been truly world class and we have references we can.
Speaker Change: Get them live in a hurry and they get to value faster with service now than anyone in the market. So that's our big calling card.
Speaker Change: Alright, that's awesome. Thank you for that perspective.
Pat: Well. Thank you very much for the question Pat.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Kirk <unk> with Evercore ISI. Please go ahead.
I'll Echo the congrats on the quarter I was wondering can you just talk a little bit about the customer feedback on the agenda.
Speaker Change: Technologies that you released under Yokohama, thus far and specifically just on the consumption pricing aspect of that I was just kind of curious what kind of I realize it's early but I was curious about the feedback and how customers are thinking about sort of the.
Speaker Change: The pricing for value aspects of that thanks Chuck.
Speaker Change: Sure Kirk.
Speaker Change: I'll give you and we really see Oklahoma early March and we have quite a few customers already adopting our agenda platform I'll give you. The example, Adobe for example has been using our agenda platform to bring together a lot of the various processes and use our AI agents with an orchestrator to automate the whole lead management.
Speaker Change: The backend systems using our platform today and is very similar to other customers. We are speaking to in every industry, where they're taking a <unk> as a platform to take all the different workflows and really improve the efficiency and automate that are using using orchestration engine today as well as they are now doing agent the agent integration as well.
Speaker Change: Well, where we have a lot of other third party vendors, we are integrated and they get the value of our <unk>.
Speaker Change: Work straight away in terms of consumption of the agenda workflows, usually require a huge amount of calls into the backend and the way we sell that today's in hybrid kind of pricing structure, you buy a subscription to our now assist.
Speaker Change: Our youth usage and you bought it down based on the number of calls you make so it's still a subscription kind of.
Speaker Change: Subscription purchase, but its accounted for as directly by the customers have the chance to use it and then based on that the decreasing there.
Speaker Change: Capacity and if they run out of it and they can buy another pack again as a subscription. So it's a hybrid model, where we are kind of helping customers get predictability, while they can now loan and they can grow based on their use cases as well so it's going very well so far the feedback has been very very positive people like the flexibility and the predictability and the platform is so powerful.
Speaker Change: Today, we have deployed the only vendor who has the full blown orchestration engine with package AI agents as well as the tool to build new agents as well and integration with lot of third party products they might be using so it's really the idea that you are not just doing piecemeal, but you're doing end to end and that's why the differentiation is coming through and I use cases growing.
Speaker Change: Considerably of using it internally inside service now I'm using it with one hundreds of customers that has been very positive you'll hear more about those use cases of course, the knowledge and financial analyst day, and we'll give you an idea of all the amount of the adoption and consumption is driving as well.
Speaker Change: Alright, Thanks, Amit before so you're all in Vegas.
Speaker Change: Well, thank you as well.
Speaker Change: Your next question comes from the line of Rob Owens with Piper Sandler. Please go ahead.
Rob Owens: Great I appreciate you taking my questions just curious to get a little bit of color.
Rob Owens: Around impact guided adoption and what that attach rate looks like in some of the various arrows you have in your quiver to speed time to value, especially in this environment. Thanks.
Rob Owens: Hey, Rob So yes, the impact has been a very important part of our offering.
Rob Owens: We provide very good digital tools for our customers to one understand how the best practices are what's the best way to kind of get the implementation done in adoption and we partner very closely with a lot of system integrators, and others, where the customers might be using to make that adoption happened very very fast.
Rob Owens: Over the last year or so when we've been delivering impact can be seeing now customers doing lot of self service work using our digital tools already we keep on adding more and more content to it which is helping them with the support as well as use cases growth and then the people. We have an impact team are available to them for any kind of expert advice.
Rob Owens: Duke again accelerated the value they get out of our platform. So the time to value has been accelerated.
Rob Owens: It continues to get better and better in terms of capabilities and be taking a lot of the learnings from the various use cases and adding to our digital tools as well.
Rob Owens: And I would just add that attach rates are getting better as well so really.
Rob Owens: Really pleased with the progress.
Rob Owens: Okay.
Speaker Change: Your next question comes from the line of Brian Schwartz with Oppenheimer. Please go ahead.
Brian Schwartz: Yeah. Thank you for taking my question and congratulations on the quarter Bill you've seen a lot of macro disruptions over the course of your career and you also sold a lot of different software products similar to the breadth of service now as portfolio. When you talk to executives, how do you think focus and priorities within.
Brian Schwartz: The different software markets is changing versus past macro disruptions.
Brian Schwartz: A really good question, Brian I think the good news about this disruption is it's incredibly important to the CEO.
Brian Schwartz: And so the highest level of contact is really the most attractive to service now because the CEO uniquely sees the whole company.
Brian Schwartz: And uniquely sets the strategy for the whole company.
Brian Schwartz: And the CEO now is making determinations around platforms that matter.
Brian Schwartz: That doesn't mean, there won't be a lot of platforms that still exist in enterprises, especially large ones that are complex, but it does mean that the CEO once business transformation.
Brian Schwartz: They know that they have to have a two sided coin that they are managing on one side they have to be ready for a revenue reduction if that's what the market provides to them. So they are thinking about opex down margin profile adjusted assume that they could be operating in a world may be.
Brian Schwartz: With less revenue and they want to know that they can still do well in that environment at the same time as Amin and Janet has said the platform is so unique that they also at the same time no. They have to grow and they have to look at business model innovation and new ways of doing things because.
Brian Schwartz: A matter of what the short term deals their way they have to really get these companies on AI because it's the only <unk> 20 trillion dollar market theyre going to run into in the next five years.
Brian Schwartz: <unk>.
Brian Schwartz: I think that the level of contact to the CEO has absolutely evolved where platforms that matter.
Brian Schwartz: And we're one of them has really resonated with me and also the other thing about this is you have to be a company. That's simple you can't bring them complexity, you can bring them elongated cycles of deployment. They gotta get there quick on the value realization.
Brian Schwartz: And at the same time Youll Lego set has to always fit together because they've seen what bad digital transformation looks like 85% of the projects and most of these enterprises have been delivered a positive ROI.
Brian Schwartz: And so all the signals of the past.
Brian Schwartz: Disruptions have really come together in an AI moment, and you're either an AI leader or you're going to lose.
Brad Sills: We have time for one more question and that question comes from the line of Brad Sills with Bank of America Securities. Please go ahead.
Brad Sills: Oh, great. Thank you so much for squeezing me in here I wanted to ask a question around the deployment cycle for agents, you're obviously seeing the benefit from <unk>.
Brad Sills: Assist agents internally with some of the metrics you described very impressive.
What does it take for you to get there.
A question of getting the data.
Brad Sills: Place, where it's all standardized and its data management and data integration is really where a lot of the effort is is it more of the orchestration layer just give us a sense for the timeline for getting say a single agent out you experienced internally and then once that's done is it a question of just rinse and repeat and you start to really start to see some of the scale of getting mortgages.
Brad Sills: It's out.
Brad Sills: Yes, sure Brad so.
Speaker Change: What we've seen already you can get an AI agent up and running in less than a few weeks.
Speaker Change: We have done that internally the processes you find in services, you kind to automate our AI agents, which we deliver out of the box today, which are very specific to a particular use case it can be ready in a few weeks because it's pre trained it is it understands the use case it can be ready because you don't have to redeploy anything it is part of the same platform. So can you.
Speaker Change: Using service now platform EIA agents once you configure them, they're out and running and you can get reporting as well as milk integration details and you are getting value out of it instantly, but we've seen customers who want to do multiple of these things when they are trying to build an orchestration engine.
Speaker Change: Great connectivity between various different systems that might take a few months because you are doing things with another vendor in many cases, so agent. The agent communication is what we have now done with Google for example, and we're doing that with AWS, Microsoft and others that might require multiple configuration between different products, which might not be completely in our control, but we are seeing that also going out.
Speaker Change: In less than few months as well so internally we have now many agents running across every department, we are doing things to the customer service and finance and legal in it in HR and they all agent driven agenda use cases, now and Thats why you heard from gena share some of the stats around that we're seeing a great amount of value generation as well.
Speaker Change: Automation and improvements inside the company using this very short quick cycles around it.
Speaker Change: And among the improvement among the improvements Brad you might find interesting.
Speaker Change: Lead the sale conversion as a <unk> improvement the deflection rate on the soul crushing work that the people didn't want to do here in the first place is 86% now and we actually have all of our leaders at the top of the house building, a gentle AI agents into their org charts, and so you're already seeing the shared.
Speaker Change: <unk> power of the agents and the people adopting them I had a really terrific conversation yesterday with a sales professional who thank me for her AI agent and her her use case was when I make a sale I need to know what I make on the sale and what my bonus is likely to.
Speaker Change: Based on my over achievement and that type of a thing in every company out there today is an excel spreadsheet nightmare and it usually takes four days with other CRM systems. She got her answer and four seconds. So what you see is people, saying like this is the only way forward and Thats the way.
Speaker Change: I see the world, it's the only way forward, but as Amit articulated perfectly.
Speaker Change: He talked about great companies, like Microsoft and AWS, and Google and service now is in that conversation and Nvidia I mean these are the kinds of companies that are teaming up with platforms that matter to change the world and it's happening.
Speaker Change: Super exciting thanks, Bill Thanks, Amit. Thank you very much thanks, Brad.
Speaker Change: Ladies and gentlemen that does conclude today's conference call. Thank you for your participation and you may now disconnect.
Speaker Change: Please wait the conference will begin shortly.
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