Q3 2025 ServiceNow Inc Earnings Call

Speaker #2: Thank you for standing by . My name is Kate , and I will be your conference operator today . At this time , I would like to welcome everyone to the Q3 2025 ServiceNow Earnings Conference call .

Darren Yip: Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q3 2025 ServiceNow earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press Star, followed by the number one on your telephone keypad. If you would like to read your question, press Star 1 again. Thank you. I would now like to turn the call over to Darren Yip, Senior Vice President of Investor Relations and Market Insights. Please go ahead.

Speaker #2: All lines have been placed on mute to prevent any background noise . After the speakers remarks , there will be a and answer session .

Speaker #2: If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad.

Speaker #2: If you would like to withdraw your question , press star one again . Thank you . I would now like to turn the call over to Darren Yip Senior Vice President of Investor Relations and Market Insights .

Speaker #2: Please go ahead

Speaker #3: Thank you . Good afternoon , and thank you for joining ServiceNow third quarter 2020 Earnings Conference Call . Joining me are Bill McDermott , our chairman and Chief Executive Officer , Gina Mastantuono .

[Company Representative]: Thank you. Good afternoon, and thank you for joining ServiceNow's third quarter 2025 earnings conference call. Joining me are Bill McDermott, our Chairman and Chief Executive Officer, Gina Mastantuono, our President and Chief Financial Officer, and Amit Zavery, President, Chief Product Officer, and Chief Operating Officer. During today's call, we will review our third quarter 2025 results and discuss our guidance for the fourth quarter and full year 2025. 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 forward-looking statements that involve risks, uncertainties, and assumptions. We undertake no duty or obligation to update such statements as a result of new information or future events.

Speaker #3: Our President and Chief Financial Officer . And Amit President and Chief Product Officer and chief Operating officer . During today's call , we will review our third quarter 2025 results and discuss our guidance for the fourth quarter and full year 2025 .

Speaker #3: 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 forward looking statements that involve risks , uncertainties and assumptions .

Speaker #3: We undertake no duty or obligation to update such statements as a result of new information or future events . Please refer to today's earnings press release and our SEC filings , including our most recent 10-q and 10-K , for factors that may cause actual results to differ materially from our forward looking statements .

[Company Representative]: Please refer to today's earnings press release and our SEC filings, including our most recent 10-Q and 10-K, for factors that may cause actual results to differ materially from our forward-looking statements. 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. Unless otherwise noted, all financial measures and related growth rates we discuss today are non-GAAP except for revenues, remaining performance obligations, our RPO, current RPO, and cash and investments. To see the reconciliation between these non-GAAP and GAAP measures, please refer to today's earnings press release and investor presentation, which are both posted on our website at investors.servicenow.com. A replay of today's call will also be posted on our website. With that, I'll turn the call over to Bill.

Speaker #3: We'd also like to note that unless otherwise noted, all financial measures and related growth rates we discussed today are non-GAAP, except for revenues. Remaining performance obligations, or RPO.

Speaker #3: Current RPO and cash and investments to see the reconciliation between these non-GAAP and GAAP measures , please refer to today's earnings press release and investor presentation , which are posted on our website at investors ServiceNow, Inc. .

Speaker #3: A replay of today's call will also be posted on our website . With that , I'll turn the call over to Bill .

Speaker #4: Thank you . Darren , and welcome everyone to today's call . ServiceNow delivered another set of stunning quarterly results that absolutely shattered expectations .

Bill McDermott: Thank you, Darren, and welcome everyone to today's call. ServiceNow delivered another set of stunning quarterly results that absolutely shattered expectations. Subscription revenue growth was 20.5% year over year in constant currency, one full point above the high end of guidance. CRPO growth was 20.5% year over year in constant currency, 2.5 points above our guidance. Operating margin was 33.5%, three full points above our guidance. Free cash flow margin was 17.5%. We had 103 deals, greater than $1 million in net new ACV, six of which were greater than $10 million in net new ACV. Technology workflows had 50 deals over $1 million, including six over $5 million. ITSM, ITOM, and ITAM were all in 15 of our top 20 deals with double-digit deals over $1 million. Together, security and risk combined for 12 of the top 20 deals with three deals over $1 million.

Speaker #4: Subscription revenue growth was 20.5% year over year , in constant currency . One full point the high end of guidance . Crpo growth was 20.5% year over year in constant currency , 2.5 points above our guidance .

Speaker #4: above item were all in 15 of our top 20 deals , with double digit deals over a million together , security and risk combined for 12 of the top 20 deals with three deals over a million that risk and security business combined is now a billion ACV business .

Speaker #4: Operating margin was 33.5% . Three full points above our guidance . Free cash flow margin was 17.5% . We had 103 deals greater than a million in net new ACV , six of which were greater than 10 million in net new ACV technology workflows had 50 deals over a million , including six over 5 million ITSM item .

Bill McDermott: That risk and security business combined is now a $1 billion ACV business, our fifth business to cross the billion-dollar threshold. CRM and industry workflows were in 14 of the top 20 with 15 deals over $1 million. Core business workflows were in 13 of the top 20 with 14 deals over $1 million. Here is the headline. ServiceNow is one of the most durable, consistent, over-performing growth companies in the enterprise software industry. When you think about brands shaping the future, you have GPU leaders like NVIDIA, hyperscalers, foundation models, and one company integrating all together, the AI workflow company, ServiceNow. It used to be the Mag7. Now there is a new category. I'm calling this the Super 8. That's the Mag7 plus ServiceNow. That's right, the Super 8. As you'll hear from Gina, our confidence in the future has never been stronger.

Speaker #4: Our fifth business to cross the billion dollar threshold CRM and industry workflows were in 14 of the top 20 , with 15 deals over a million and core business workflows were in 13 of the top 20 , with 14 deals over a million .

Speaker #4: Here's the headline ServiceNow is one of the most , consistent overperforming growth companies in the enterprise software industry . When you think about brands shaping the future , you have GPU leaders like Nvidia hyperscalers , Foundation models , and one company integrating all together .

Speaker #4: The AI workflow company ServiceNow . It used to be the mag seven . Now there's a new category . I'm calling this the super eight .

Speaker #4: That's the mag seven plus ServiceNow . That's right . The super eight . As you'll hear from Gina , our confidence in the future has never been stronger .

Speaker #4: So we're raising guidance again . Heading into the fourth quarter . This team knows how to focus , innovate for our customers , execute at global scale .

Bill McDermott: We are raising guidance, again, heading into the fourth quarter. This team knows how to focus, innovate for our customers, execute at global scale, and most importantly, how to win. We've only scratched the surface of the market opportunity for this platform. This new enterprise AI neighborhood is a dynamic place to live. Our Now Assist, net new ACV to date, beat expectations once again in Q3. Our AI products are on pace to exceed $0.5 billion in ACV this year. Excellent progress toward beating our $1 billion target next year, and we're totally focused on surpassing it. We saw 12 Now Assist deals over $1 million, including one over $10 million. Our AI Control Tower deal volume more than quadrupled quarter over quarter in Q3. Just since the end of May, AI agent assist consumption has increased over 55x.

Speaker #4: And most importantly , how to win . We've only scratched the surface of the market opportunity for this platform . This new enterprise AI neighborhood is a dynamic place to live .

Speaker #4: Our now assist .NET new ACV to date beat expectations once again in Q3. Our AI products are on pace to exceed half a billion in ACV this year.

Speaker #4: Excellent progress toward beating our 1 billion target next year , and we're totally focused on surpassing it . We saw 12 now assist deals over a million , including one over 10 million .

Speaker #4: Our AI control tower deal volume , more than quadrupled quarter over quarter in Q3 . And just since the end of May , AI agent consumption has increased over 55 x .

Speaker #4: That's the foundation of a beautiful hockey stick that's coming to you for our customers , it's all about AI business transformation . IDC forecasts AI .

Bill McDermott: That's the foundation of a beautiful hockey stick that's coming to you. For our customers, it's all about AI business transformation. IDC forecasts AI IT spending will be $1.3 trillion through 2029. Here is why ServiceNow is winning. Our platform sits at the core of the enterprise technology estate. ServiceNow is championed by the very leaders who are designing the AI reference architectures of the future. Beginning with autonomous IT, we're helping those leaders solve enterprise-grade AI challenges. Governance is one of those mission-critical areas. Machines simply can't govern themselves. AI is like any other enterprise asset. It needs to be cataloged, tracked, supervised, and secured. ServiceNow's configuration management leadership gives us and our customers a clean, single pane of glass to govern all artificial intelligence. How is it working? Where is it adding value? Where is it hallucinating? This is AI-enabled orchestration of all the other AI.

Speaker #4: Spending will be $1.3 trillion through 2029, and here's why ServiceNow is winning: our platform sits at the core of the enterprise technology estate.

Speaker #4: ServiceNow is championed by the very leaders who are designing the AI reference architectures of the future , beginning with autonomous . IT , we're helping those leaders solve enterprise grade AI challenges .

Speaker #4: Governance is one of those mission critical areas . Machines simply can't govern themselves . AI is like any other enterprise asset . It needs to be cataloged , tracked , supervised , and secured .

Speaker #4: ServiceNow is configuration management leadership gives us and our customers a clean single pane of glass to govern all artificial intelligence . How is it working where it's adding value and where it's hallucinating ?

Speaker #4: This is AI-enabled orchestration of all the other AIs. Every single enterprise and every industry wants this real-time AI control tower.

Bill McDermott: Every single enterprise in every industry wants this real-time AI Control Tower. Another challenge is getting beyond the hype to fast business value. The root cause of nearly every failed deployment of enterprise technology in history is a lack of integration. Even the ones that worked took years to get to positive ROI. To change this paradigm, AI has to run east to west across the enterprise and north to south, up and down the tech stack. ServiceNow's AI platform can do this like no other. For every process that transcends departments and systems, ServiceNow's workflow engine is creating the roadmap that AI agents follow to get work done. Without cross-enterprise workflows, so-called agentic AI is just another one-dimensional chatbot. Enterprises gravitate to ServiceNow because we have a system of intelligence and a system of action on one integrated AI platform.

Speaker #4: Another challenge is getting beyond the hype to fast business value . The root cause of nearly every failed deployment of enterprise technology and history is a lack of integration , and even the ones that worked took years to get to positive ROI .

Speaker #4: To change this paradigm , AI has to run east to west across the enterprise and north to south , up and down the tech stack .

Speaker #4: ServiceNow's AI platform can do this like no other. For every process that transcends departments and systems, the ServiceNow Workflow Engine is creating the roadmap that AI agents follow to get work done without cross workflows.

Speaker #4: So Agentic AI is just another one dimensional chatbot . Enterprises gravitate to ServiceNow because we have a system of intelligence and a system of action on one integrated AI platform .

Speaker #4: Legacy systems of record were enterprises want a modern alternative ? Are being composed as AI native workflows on the ServiceNow AI platform , we all have personal experiences with AI apps on our phones .

Bill McDermott: Legacy systems of record, where enterprises want a modern alternative, are being composed as AI-native workflows on the ServiceNow AI platform. We all have personal experiences with AI apps on our phones. Enterprise AI is different. It's much harder. To put AI to work for people takes more than a language model or a rebranded wrapper on legacy tech. It takes domain expertise, which ServiceNow has curated over two decades and trillions of automated workflows. It also takes empathy, as every customer's AI journey is unique. You don't build trust in this industry by forcing customers to conform. You build it by meeting them where they are. That's where the operative word in ServiceNow's strategy is any. Any cloud, any model, any data source, any agent. It's why we were so early partnering with all three hyperscalers, the foundation model companies, and the systems of record.

Speaker #4: Enterprise AI is different . It's much harder to put AI to work for people . Takes more than a language model or a rebranded rapper .

Speaker #4: On legacy tech takes domain expertise , which ServiceNow has curated over two decades and trillions of automated workflows . It also takes empathy , as every customer's AI journey is unique .

Speaker #4: You don't build trust in this industry by forcing customers conform . You build it by meeting them where they are . That's where the operative word in ServiceNow strategy .

Speaker #4: Any any cloud , any model , any data source , any agent . It's why we were so early partnering with all three hyperscalers .

Speaker #4: The foundation model companies and the systems of . We neutralize complexity for our customers , giving them a clear roadmap to cycle down old systems over time .

Bill McDermott: We neutralize complexity for our customers, giving them a clear roadmap to cycle down old systems over time as their AI readiness matures. Our customers recognize the time is now to shape their future. AI is the new UI. The ServiceNow AI experience breaks the cycle of siloed systems and bolt-on agents with a unified AI interface for voice, images, data, and text. Figma and ServiceNow are partnering to bridge the gap between design intent and enterprise execution. Through an MCP integration, teams can seamlessly transition from visual design in Figma to fully functional enterprise-grade applications on the ServiceNow platform. This integration empowers developers, regardless of skill level, to use Figma design as direct prompts in the Now Assist build agent. We see a bright future, intelligent agents working side by side with people to resolve issues, complete tasks, and take action.

Speaker #4: As their AI readiness matures . Our customers recognize the time is now to shape their future AI is the new UI . The ServiceNow AI experience breaks the cycle of siloed systems and bolt on agents with a unified AI interface for voice , images , data and text .

Speaker #4: Figma and ServiceNow are partnering to bridge the gap between design intent and enterprise execution through an MCP integration , teams can seamlessly transition from visual design Figma to fully functional enterprise grade applications on the ServiceNow platform .

Speaker #4: This integration empowers developers regardless of skill level , to use Figma design as direct prompts in the now assist build agent , we see a future .

Speaker #4: Intelligent agents working side by side with people to resolve issues , complete tasks and take action in the context of value creation . For customers , partners , employees and shareholders .

Bill McDermott: In the context of value creation for customers, partners, employees, and shareholders, enterprise AI keeps every ServiceNow stakeholder on the same side. This is a once-in-a-generation opportunity. It's like minting a new currency that underpins a limitless new economy. The more we keep getting this right, the more we'll reach our full potential as the AI-defining enterprise software company of the 21st century. To ground this in a special way, in a special and specific market, let's talk customer experience. Enterprises invested a lot into legacy CRM deployments. For all that investment, they got a sprawling mess of instances and silos. They want a better way with AI. This applies to many legacy vendors, some more than others. Here's why ServiceNow is reshaping the customer experience market. Our AI experience turns CRM into an AI-first system of action that drives growth and customer loyalty.

Speaker #4: Enterprise AI keeps every ServiceNow stakeholder on the same side . This is a once in a generation opportunity . It's like minting a new currency that underpins a limitless new economy .

Speaker #4: The more we keep getting this right , the more we'll reach our full potential . As the AI defining enterprise software company of the 21st century .

Speaker #4: To ground this in special way in a special and specific market , let's talk customer experience . Enterprises invested a lot into legacy CRM deployments .

Speaker #4: For all that investment , they got a sprawling mess of instances and silos . They want a better way with AI . This applies to many legacy vendors , some more than others .

Speaker #4: Here's why ServiceNow is reshaping the customer experience market . Our AI experience turns CRM into an AI first system of action that drives growth and customer loyalty .

Speaker #4: In sales . A new AI powered Cpq solution accelerates , quote generation , and this is going to free business to focus on relationships and service .

Bill McDermott: In sales, a new AI-powered CPQ solution accelerates quote generation, and this is going to free business to focus on relationships. In service, AI agents flag at-risk cases, automate resolutions, and empower teams to act before SLAs are breached. This spans the entire customer lifecycle from first contact to resolution. Customers like Thrive and Pure Storage are using ServiceNow CRM to personalize support, connect data, AI, and workflows, and scale service excellence. With a global technology services company, we are streamlining service models and enhancing customer experiences through agentic workflows. A hardware manufacturer selected ServiceNow CPQ and manufacturing solution to scale sales and service without increasing cost. A leading global technology company tripled their CPQ commitment with ServiceNow. What began with one product and one channel turned into a breakout success. The customer saw the impact, and now they're scaling it across partners and a dozen more products.

Speaker #4: AI agents flag at risk cases , automate resolutions , and empower teams to act before SLAs are breached . This spans the entire customer life cycle from first contact to resolution .

Speaker #4: Customers like Thrive and Pure Storage are using ServiceNow , CRM to personalize , support , connect data , AI , and workflows , and scale service excellence with a global technology services company .

Speaker #4: We are streamlining service models and enhancing customer experiences through a genetic workflows . A hardware manufacturer selected ServiceNow , Cpq and manufacturing solution to scale sales and service without increasing cost .

Speaker #4: A leading global technology company tripled their CPQ commitment with ServiceNow. What began with one product and one channel turned into a breakout success.

Speaker #4: The customer saw the impact and now they're scaling it across partners and a dozen more products . A European auto manufacturer selected ServiceNow Cpq for its configuration and it's selling this globally .

Bill McDermott: A European auto manufacturer selected ServiceNow CPQ for its configuration, and it's selling this globally. What's fascinating is that these conversations are actually coming to us. The appetite for change is everywhere. We're also meeting the moment with great partners like Genesys. Unified experience from Genesys and ServiceNow merges contact centers, CRM, and service operations into a single agentic AI-powered platform. Through agent-to-agent orchestration between Genesys Cloud and ServiceNow, AI agents will collaborate autonomously on tasks to deliver fast resolutions, seamless customer experiences, and stronger customer loyalty. ServiceNow always goes where the customer needs us to go. In this case, that's to the core of a better CRM because the status quo just isn't cutting it. Let's spend a moment on U.S. federal, which had a great Q3, beating NNACV expectations handily.

Speaker #4: What's fascinating is that these conversations are actually coming to us , the appetite for change is everywhere . We're also meeting the moment with great partners like Genesis Unified Experience from Genesis and ServiceNow , merges contact centers , CRM and service operations into a single allergenic , AI powered platform through agent to agent orchestration .

Speaker #4: Between Genesis Cloud and ServiceNow , AI agents will collaborate autonomously on tasks to deliver fast resolutions , seamless customer experiences , and stronger customer loyalty .

Speaker #4: ServiceNow always goes where the customer needs us to go. In this case, that's to the core of a better CRM because the status quo just isn't cutting it.

Speaker #4: Let's spend a moment on US federal , which had a great Q3 beating Nav expectations handily in the quarter . We saw now assist pilots quickly converting into deals as agencies realize fast time to value and compelling Rois .

Bill McDermott: In the quarter, we saw Now Assist pilots quickly converting into deals as agencies realized fast time-to-value and compelling ROIs. Like other industries, our AI Control Tower is gaining attention as agencies look to enforce governance and manage risk within their AI estate. The GSA OneGov agreement opens the door for broader federal and government adoption of ServiceNow. This simplified model reduces complexity and makes it easier for agencies to adopt more of our AI platform over time. That positions us well for upgrading standard customers to Pro Plus. Through the agreement, the ServiceNow AI Platform is estimated to boost efficiency by 30%, saving the federal government billions over the next five years, and it will accelerate agentic AI transformation. In closing, ServiceNow's strategic relevance has never been higher, and it's soaring right now.

Speaker #4: Like other industries , our AI control tower is gaining attention as agencies look to enforce governance and manage risk within their AI estate .

Speaker #4: The GSA one gov agreement opens the door for broader federal and government adoption of ServiceNow . This simplified model reduces complexity and makes it easier for agencies to adopt more of our AI platform over time .

Speaker #4: That positions us well for upgrading standard customers to Pro Plus . Through the agreement , the ServiceNow AI platform is estimated to boost efficiency by 30% , saving the federal government billions over the next five years , and it will accelerate Agentic AI transformation closing , ServiceNow strategic relevance has never been higher .

Speaker #4: And it's soaring right now . When you look at the Zurich release , every innovation from vibe coding to a genetic playbooks and enterprise grade security is purpose built to unlock the full value of a AI helping teams act faster , work smarter and build trust as they scale .

Bill McDermott: When you look at the Zurich release, every innovation from Vibe coding to agentic playbooks and enterprise-grade security is purpose-built to unlock the full value of agentic AI, helping teams act faster, work smarter, and build trust as they scale. Gartner just published the first-ever 2025 Magic Quadrant for business orchestration and automation technologies, affectionately called VOP. Get on board because ServiceNow is a leader, the furthest for its completeness of vision placement of all companies. We have a rock-solid core business with the biggest opportunity in our history to provide the AI Control Tower. We have a next-generation CRM business at the doorstep of substantial legacy disruption. We have AI, data, and workflows integrated into a single AI architecture. World's leading brands like the great NVIDIA, the world's first $5 trillion company. Congratulations, Jensen, our great friend and your wonderful company.

Speaker #4: Gartner just published a first ever 2025 Magic Quadrant for Business Orchestration and Automation Technologies , affectionately called boat . So get on board because ServiceNow is a leader , the furthest for its completeness of vision placement of all companies .

Speaker #4: We have a rock solid core business with the biggest opportunity in our history to provide the AI control tower . We have a next generation CRM business at the doorstep of substantial legacy disruption .

Speaker #4: We have AI data and workflows integrated into a single AI architecture, the world's leading brands like the great Nvidia, the world's first $5 trillion company.

Speaker #4: Congratulations , Jensen , our great friend , and your wonderful company also , AstraZeneca , Volkswagen Group , Ulta Beauty , 7-Eleven Japan , Fedex , Dataworks , and countless other companies are working with ServiceNow and excited to do so .

Bill McDermott: Also, AstraZeneca, Volkswagen Group, Ulta Beauty, 7-Eleven Japan, FedEx, Data Works, and countless other companies are working with ServiceNow and excited to do so. Periods of systemic change always reveal new pillars on which the future is being built. This is the one moment in time when everything will change, and we won't do it with AI alone. We need AI that works for people. We need a bias for exponential thinking, for Renaissance-level creativity to finally solve some of the world's biggest challenges. Our customers, our partners, and our team are all in to build that future on the ultimate platform, ServiceNow, the AI platform for business transformation. Thank you for your time and interest. I look forward to your questions. I'll hand things over to our President and Chief Financial Officer, Gina Mastantuono. Gina, over to you.

Speaker #4: Periods of systemic change always reveal new pillars on which the future is being built . This is the one moment in time when everything will change and we won't do it with AI alone .

Speaker #4: We need AI that works for people . We need a bias for exponential thinking , for Renaissance level creativity to finally solve some world's biggest challenges .

Speaker #4: Our customers are partners and our team are all in to build that future on the ultimate platform . ServiceNow . The AI platform for business transformation .

Speaker #4: your time and interest . I look forward to your questions . I'll hand things over to our President and Chief Financial Officer . Gina Mastantuono .

Speaker #4: Gina , over to you .

Speaker #5: Thank you . Bill , once again , Q3 showcased another standout quarter of elite level execution with significant outperformance across all of our top line and profitability guidance metrics .

Amit Zavery: Thank you, Bill. Once again, Q3 showcased another standout quarter of elite-level execution with significant outperformances across all of our top line and profitability guidance metrics. Now Assist, Workflow Data Fabric, and RaptorDB were all ahead of plan. ServiceNow's U.S. federal business also demonstrated its resilience, surpassing net new ACV expectations for the quarter as we work hand in hand with agency leaders to modernize how the government works for the American people. Q3 subscription revenues were $3.299 billion, growing 20.5% year over year in constant currency, 100 basis points above the high end of our guidance range, driven by strong execution with broad-based demand throughout the platform. RPO ended the quarter at approximately $24.3 billion, representing 23% year over year constant currency growth. Current RPO was $11.35 billion, representing 20.5% year over year constant currency growth, a 250 basis point beat versus our guidance.

Speaker #5: Now assist workflow , data fabric and Raptor DB were all ahead of plan ServiceNow, Inc. , US Federal business also demonstrated its resilience , surpassing net new expectations for the quarter as we work hand in hand with agency leaders to modernize how the government works for the American people .

Speaker #5: Q3 subscription revenues were 3.299 billion , growing 20.5% year over year in constant currency , 100 basis points above the high end of our guidance range , driven by strong execution with broad based demand throughout the platform .

Speaker #5: RPO ended the quarter at approximately 24.3 billion , representing 23% year over year . Constant currency growth . Current RPO was 11.35 billion , representing 20.5% year over year .

Speaker #5: Constant currency growth , a 250 basis point beat versus our guidance from an industry perspective , transportation and logistics led the way growing net new ACV , over 90% year over year , followed by momentum in retail and hospitality and education , both growing over 50% .

Amit Zavery: From an industry perspective, transportation and logistics led the way, growing net new ACV over 90% year over year, followed by momentum in retail and hospitality and education, both growing over 50%. Energy and utilities continued to see healthy demand, and government was also an area of strength, driven by our U.S. federal business growing net new ACV over 30% year over year. Our renewal rate remained a strong 97% and an even more robust 98% when excluding the closure of a large federal agency. We ended Q3 with 553 customers generating over $5 million in ACV. Furthermore, the number of customers contributing $50 million or more increased by over 20% year over year. We closed 103 deals greater than $1 million in net new ACV in the quarter, including three deals over $20 million.

Speaker #5: Energy and utilities continued to see healthy demand and government was also an area of strength driven by our US federal business . Growing net new ACV , over 30% year over year .

Speaker #5: Our renewal rate remained a strong 97% and an even more robust 98% when excluding the closure of a large federal agency . We ended Q3 with 553 customers generating over 5 million in ACV .

Speaker #5: Furthermore , the number of customers contributing 50 million or more increased by over 20% year over year . We closed 103 deals greater than a million in net new ACV in the quarter , including three deals over 20 million .

Speaker #5: The power of our Better Together platform model was evident as all of our top 20 deals included six or more products . Now , assist had a tremendous quarter once again exceeding expectations , fueled by 12 deals over ACV , including one over 10 million .

Amit Zavery: The power of our Better Together platform model was evident as all of our top 20 deals included six or more products. Now Assist had a tremendous quarter, once again exceeding expectations, fueled by 12 deals over $1 million in net new ACV, including one over $10 million. As Bill noted, our AI products are on pace to exceed half a billion in ACV this year, underscoring the great progress we're making towards our $1 billion target for 2026. Key product areas of strength included ITSM and HR Plus net new ACV, both doubling quarter over quarter, ITOM Plus net new ACV surging more than 5x quarter over quarter, and CSM Plus deal volume tripling year over year. More broadly within CRM, our AI-powered CPQ solution has become a powerful entry point into front office transformation. We're seeing traction with displacement wins around the globe, including multiple million-dollar deals.

Speaker #5: As Bill noted , our AI products are on pace to exceed half a billion in ACV . This year , underscoring the great progress we're making towards a million in net new $1 billion target for 2026 .

Speaker #5: Key product areas of strength included ITSM and HR, plus net new ACV, both quarter over quarter. Item plus net new ACV surged more than five quarter over quarter, and CSM plus deal volume increased year over year.

Speaker #5: More broadly , within CRM , AI powered Cpq solution has become a powerful entry point into front office transformation . We're seeing traction with displacement wins around the globe , including multiple million dollar deals .

Speaker #5: Turning to profitability , non-GAAP operating margin was 33.5% , 300 basis points above our guidance driven by our top line outperformance , AI opex efficiencies , disciplined spend management and timing of some program spend as we advance our AI agent deployments across the company , we're unlocking substantial organizational capacity , driving measurable efficiency gains and enhancing scalability .

Amit Zavery: Turning to profitability, non-GAAP operating margin was 33.5%, 300 basis points above our guidance, driven by our top line outperformance, AI OpEx efficiencies, disciplined spend management, and timing of some program spends. As we advance our AI agent deployments across the company, we're unlocking substantial organizational capacity, driving measurable efficiency gains and enhancing scalability. Our free cash flow margin was 17.5%, up 50 basis points year over year. We ended the quarter with a robust balance sheet, including $9.7 billion in cash and investments. In Q3, we bought back approximately 644,000 shares as part of our share repurchase program, up nearly 70% versus last quarter, with the primary objective of managing the impact of dilution. As of the end of the quarter, we had approximately $2 billion of authorization remaining. Together, these results continue to demonstrate our ability to deliver a healthy balance of world-class growth, profitability, and shareholder value.

Speaker #5: Our free cash flow margin was 17.5% , up 50 basis points year over year . We ended the quarter with a robust balance sheet , including 9.7 billion in cash and investments in Q3 , we bought back approximately 644,000 shares as part of our share repurchase program , up nearly 70% versus last quarter .

Speaker #5: With the primary objective of managing the impact of dilution as of the end of the quarter , we had approximately 2 billion of authorization remaining .

Speaker #5: Together , these results continue to demonstrate our ability to deliver a healthy balance of world class growth , profitability , and shareholder value with our continued confidence in the trajectory of our business .

Amit Zavery: With our continued confidence in the trajectory of our business, today we announced that the Board of Directors has approved a five-for-one stock split designed to make our shares more accessible to a broader base of investors and to provide employees with greater flexibility in managing their equity. A special meeting of shareholders will be held on December 5 to approve the split. Moving to our guidance, given our Q3 outperformance, we are raising our 2025 growth and profitability outlook. For 2025, we are raising our subscription revenues by $55 million at the midpoint, to $12.835 billion to $12.845 billion, representing 20.5% year over year growth, or 20% on a constant currency basis. We are raising our full-year operating margin target by 50 basis points, from 30.5% to 31%, as AI operational efficiencies continue to drive incremental leverage.

Speaker #5: Today, the Board of Directors has approved a five-for-one stock split designed to make our shares more accessible to a broader base of investors and to provide employees with greater flexibility in managing their equity.

Speaker #5: A special meeting of shareholders will be held on December 5th to approve the split . Moving to our guidance , given our Q3 outperformance , we are raising our 2025 growth and profitability outlook for 2025 .

Speaker #5: We are raising our subscription revenues by 55 million at the midpoint to 12.835 billion to 12.845 billion , representing 20.5 . Year 25 20.5% year over year growth , or 20% on a constant currency basis .

Speaker #5: We are raising our full year operating margin target by 50 basis points from 30.5% to 31% , as AI operational efficiencies continue to drive incremental leverage .

Speaker #5: We're also raising our full year free cash flow margin target by 200 basis points from 32% to 34% . We continue to expect subscription gross margin of 83.5% and GAAP diluted weighted average outstanding shares of 210 million for Q4 .

Amit Zavery: We're also raising our full-year free cash flow margin target by 200 basis points, from 32% to 34%. We continue to expect a subscription gross margin of 83.5% and GAAP-diluted weighted average outstanding shares of 210 million. For Q4, I would note that while our public sector pipeline and demand is very strong, the ongoing government shutdown may impact deal timing in our U.S. federal business in Q4. Given the timeline requirements to complete standard procurement processes, we've prudently factored in this timing dynamic into our guidance. With that in mind, for Q4, we expect subscription revenues between $3.42 billion and $3.43 billion, representing 19.5% year over year growth, or 17.5% to 18% on a constant currency basis. We expect CRPO year over year growth of 23%, or 19% on a constant currency basis. We expect an operating margin of 30%.

Speaker #5: I would note that while our public sector pipeline and demand is very strong , the ongoing government shutdown may impact deal timing in our U.S.

Speaker #5: federal business in Q4 , given the timeline requirements to complete standard procurement processes , we've prudently factored in this timing dynamic into our guidance .

Speaker #5: With that in mind , for Q4 , we expect subscription revenues between 3.4 2,000,000,003.43 billion , representing 19.5% year over year growth , or 17.5 to 18% on a constant currency basis .

Speaker #5: We expect Crpo year over year growth of 23% or 19 on a constant currency We expect an operating margin of 30% . Finally , we expect 210 million GAAP diluted weighted average outstanding shares for the quarter .

Amit Zavery: Finally, we expect 210 million GAAP-diluted weighted average outstanding shares for the quarter. In conclusion, Q3 was an exceptional quarter with standout performances across the board. These results underscore the power of the ServiceNow AI Platform and our multiple growth vectors, from core workflow expansion to the accelerating adoption of innovative new products in areas like security and risk, sales and order management, and data and analytics. Massive platform demand combined with AI-driven efficiencies not only fueled fantastic results but also reinforced our ability to scale with accelerating margin expansion. Before we close, Bill and I want to take a moment to thank our incredible employees around the world. Your unwavering commitment, tireless execution, and passion for excellence continue to be the driving force behind our success. With that, I'll open it up for Q&A.

Speaker #5: In conclusion , Q3 was an exceptional quarter with standout performances across the board . These results underscore the power of the ServiceNow AI platform and our multiple growth vectors from core workflow expansion to the accelerating adoption of innovative new products in areas like security and risk .

Speaker #5: Sales and order management and data and analytics . Massive platform demand combined with AI driven efficiencies not only fueled fantastic results , but also reinforced our ability to scale with accelerating margin expansion before we close , Bill and I want to take a moment to thank our incredible employees around the world .

Speaker #5: Your unwavering commitment , tireless execution , and passion for excellence continue to be the driving force behind our success . With that , I'll open it up for Q&A .

Speaker #2: At this time , I would like to remind everyone , in order to ask a question , please press star . Then the number one on your telephone keypad .

Operator: At this time, I would like to remind everyone, in order to ask a question, please press Star, then the number one on your telephone keypad. We encourage everyone to limit yourselves to one question. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Cash Rangan with Goldman Sachs. Your line is open.

Speaker #2: We encourage everyone to limit yourself to one question . We will pause for just a moment to compile the Q&A roster . Your first question comes from the line of Kash Rangan with Goldman Sachs .

Speaker #2: Your line is open .

Speaker #6: Hi . Thank you very much . Congratulations , Bill and team . Bill , I like the super eight , but I still like the category of one .

[Analyst]: Hi. Thank you very much. Congratulations, Bill and team. Bill, I like the Super 8, but I still like the category of one, even better than Super 8. I want to ask you a question. With agentic technology, it's becoming abundantly clear, as you outlined, that there is a process of integration, implementation. We're back to, in some sense, making software companies like yours successful with the help of the outside world, like the Accentures and whatnot. Some integration expertise, implementation expertise could go a long way, maybe even the talk of forward-deployed engineers to get this technology primed for real time. What are your thoughts on that, Bill, going forward as you really try to institutionalize the adoption of agentic technology in your ecosystem? That's it for me. Thank you so much, and all the best for the future.

Speaker #6: Even better than super eight . But I want to ask you a question with genetic technology , it's becoming abundantly clear as you outlined , that there is a process of integration implementation .

Speaker #6: We're back to, in some sense, making software companies like yours successful with the help of the outside world, the Accentures and whatnot.

Speaker #6: Some integration , expertise , implementation expertise could go a long way , maybe even the talk of forward deployed engineers to get this technology primed for real time .

Speaker #6: What are your thoughts on that bill going forward ? Is you really try to institutionalize the adoption of authentic technology in your ecosystem .

Speaker #6: That's it for me . Thank you so much . And all the best for the future .

Speaker #4: Yeah . Cash . Let me begin . First of all by saying it's been an honor . To know you all these years .

Bill McDermott: Yeah, Cash, let me begin first of all by saying it's been an honor to know you all these years. You're one of the greats of all time. I never forget being on a helicopter with you many years ago on a rough ride. You were a champion then, and you're a champion now. I wish you and your family the best in your next endeavors. I was with 150 CEOs a couple of Fridays ago, and we were talking about the whole AI scenario. They were telling me that their proof of concepts, you know, these toy sidecars, are getting crushed. They don't want to do them anymore. They were also telling me that they have so much complexity in their business processes that they're having trouble making AI work. I explained that was the same dilemma, as you pointed out, Cash, with digital transformation.

Speaker #4: You , one of the greats of all time . And never forget being on a helicopter with you many years ago on a on a rough ride .

Speaker #4: And you were a champion then , and you're a champion now . And I wish you and your family the best in your next endeavors .

Speaker #4: I was with 150 CEOs , a couple of Fridays ago , and we were talking about the whole AI scenario , and they were telling me that their proof of concepts , you know , these toy sidecars are getting crushed .

Speaker #4: They don't want to do them anymore . And they were also telling me that they have so much complexity in their business processes that they're having trouble making AI work .

Speaker #4: And I explained that was the same dilemma as you pointed out , cash with digital transformation . You have a platform here with AI platform for business transformation that resides above the systems of record and gives you that clean pane of glass to integrate the business processes and to workflows .

Bill McDermott: You have a platform here with AI platform for business transformation that resides above the systems of record and gives you that clean pane of glass to integrate the business processes into workflows. Workflow has become the new buzzword. Everybody likes workflow now, but we're the workflow company. What's unique about our workflows is we're doing 75 billion of them today. We're doing more than a trillion transactions on them today. The fact that we can connect to any cloud, you know, we have all of the three hyperscalers. They're all great companies, by the way. We have the language models that are large ones, and we integrate with all of them. We built on NVIDIA Nemotron the next generation of our platform, which enables customers to do extraordinary things with big language model power at a fraction of the big model cost.

Speaker #4: And workflow has become the new buzzword . Everybody likes workflow now , but we're the workflow company . And what's unique about our workflows is we're doing 75 billion of them today , and we're doing more than a trillion transactions on them today .

Speaker #4: So the fact that we can connect to any cloud , you know , we have all of the three hyperscalers , they're all great companies , by the way .

Speaker #4: We have the language models that are large, and we integrate with all of them. And we built on NVIDIA, NeMo, and Triton.

Speaker #4: The next generation of our platform enables customers to do extraordinary things with big language model power at a fraction of the big model cost.

Speaker #4: Zero latency , total hallucination , and a cost effective ROI . That's amazing . And cash . We're getting customers live with autonomous implementations in a few weeks .

Bill McDermott: Zero latency, total security, no hallucination, and a cost-effective ROI that's amazing. Cash, we're getting customers live with autonomous implementations in a few weeks, not years and years. The game has changed. I believe we're at the epicenter of the enterprise to make every company a best-run business. The word's getting out there. I'm glad you asked that question. It was a perfect question. Thanks a lot, Cash.

Speaker #4: Not years . And years . So the game has changed , and I believe we're at the epicenter of the enterprise to make every company a best run business .

Speaker #4: And the word's getting out there , and I'm glad you asked that question . It was a perfect question . Thanks a lot , cash Bill .

Speaker #6: And the word should know that as that helicopter swiveled 45 degrees from its forward path of progress that you diligently on a BlackBerry were typing away emails with .

[Analyst]: Bill, and the world should know that as that helicopter swiveled 45 degrees from its forward path of progress, that you diligently on a BlackBerry were typing away emails with, I think, perfect spelling. I was nearly throwing up, and you were so kind to me. That memory will go on forever.

Speaker #6: I think perfect spelling . So and I was nearly throwing up in you were so kind to me . So that memory will go down forever .

Speaker #4: Great memory . Cash , cash .

Speaker #7: I'll just add one thing again . Congratulations on your future plans . But as Bill was saying , what we're doing with the way we build out our agentic processes in the workflow as part of our of ServiceNow platform is that we have 100 plus prepackaged workflows with Agentic built in , so you don't have to do a lot of hand-holding , a lot of implementation to get going .

Bill McDermott: Great memory, Cash.

[Analyst]: Cash, I'll just add one thing. Again, congratulations on your future plans. As Bill was saying, what we're doing with the way we build out our agentic processes and the workflow as part of our ServiceNow platform is that we have 100-plus prepackaged workflows with agentic built in. You don't have to do a lot of hand-holding, a lot of implementation to get going. Of course, there's going to be co-innovation required. There might be something specific for our customers. That's why we're investing in an FDE kind of a model with forward-deployed engineers who are really AI black belt, who can work very closely with customers on the AI expertise required for some of those use cases. A lot of customers are getting, I think, the lack of expertise in some of those departments might be a difficult thing for them to catch up on.

Speaker #7: Of course , they're going to be co-innovation required . There might be something specific for customers . That's why we investing in FDA kind of a model with forward deployed engineers who are really AI , black belt , who can work very closely with customers on the AI expertise required for some of those use cases .

Speaker #7: A lot of customers are getting . I think the lack of expertise in some of these departments might be a difficult thing for them to catch up on , and when they do things with spare parts and buying all these random pieces , it becomes very difficult to really get the outcome .

[Analyst]: When they do things with spare parts and buying all these random pieces, it becomes very difficult to really get the outcome they want. What we're doing is really solving the problem and getting them the use cases really closely out of the box and getting the implementation done quickly. In production, they see value instantly, and they do more and more with us. That's really the difference between us and everybody else out there. Thanks, Amit.

Speaker #7: They want . So what we're doing is really solving the problem and getting them the use cases really closely out of the box and implementation done quickly .

Speaker #7: And then production is key value instantly . And they do more and more with us . And that's really the difference between us and everybody else out there .

Speaker #6: Thanks , Amit .

Speaker #2: Your next question comes from the line of Samet Semana with Jefferies . Your line is open .

Operator: Your next question comes from the line of Samad Samana with Jefferies. Your line is open.

Speaker #8: Hi . Good evening and thanks for taking my question . Great to see the strong results , Bill . I also want to ask an AI related question , the 500 million plus ACV level for AI on its own is a great disclosure that you're tracking to that , but it stood out that the deal volume you mentioned for analysis also seems to be broadening out , and that there's a greater breadth of deals driving the AI .

[Analyst]: Hi. Good evening, and thanks for taking my question. Great to see the strong results, Bill. I also want to ask an AI-related question. The $500 million plus ACV level for AI on its own is a great disclosure that you're tracking to that. It stood out that the deal volume you mentioned for Now Assist also seems to be broadening out and that there's a greater breadth of deals driving the AI ACV strength. What I was wondering is, are you seeing that the broader sales organization and that the partner base that Cash just mentioned is getting better at selling the AI solutions and it's being less of a top-down driven sale? How should we think about maybe that impact going forward?

Speaker #8: ACV strength . So I was wondering , is , are you seeing that the broader sales organization and the partner base , that cash just mentioned is getting better at selling the AI solutions ?

Speaker #8: And it's being less of a top down , driven sale ? And how should we think about maybe that impact going forward ?

Speaker #4: Yeah . So great question . And you're right , it is progressing beautifully . And it is now a standard way of selling in our company .

Bill McDermott: Yeah, Samad, it's a great question. You're right. It is progressing beautifully, and it is now a standard way of selling in our company. You see that in the Pro Plus upgrades and all the new business that's coming in Pro Plus. What's really exciting to me from a shareholder value creation perspective is that the customers really want it. When you see a 55x growth since May in the number of assists that our customers are doing on our platform, you have to look into the future and say, we have billions of assists already out there in the marketplace that will be monetized in future quarters. Already we have 1,700 customers that are live on this, and that's growing every single day. One thing that will definitely get underreported on an earnings day is culture.

Speaker #4: And you see that in the Pro Plus upgrades and all the new business that's coming in Pro Plus. What's really exciting to me from a shareholder value creation perspective is that the customers really want it.

Speaker #4: And when you see a 55 X growth since May and the number of assists that our customers are doing on our platform , you have to look into the future and say , we have billions of assists already out there in the marketplace .

Speaker #4: That will be monetized in future quarters . And we have 1700 customers that alive on this . And that's growing every single day .

Speaker #4: already culture . We have every single person in our company with their own AI learning journey , where they've been assessed and credentialed , and there's an AI action plan because we're putting AI to work for our people and internally with super cool , with our ServiceNow on now , meaning we run the product before we put it into the market .

Bill McDermott: We have every single person in our company with their own AI learning journey, where they've been assessed and credentialed, and there's an AI action plan because we're putting AI to work for our people. Internally, what's super cool with our ServiceNow on now, meaning we run the product before we put it into the market, is 90% of the IT customer service and HR processes are now being done by agents, not at the exclusion of people, but to make people happier. The soul-crushing stuff is done by the agent, and the people are doing more and serving more capability to our customers. This really is a virtuous cycle because we're proving that you can grow, put AI to work for people, hire, and as Gina said, have tremendous operating leverage on the margin and free cash flow line to reinvest in our business and to create. Even

Speaker #4: Is 90% of the IT customer service and processes are now being done by agents , not at the exclusion of people , but to make people happier .

Speaker #4: So the soul crushing stuff is done by the agent and the people are doing more and serving more capability to our customers . And this really is a virtuous cycle because we're proving that you can grow , put AI to work for people , hire , and as Gina said , have HR tremendous operating leverage on the margin and free cash flow line to reinvest in our business and to create even greater shareholder value .

Operator: We get it. We know where that hockey stick is, and we're building a company for the ages here to create greater shareholder value.

Speaker #4: So we get it . We know where that hockey stick is , and we're building a company for the ages here .

Speaker #8: And , Gina , if I could squeeze one in for you if possible . I know you can't predict what the federal government will reopen , although the way you've been nailing guidance , I'd say your prediction powers are strong .

[Analyst]: Gina, if I could squeeze one in for you if possible. I know you can't predict when the federal government will reopen, although the way you've been nailing guidance, I'd say your prediction powers are strong. How should we think about the prudence that you factored in? Is it different from what you were thinking, let's call it 90 days ago, or is there incremental prudence just given that the government is so close? Help us understand that comment specifically around guidance. Thank you again for taking my questions in great order.

Speaker #8: But how should we think about the the prudence that you factored in ? Is it different from what you were thinking ? Let's call it 90 days ago ?

Speaker #8: Or is it . Is there incremental prudence , just given that the government is still closed ? Just help us understand that comment specifically around around guidance .

Speaker #8: And thank you again for taking my questions and great quarter .

Speaker #5: , of course , of course , Samad . Yes . So first and foremost , I want to just extend like huge congratulations to our incredible fed team .

Darren Yip: Of course, of course, Ahmad. Yes. First and foremost, I want to just extend huge congratulations to our incredible Fed team. We had an incredible Q3, which, as you know, is the biggest federal quarter always because it's the closing quarter of the fiscal year for the Fed. Over 30% year-over-year growth in net new ACV really demonstrates the incredible resilience and demand that federal agencies have for our platform. First and foremost, demand is strong, and we are resonating so clearly with the federal agencies, which is fantastic. Specifically with the government shutdown, 90 days ago, the government was not shut down. I would say that we absolutely have factored in a bit more prudence into this guide because as much as I would like to say I know how to forecast when the government is going to reopen, I just don't.

Speaker #5: We had an incredible Q3 , which as you know , is the biggest federal quarter always because it's the it's the it's the closing quarter of the fiscal year for the fed .

Speaker #5: Over 30% year-over-year growth in net new ACV really demonstrates the incredible resilience and demand that federal agencies have for our platform.

Speaker #5: So first and foremost , demand is strong and we are resonating so clearly with the federal agencies , which is fantastic on specifically with the government shutdown 90 days ago , the government was not shut down and I would say that we absolutely have factored in a bit more prudence into this guide , because as much as I would like to say , I know how to forecast when the government is going to reopen , I just don't .

Speaker #5: And so, procurement processes do take a bit of time. We did factor some timing-related prudence into the guide because demand is healthy and strong, and there is an opportunity for us in the federal space.

Darren Yip: Procurement processes do take a bit of time. We did factor some timing-related only prudence into the guide because demand is healthy, strong, and the opportunity for us in federal space, and by the way, more broadly, public sector, state, and local as well, remains stronger than ever.

Speaker #5: And by the way , more broadly public sector state and local as well remains stronger than ever .

Speaker #2: Here next question comes from the line of Alex Zukin with Wolfe Research . Your line is open .

[Company Representative]: Your next question comes from the line of Alex Zukin with Wolfe Research. Your line is open.

Speaker #9: Hey , guys . Thanks for taking the question . Maybe just a quick two parter . Bill , for you . You know , maybe demand trends as you progress through the quarter .

Bill McDermott: Hey, guys. Thanks for taking the question. Maybe just a quick two-parter, Bill, for you. You know, maybe demand trends as you progress through the quarter, linearity of bookings, and kind of maybe talk to us a little bit about how the consumption and utilization of some of the AI credits is trending. It sounds like it's going better than you expected. I have a quick follow-up for Gina.

Speaker #9: Linearity of bookings and kind of maybe talk to us a little bit about how the consumption and utilization of some of the AI credits is trending .

Speaker #9: It sounds like it's it's going better than you expected . And then I have a quick follow up for Jim .

Speaker #4: Yeah . Thank you very much , Alex . I really appreciate it . The demand is amazing . Our demand right now is better than I've ever seen it .

Operator: Thank you very much, Alex. I really appreciate it. The demand is amazing. Our demand right now is better than I've ever seen it. I just want to give you a little bit of an anecdotal color on this. We have a World Forum process going on across the world right now. I was getting texts early this morning on our New York Forum, which is substantially oversubscribed. I also got one along with my colleagues in the board. A couple of days ago, we did our board meeting. In Japan, we had a capacity for around 6,000 people in Japan for our World Forum. We had 6,500 that could not be seated due to fire regulations, and we had to set up a workaround so everyone could see the speeches and get the content. The pipe is wild. What's happening now is we're breaking through.

Speaker #4: And I just want to give you a little bit of an anecdotal color on this . We have a world forum process going on across the world right now .

Speaker #4: I was getting texts early this morning on our New York forum, which is substantially oversubscribed, but I also got one along with my colleagues in the board.

Speaker #4: A couple of days ago , we did our board meeting in Japan . We had a capacity for around 6000 people in Japan for our World Forum .

Speaker #4: We had 6500 . That could not be seated due to fire regulations , and we had to set up a workaround so everyone could this .

Speaker #4: The speeches and get the content . The pipe is wild . And what's happening now is we're breaking through the brand is actually now breaking through , and this one platform for AI business transformation is coming across at the C-suite .

Operator: The brand is actually now breaking through, and this one platform for AI business transformation is coming across at the C-suite. The CEOs are kind of getting the picture. Many of them have killed these proof-of-concept scenarios. One had 900 proof-of-concepts going on in the company and said it was uncontrollable, and they killed them all. They went with ServiceNow. I think we're really breaking through. As it relates to the linearity, I would say the linearity is historically consistent. I think it's going to get even better when you think about the bookings and the step-ins and the hockey stick around the assists as the tokens are used, then they get reloaded. That is the hockey stick that's built into the model. I see a 55x growth since May in the assists as a clear indication that the customer is deriving unique value from the platform.

Speaker #4: The CEOs are kind of getting the picture . Many of them have killed these proof of concept . Scenarios . One had 900 proof of concepts going on in the company and said it was uncontrollable , and they killed them all , and they went with ServiceNow .

Speaker #4: So I think we're really breaking through as it relates to the linearity . I would say the linearity is historically consistent . I think it's going to get even better when you think about the bookings and the step ins and the hockey stick around the assists as the tokens are used , then they get reloaded and that is the hockey stick .

Speaker #4: That's built into the model . And yes , I see a 55 x growth since May in the assists as clear indication that the customer is deriving unique value from the platform .

Speaker #4: And yes , I think that's tsunami is going to increase and pick up even more .

Operator: I think that tsunami is going to increase and pick up even more.

Speaker #9: Wonderful . And amazing . Gina , maybe for you the renewal cohort in Q4 , that's been I think , a headwind or crpo growth .

Bill McDermott: Wonderful and amazing. Gina, maybe for you, the renewal cohort in Q4 that's been, I think, a headwind to CRPO growth. Anything that stands out positive from this large renewal cohort that wasn't initially expected this quarter, like whether it's a greater willingness to expand with Pro Plus and anything to think through there as we incorporate the prudence and the guidance?

Speaker #9: Anything that stands out positive from this large renewal cohort that wasn't initially expected this quarter, like whether it's a greater willingness to expand with Pro Plus, and anything to think through there as we incorporate the prudence in the guidance.

Speaker #5: what I would say is that part of the incredible . So we had a 250 basis point beat in Crpo in Q3 . Part of that , about half was the team doing a pretty incredible proactive job of pulling some of that cohort renewal into Q3 from Q4 , which not only boosted Q3 results , but also provides strong momentum heading into Q4 because now , as a result , we have a head start in addressing that large renewal cohort coming up in the next quarter .

Darren Yip: Yeah, what I would say is that part of the incredible beat, we had a 250 basis point beat in CRPO in Q3. Part of that, about half, was the team doing a pretty incredible proactive job of pulling some of that cohort renewal into Q3 from Q4, which not only boosted Q3 results but also provides strong momentum heading into Q4 because now, as a result, we have a head start in addressing that large renewal cohort coming up in the next quarter. I feel really good about what that looks like. We're also seeing plus attach rates better in Q3. They continue to get better and better and stronger. I feel really good about what that renewal cohort looks like. We continue to see very strong renewal rates, as I called out as well.

Speaker #5: And so feel really good about what that looks like . We're also seeing plus attach rates that are in Q3 . So they continue to get better and better and stronger .

Speaker #5: And so I feel really good about what that renewal cohort looks like. We continue to see very strong renewal rates, as I called out as well.

Speaker #5: And so just putting a topper to the conversation back to what Bill was saying , demand trends remain really healthy pipeline into Q4 looks strong and very healthy .

Darren Yip: Just putting a topper to the conversation back to what Bill was saying, demand trends remain really healthy. Pipeline into Q4 looks strong and very healthy. We remain really confident in the guide and feel great about the ability for us to pass the full beat in revenue in Q3 to the full year. On top of that, to be able to raise the bottom line guide 50 basis points in operating margin and 200 basis points on free cash flow really demonstrates not only the demand we're seeing, but the AI efficiencies internally we're getting to help really drive that bottom line expansion on top of the incredible top line growth.

Speaker #5: And we remain really confident in the guide and feel great about the the ability for us to pass the full beat in revenue in Q3 to the full and then on top of that , to be able to raise the bottom line guide 50 basis points on operating margin and 200 basis points on free cash flow , really demonstrates not only the demand we're seeing , but the AI efficiencies internally .

Speaker #5: We're getting to help really drive that , that that bottom line expansion on top of the incredible top line growth .

Speaker #2: Before going to the next question, we would like to remind everyone to please limit yourself to one question. Your next question comes from the line of Tyler Raki with Citi.

[Company Representative]: Before going to the next question, we would like to remind everyone to please limit yourselves to one question. Your next question comes from the line of Tyler Recke with Citi, your line is open.

Speaker #2: Your line is open .

Speaker #10: Great . Thank you so much for taking the question . You talked about some pretty astounding consumption increases . 55 x . Can you can you talk to what do you think is sort of driving , you know that that type of consumption ?

Bill McDermott: Great. Thank you so much for taking the question. You talked about some pretty astounding consumption increases, 55x. Can you just talk to what do you think is sort of driving that type of consumption? I mean, I imagine it's pretty broad based, but if you're seeing that outsize in a particular vertical or use case, you talked about $500 million of Now Assist ACV by year-end. Just any sense on kind of how that tracks to your original expectations and what the upside could look like on the billion-dollar target next year? Thank you.

Speaker #10: I mean , I imagine it's pretty broad based . But if you're seeing that outsized in a particular vertical or use case and then you talked about 500 million of now assessed ACV by year end , just any , any sense on kind of how that tracks to your original expectations and what the , the upside could look like on the billion dollar target next year .

Speaker #10: Thank you .

Speaker #7: Hi , Tyler . I'll take that . This is Amit here . So on the consumption , the way things have worked very well for us is that once our customers start using Agentic workflows and once you're doing Agentic , you are starting to use a lot more of the CIS because you're making a lot of calls back and forth to the different processes and automating those systems .

Amit Zavery: Hi, Tyler. I'll take that. This is Amit here. On the consumption, the way things have worked very well for us is that once our customers started using agentic workflows, and once you're doing agentic, you are starting to use a lot more of the assists because you're making a lot of calls back and forth to the different processes and automating those systems. The volume you require for those agentic use cases is like 10x, 5x, 12x depending on each of the calls. That's where the growth has been. When we provided these prepackaged agentic workflows to our customer, they're going live faster. They're starting to use those things quickly. This quarter already, we started seeing so many customers go live, and that's where the usage goes up much higher than we had before, where it was more of an idea of summarization and things like that.

Speaker #7: So the volume you require for those agentic use cases is like ten x five , 12 x , depending on each of the calls .

Speaker #7: That's where the growth has been . And when we provided this pre-packaged agentic workflows to our customer , they're going live faster . They are starting to use those things quickly .

Speaker #7: And this quarter already we started seeing so many customers go live . And then that's where the usage goes up much higher than we had before , where it was more of a idea of summarization and things like that .

Speaker #7: Agentic is really the game changer for our consumption business . And with customers who have gotten this now , assist packages are starting to now apply and use them more regularly , and they're unlocking new new use cases as well .

Amit Zavery: Agentic is really the game changer for our consumption business. With customers who have gotten these Now Assist packages, they are starting to now apply and reuse them more regularly. They're unlocking new, new use cases as well, right? Incident management, triaging, helping customers kind of solve a lot of the requests around a customer issue. Those use cases are very complex. With agentic workflows, that requires a lot more work behind the scenes, but the automation happens. That's where the hockey stick starts happening for our use cases as well.

Speaker #7: Right ? Incident management , triaging , helping customers kind of solve a lot of the requests around a customer issue . And those use cases are very complex .

Speaker #7: And with Agentic workflows , that requires a lot more work behind the scenes . But the automation happens , and that's where the hockey stick starts happening .

Speaker #7: For our use cases as well.

Speaker #4: And may I just give you a couple of examples and we'll turn it over to Gina on the math . Think about it this way .

Operator: May I just give you a couple of examples, and we'll turn it over to Gina on the math? Think about it this way. Lenovo, very well-known, fantastic brand. They're resolving cases 35% faster, and they achieved a 100% customer satisfaction score with the Now Assist deployment. Bell, a leading Canadian telecom company, you know them well. They're deflecting more than 3 million customer support calls annually, and they're automating 90% of dispatch-related tasks now on Now Assist agents. Griffith University in Australia, they've adopted the enterprise service management approach to enable easy-to-use services for students and the staff that serve those students, and they deployed AI across ITSM and customer service management functions. That's led to an 87% increase in overall self-service rate.

Speaker #4: Lenovo . Very well known fantastic brand . They're resolving cases 35% faster and they achieved 100% customer satisfaction score with the now assist deployment .

Speaker #4: Bell , a leading Canadian telecom company . You know them well . They're deflecting more than 3 million customer support calls annually . And they're automating 90% of dispatch related tasks .

Speaker #4: Now on to assist agents at Griffith University in Australia. They've adopted the enterprise service management approach to enable easy-to-use services for students.

Speaker #4: And the staff that serve those students . And they deployed AI across ITSM and customer service management functions . And that's led to an 87% increase in overall self-service rate .

Speaker #4: Follow me. The CMDB competitive advantage that ServiceNow has in the marketplace has led us into this Agentic AI, cross-functional support on the platform to new use cases in all functions of corporations.

Operator: The CMDB competitive advantage that ServiceNow has in the marketplace has led us into, with this agentic AI cross-functional support on the platform, to new use cases in all functions of corporations. That is only a ServiceNow-enabled skill. No other platform can do that. I think that's really reason to believe.

Speaker #4: And that is only a ServiceNow-enabled skill. No other platform can do that. So I think that's really reason to believe.

Speaker #4: .

Speaker #5: And then lastly , to your question on how how the how the ACV for now assist is tracking . So yes , we're on on pace to exceed half a billion by the end of the year , which is tracking ahead of where we thought we'd be .

Darren Yip: Lastly, to your question on how the ACV for Now Assist is tracking. Yes, we're on pace to exceed $500 million by the end of the year, which is tracking ahead of where we thought we'd be. You heard Bill and Amit talk about our assists tracking faster and growing faster also than we planned. We are well on our way to that $1 billion. I'm not going to up the guide at this point, but you can expect that we expect that we will continue to track ahead of plan and continue to see pretty incredible traction for all of our AI products.

Speaker #5: I heard Bill and Amit talk about our assists tracking faster and growing faster, also faster than we planned. So, we are well on our way to that $1 billion.

Speaker #5: I'm not going to up the guide at this point , but you can expect that . We expect that we will continue to track ahead of plan and continue to see pretty incredible traction for all of our AI products .

Speaker #2: Here . Next question comes from the line of Michael Turin with Wells Fargo . Your line is open .

[Company Representative]: Your next question comes from the line of Michael Turin with Wells Fargo. Your line is open.

Speaker #11: Great . Thank you so much . Appreciate you taking the question , Gina . The three key results is you're alluding to are impressive , especially given the uncertainty that company has been navigating throughout the year .

Bill McDermott: Great. Thanks so much. Appreciate you taking the question. Gina, the Q3 results, as you were alluding to, are impressive, especially given the uncertainty that companies have been navigating throughout the year. The one question we're getting is around the Q4 subscription revenue guide for 18%. That number is a touch lower than where the CRPO growth rates overall seem to be settling. Just any context you can give us to help bridge those two metrics? Is that public sector comment you're making more specifically tied to the Q4 guide, or are there other assumptions just given renewal dynamics and a few months that we know are very important for the company to be mindful of as well? Thank you.

Speaker #11: The one question we're getting is around the fourth quarter subscription revenue guide for 18% . That number is a touch lower than where the Crpo growth rates overall seem to be settling .

Speaker #11: So, just any context you can give us to help bridge those two metrics is that public sector comment. You're making more specifically tied to the fourth quarter guide, or are there other assumptions just given renewal dynamics and a few months that we know are very important for the company to be mindful of as well?

Speaker #11: Thank you .

Speaker #5: Thank you . So , yes , public sector will will be a factor in their one thing I think is important . The full Q3 revenue beat we put into the full year .

Darren Yip: Thank you. Yes, public sector will be a factor in there. One thing I think is important, the full Q3 revenue beat we put into the full year. Remember that the full year is higher, and we raised not only in Q3, we also raised in Q2. The other piece that I would say is on-prem is definitely a factor a bit in Q4. That's a piece that you need to understand too.

Speaker #5: And so remember that that the full year is , is , is higher . And we raised not only in Q3 , we also raised in Q2 .

Speaker #5: The other piece that I would say is on prem is definitely a factor , a bit in Q4 . And so that's a piece that that's that , that , that you need to understand to .

Speaker #2: Your next question comes from the line of Kirk with Evercore ISI. Your line is open.

[Company Representative]: Your next question comes from the line of Craig Turin with Evercore ISI. Your line is open.

Speaker #12: Yeah . Thanks very much . And I'll echo the congrats on the quarter . You know , Bill , you were mentioning that some of the bigger enterprises are starting to get rid of some of these , you know , pilot projects with with AI , which would seem to lead to more consolidation to platforms like yourselves .

Operator: Yeah, thanks very much. I'll echo the congrats on the quarter. Bill, you were mentioning that some of the bigger enterprises are starting to get rid of some of these pilot projects with AI, which would seem to lead to more consolidation to platforms like yourselves. I was just wondering, when you're talking to CEOs about AI, how important is it to be able to talk about AI and workflow from an industry context? You all obviously have specialization in areas like government, financial services. How important is the fact that you can bring solutions that address specific industry workflow pain points as well as just more horizontal? Just curious on your thoughts on that. Thanks.

Speaker #12: I was just wondering , when you're talking to CEOs about AI , how important is it to be able to talk about AI and workflow from an industry context , meaning you all obviously have specialization in areas like government , financial services .

Speaker #12: How important is the fact that you can bring solutions that address specific industry workflow pain points, as well as just more horizontal? Just curious on your thoughts on that.

Speaker #12: Thanks .

Speaker #4: Yeah , it's a great question , Kirk . There's no question that the customers expect not for you to know their industry . They want you to know their industry cold .

Operator: Yeah, it's a great question, Craig. There's no question that the customers expect not for you to know their industry. They want you to know their industry cold. They also want you to understand before you show up their mission-critical processes, the objectives of the company, and to be very specific and pointed on exactly how your technology is going to move their needle. We use our own AI platform to do that for every seller in the company. When we show up, we show up with that domain expertise, the deep list of logos, and we can get extraordinarily specific about what we're doing with the platform and what we could do for them with the platform. We also have thought about that in the coverage model and how we go to market.

Speaker #4: They also want you to understand, before you show up, their mission-critical processes, the objectives of the company, and to be very specific and pointed on exactly how your technology is going to move their needle.

Speaker #4: And we use our own AI platform to do that for every seller in the company . So when we show up , we show up with that domain expertise .

Speaker #4: The deep list of logos, and we can get extraordinarily specific about what we're doing with the platform and what we could do for them with the platform.

Speaker #4: And we also have thought about that in the coverage model and how we go to market . So where you have , you know , critical mass or you have large customers in a cohort like financial services , like public sector , as an example , like telco , like high tech manufacturing and so forth .

Operator: Where you have critical mass or you have large customers in a cohort like financial services, like public sector as an example, like telco, like high-tech manufacturing, and so forth, we try to structure the coverage model that way. All the things that we do in the command center behind the scene are always industry specific. Amit, you may want to build on that.

Speaker #4: We try to structure the coverage model that way and all the things that we do in the command center behind the scene are always industry specific , and you may want to build on that .

Speaker #7: Yes . So , Kirk , other things we do is we have a team which is very focused on industry solutions . What they do is they build out data models which are very specific to particular industry , and look at the example like Ulta Beauty , where we do retail store operations .

Amit Zavery: Yes. The other things we do is we have a team which is very focused on industry solutions. What they do is they build out data models which are very specific to a particular industry. Look at an example like Ulta Beauty, where we do retail store operations. Our agentic flows are built specifically for what you require to manage your retail store, the maintenance, the lifecycle, and the cases the retail store operator requires help with because we build that into our agentic platform, not just a generic offering, but very specific to that use case so they can go live faster. We're doing similar kinds of things for other industries as well. We do that for manufacturing. We do that for industrial production. We have done a lot of work around health care, financial services, telecommunication.

Speaker #7: Our agentic flows are built specifically for what we require to manage a retail store: the maintenance, the life cycle, and the cases that the retail store operator requires help with.

Speaker #7: Because we build that into our Agentic platform and not just a generic offering, but very specific to that use case. So they can go live faster.

Speaker #7: If we're doing the similar kind of thing for other industries as well , we do that for manufacturing . We do that for industrial , industrial production .

Speaker #7: We have done a lot of work around healthcare , financial services , telecommunication , and we partner also with companies who are very good domain expertise in there .

Amit Zavery: We partner also with companies who have very good domain expertise in there. We build joint solutions we can take to market in that area. For example, we did things for financial services with Visa for dispute management, which is built together on our industry data model, which every customer can take advantage of. A lot of things going on. It's just not that we provide you a platform which is generic, but also a lot more specific domain expertise built inside it.

Speaker #7: So we build joint solutions . We can take to market in that area . For example , we did things for financial services with visa for dispute management , which is built together on our industry data model , which every customer can then take advantage of .

Speaker #7: So a lot of things going on , it's just not that we provide you a platform , which is generic , but also a lot more specific domain expertise built inside .

Speaker #12: Thanks very much .

Operator: Thanks very much.

Speaker #2: Your next question comes from the line of Keith Weiss in Morgan Stanley . Your line is open .

[Company Representative]: Your next question comes from the line of Keith Weiss at Morgan Stanley. Your line is open.

Speaker #13: Hi everyone . This is Ryan from Keith Weiss . I guess I'm just curious if there's any updates around move works and if there are any changes in how you're thinking about that process closing .

Bill McDermott: Hi, everyone. This is Ryan Lampson for Keith Weiss. I'm just curious if there's any updates around MoveWorks and if there are any changes in how you're thinking about that process closing. Just on that, I mean, the Now Assist performance has been really encouraging. I'm curious if you could provide some additional thoughts around what MoveWorks brings to the table to continue to strengthen that AI suite. Thank you.

Speaker #13: And I guess just on that , I mean , the now assist performance has been really encouraging . And so just curious if you could provide some additional thoughts around what move works brings to the table to continue to strengthen that AI suite ?

Speaker #13: Thank you .

Speaker #5: Thanks so much . So with respect to move works , we're expecting at this point that we'll be closing hopefully closing that deal at the towards the end of Q4 .

Darren Yip: Thanks so much. With respect to MoveWorks, we're expecting at this point that we'll be closing, hopefully closing that deal towards the end of Q4. We're very excited about what MoveWorks is going to bring to us. At the same time, it's pretty important to note that the incredible Now Assist results that we've had have been all on our own without MoveWorks. As you think about moving into 2026, ServiceNow plus MoveWorks is going to add a whole other level to what we can provide to our customers. I'll let Amit take more specific about what MoveWorks is going to bring.

Speaker #5: So very excited about what MoveWorks is going to do for us. But at the same time, it's pretty important to note that the incredible Now Assist results that we've had have been all on our own, without MoveWorks.

Speaker #5: And so as you think about moving into 2026 , ServiceNow plus Move Works is going to add a whole other level to what we can provide to our customers .

Speaker #5: And I'll let Amit take more, more specific about what move works is going on.

Speaker #7: To be Gina mentioned . I mean , I think we are our initial thesis around move still remains the same , right ? We're looking at a company which brings a lot of good AI expertise and talent to allow us to accelerate our roadmap .

Amit Zavery: As Gina mentioned, I mean, I think our initial thesis around MoveWorks still remains the same, right? We're looking at a company which brings a lot of good AI expertise and talent to allow us to accelerate our roadmap. We've been doing a lot of work, as you see, with our new capabilities with the Zurich release and things we're doing around the AI lens and other things we delivered today. Those things are all progressing well. Customers are appreciating it, and the adoption has been great. As MoveWorks comes on board, we will, of course, accelerate a lot more stuff together. Nothing is dependent on it right now.

Speaker #7: But we've been doing a lot of work, as you see, with our new capabilities from the Zurich release and the things we're doing around the AI lens and other things we delivered today.

Speaker #7: So those things are all progressing well . Customers appreciating it and the adoption has been great . We will , as Mu works , come on board , we will of course accelerate a lot more stuff together .

Speaker #7: But nothing is dependent on it right now.

Speaker #2: Your next question comes from the line of Peter Read with AllianceBernstein. Your line is open.

[Company Representative]: Your next question comes from the line of Peter Reed with the Lion's Brain team. Your line is open.

Speaker #14: Thank you. You know, I think one of the really innovative and exciting opportunities you've been talking about is the AI control tower.

Bill McDermott: Thank you. I think one of the really innovative and exciting opportunities you've been talking about is the AI Control Tower. I wanted to kind of pick your brain on how you see the demand from buyers. Is this the type of thing where people are investing in the Control Tower as they start on their AI journey, or does the buyer really need to get to kind of a certain maturity level before they realize its need and then they kind of come back and invest in it? If you think through that model, how do the commercials ramp and how material can this opportunity be for ServiceNow over time?

Speaker #14: And I wanted to kind of pick your brain on how you see the demand from buyers. Is this the type of thing where people are investing in the control tower as they start on their AI journey, or does the buyer really need to get to a kind of a certain maturity level before they realize its need?

Speaker #14: And then they kind of come back and invest in it? And if you think through that model, like how do the commercials ramp and how material can this opportunity be for ServiceNow over time?

Speaker #7: Yeah . So , Peter , the AI control tower , it's been one of the biggest interest from any customer we speak to , because every customer , when they're thinking of AI adoption and agentic , they're worried about control .

Amit Zavery: Yeah. Peter, on the AI Control Tower, it's been one of the biggest interests from any customer we speak to because every customer, when they're thinking of AI adoption and agentic, they're worried about control. They don't know how to manage the security. They don't know what to do with trust, safety, regulatory requirements. The AI Control Tower solves that problem. As soon as we start talking to customers, it resonates instantly. That's why our business in this area, customer base, grew by 4x in this quarter itself because there's so much proliferation of different pieces of technologies out there in customer base, and they need something which can control it and manage it for them. Just like we've been doing that for various assets, we're now doing it for AI.

Speaker #7: They don't know how to manage security. They don't know what to do with trust, safety, regulatory requirements, and the AI control tower solves that problem.

Speaker #7: As soon as we start talking to customers , it resonates instantly . That's why our business in this area , customer base grew by four X in this quarter itself .

Speaker #7: Because there's so much proliferation of different pieces of technologies out there in the customer base, and they need something that can control it.

Speaker #7: And manage it for them , just like we were doing that for various assets . We are now doing it for AI , and what we have done is we have integrated all the different systems out there to give you full visibility and control , and that resonates .

Amit Zavery: What we have done is we have integrated all the different systems out there to give you full visibility and control. That resonates, and that's where the growth is coming from. If you look at our risk business, the security business, AI Control Tower is pulling that into a lot more conversations than we would otherwise have been because of our end-to-end capability around security, risk, compliance, and giving you full lifecycle control and cost management around AI. We're very heterogeneous end-to-end, and that's where the use cases are emerging from. That's driving a lot of consumption. The business will continue to grow in this area because we are probably the only provider like this in the industry today.

Speaker #7: And that's where the growth is coming for . If you look at our risk business , the security business , AI control tower is pulling that into a lot more conversations than we would otherwise have been because of our end to end capability around on security risk , compliance and giving you full lifecycle control and cost management around AI .

Speaker #7: And we're very heterogeneous end to end. And that's where the use cases are emerging from. And that's driving a lot of consumption.

Speaker #7: As you said, the business will continue to grow in this area because we are probably the only provider like this in the industry today.

Speaker #4: And to build on on that , Peter , you know , I recently was on a trip in Europe and you take great companies as an example , like an AstraZeneca .

Operator: To build on that, Peter, you know, I recently was on a trip in Europe, and you take great companies as an example, like an AstraZeneca. They're using the AI Control Tower to manage and govern all their AI initiatives at scale. They've implemented ServiceNow agentic AI across the organization to drive employee productivity because they want to free up time for innovation to double the medicines that they bring to market, and they want to do it faster than any competitor. I think Amit nailed it. I would also, especially when you get to Europe and Asia, say ethical, compliant, and secure is really radiating as important attributes of our platform because they see what's going on in the headlines with security challenges out there. That's what this unified architecture does.

Speaker #4: They're using the control tower to manage and govern all their AI initiatives at scale. They've implemented ServiceNow AI across the organization to drive employee productivity because they want to free up time for innovation to double the medicines that they bring to market.

Speaker #4: And they want to do it faster than any competitor. I think I've nailed it. But I would also, especially when you get to Europe and Asia, emphasize that being ethical, compliant, and secure is really radiating as important attributes of our platform because they see what's going on in the headlines with security challenges out there.

Speaker #4: And that's what this unified architecture does . You know , it's AI , but it's ethical compliance , secure . And you can coordinate all your efforts across legal , the security function , internal audit .

Operator: It's AI, but it's ethical, compliant, secure, and you can coordinate all your efforts across legal, the security function, internal audit, IT. These are really important matters. The AI Control Tower is going to give organizations that clean pane of glass, that simple control tower to drive AI strategy, governance, management, and performance across all of their AI investments. This AI sprawl that's gone on right now, whether it's built in-house proof of concepts or externally sourced dreams that haven't quite worked out, are really getting cleaned up by the AI Control Tower in this platform. I think having a single governance framework is absolutely a breakthrough for enterprises, and they all appreciate it at the C-suite, I can tell you that.

Speaker #4: It . And these are really important matters . And the AI control tower is going to give organizations that clean pain of glass that simple control tower to drive AI strategy , governance , management and performance across all of their AI investments .

Speaker #4: This AI sprawl that's going on right now, whether it's built in-house, proofs of concept, or externally sourced dreams that haven't quite worked out, are really being cleaned up by the AI control tower in this platform.

Speaker #4: So, I think having a single governance framework is absolutely a breakthrough for enterprises, and they all appreciate it at the C-suite.

Speaker #4: I can tell you that.

Speaker #14: Thank you .

Speaker #4: You're welcome .

Bill McDermott: Thank you.

Speaker #15: Your next .

Operator: You're welcome.

Speaker #2: Your next question comes from the line of Brad Seals with Bank of America Securities. Your line is open.

[Company Representative]: Your next question comes from the line of Greg Sales with Bank of America Securities. Your line is open.

Speaker #16: Oh , great . Thank you so much . I wanted to ask a question also on now assist . Just given the momentum you're seeing here , I wanted to get your thoughts on the pricing change earlier this year .

Bill McDermott: Oh, great. Thank you so much. I wanted to ask a question also on Now Assist, just given the momentum you're seeing here. I wanted to get your thoughts on the pricing change earlier this year. Do you feel like that has been well received? Has that been an unlock for you as you're starting to see some of the momentum here? Do you have the right pricing model in place? Do you kind of feel that way? Also, you know, some of the deal metrics you mentioned sound like you're getting to a place where you probably have some pretty decent lighthouse accounts for reference with Now Assist. Do you feel that that could be a catalyst, you know, for more Now Assist deals to come? Thank you.

Speaker #16: Do you feel like that has been well received? Has that been an unlock for you as you're starting to see some of the momentum here?

Speaker #16: Do you have the right pricing model in place? You kind of feel that way. And then also, you know, some of the deal metrics you mentioned sound like you're getting to a place where you probably have some pretty decent lighthouse accounts for reference with Now Assist.

Speaker #16: Do you feel that that could be a catalyst for more analysis deals to come? Thank you.

Speaker #7: Hey , Brad . So the pricing we introduced for now assists . And this idea of combination of subscription and consumption , a hybrid model has been very well received by our customers .

Amit Zavery: Hey, Brian. The pricing we introduced for Now Assist and this idea of a combination of subscription and consumption, a hybrid model, has been very well received by our customers. They like this idea of having flexibility as well as predictability in this model where we can give them the capability to adopt as they need to, and then they pay based on usage over time. If they run out of tokens, they can re-up as well. That structure has worked perfectly for our customers. We're seeing a lot of interest in terms of adopting this kind of structure by other vendors as well because they're seeing that what we have done works very well for everyone today.

Speaker #7: They like this idea of having flexibility as well as predictability. In this model, we can give them the capability to adapt as they need to, and then they pay based on usage over time.

Speaker #7: And then if they run out of tokens, they can re-up as well. So that structure has worked perfectly for our customers.

Speaker #7: We're seeing a lot of interest in terms of adopting this kind of structure by other vendors as well because they're seeing what we have done works very well for everyone today.

Speaker #7: So we're very happy with the structure. It's already been playing out the way we expected in terms of consumption. The idea of adoption and usage is going up very fast.

Amit Zavery: We're very happy with the structure that has already been playing out with the way we expected in terms of consumption and the idea of adoption and usage going up very fast while we, of course, get the subscription revenue up front. The combination has played out, and I think it's the right structure, and we continue to add more to it with other products as well. You should expect continuous that kind of a structure going forward. The other question you have around our lighthouse accounts, there are a lot of customer examples we shared with you earlier, Ulta Beauty, AstraZeneca, City of Raleigh, who are doing a lot of deflections using Now Assist and doing a lot of adoption around AI Control Tower as well as using this to automate their business processes.

Speaker #7: While we, of course, get the subscription revenue up front. So, the combination has played out, and I think it's the right structure.

Speaker #7: And we continue to add more to it with other products as well. So, you should expect continuous that kind of structure going forward.

Speaker #7: And the other question you have around our lighthouse accounts , there are a lot of customer examples we shared with you earlier , Ulta beauty , AstraZeneca , City of Raleigh , who are doing a lot of deflections using now assist and doing a lot of adoption around AI control tower , as well as using this to automate the business processes so that lighthouse accounts , of course , help us to go and talk to other , other customers with a similar kind of use cases .

Amit Zavery: Lighthouse accounts, of course, help us to go and talk to other customers with a similar kind of use cases and get that adoption going very fast as well.

Speaker #7: And get that adoption going very fast as well.

Speaker #4: And Brad , I have to say , you know , just as a point of pride when the world's most valuable company is one of those lighthouses , I can only tell you it just it really , really touches my heart .

Operator: Brad, I have to say, just as a point of pride, when the world's most valuable company is one of those lighthouses, I can only tell you it just really, really touches my heart. I think every single heart, all 28,000 at ServiceNow, to proudly say that NVIDIA runs ServiceNow, it's super exciting.

Speaker #4: And I think every single heart, all 28,000 at ServiceNow, can proudly say that NVIDIA runs ServiceNow. It's super exciting.

Speaker #16: Very exciting. Thanks so much, guys.

Bill McDermott: Very exciting. Thanks so much, guys.

Speaker #5: Thanks , Brad .

Speaker #15: Your next .

[Company Representative]: Thanks, Brad. Your next question comes from the line of Arjun Bhaskar with William Blair. Your line is open.

Speaker #2: Your next question comes from the line of Arjun Bashir with William Blair. Your line is open.

Speaker #17: All right . Thank you very much . I had two questions . I hopefully quick ones . Bill . First I'm curious just in terms of where you see interest in adoption , is there a particular workflow that that sticks out or that customers are adopting first and then is it it and then you see them expand to customer and HR and other other workflows for your now SKUs .

Bill McDermott: All right. Thank you very much. I had two questions, hopefully quick ones. Bill, first, I'm curious, just in terms of where you see interest in adoption, is there a particular workflow that sticks out or that customers are adopting first, and then you know is it IT, and then you see them expand to customer and HR and other workflows for your Now Assist SKUs? Second question, just in terms of monetization, Gina, I'm curious if the $500 million that you have planned by the end of the year, how much of that is the subscription uplift piece versus the token consumption, or should we think of consumption kind of layering in more in 2026? Thank you.

Speaker #17: And then and then second question just on in terms of monetization , I'm curious if the 500 million that you have planned by the end of the year , how much of that is the subscription uplift piece versus the token consumption ?

Speaker #17: Or should we think of consumption kind of layering more in 2026? Thank you.

Speaker #4: Thank you very much for the question, Arjun. I'll start and then give it to Ahmed. But I'll just focus on the category of CRM.

Operator: Thank you very much for the question, Arjun. I'll start and then give it to Amit, but I'll just focus on the category of CRM, if I might. It's fascinating to see what's happening and how quickly that dynamic is changing because of AI. I recently met a CEO of one of the largest companies in the world, one of the most prestigious companies in the world, and they also happen to retail very glamorous, wonderful products all over the world.

Speaker #4: If I might . It's fascinating to see what's happening and how quickly that dynamic is changing because of AI . I recently met a CEO of one of the largest companies in the world , one of the most prestigious companies in the world , and they also to retail .

Speaker #4: Very glamorous , wonderful products all over the world . And the conversation revolved around social media and the idea of TikTok and the real time understanding of what's going on in the market .

Operator: The conversation revolved around the social media and the idea of TikTok and the real-time understanding of what's going on in the market, but then also having a tremendous ability to use AI as a secure portal for the customer to configure, price, and quote all of their online interests and have that fulfilled in a way where they get the right product at the right price, at the right place, in the form factor that the customer wants, and ultimately to service that account and make sure that customer is one for life. You know, the net present value or the loyalty effect is still every business's greatest asset. When I explained how we did it and how that was unique in an end-to-end platform that we built and that was our AI, and it was a single customer experience, and you could meet the customer where they are.

Speaker #4: But then also having a tremendous ability to use AI as a secure portal for the customer to configure , price and quote all of their online interests and have that fulfilled in a way where they get the right product at the right price , at the right place , in the form factor that the customer wants , and then ultimately to service that account and make sure that customer is won for life .

Speaker #4: You know , the the net present value of the loyalty effect is still every business is greatest asset . And when I explained how we did it and how that was unique in an end to end platform that built , and that was our AI and it was a single customer And you could meet the customer where they are .

Speaker #4: And in fact , you can even automate that supply chain on the fly . If you found that that TikTok ad hit a strike zone for you in the marketplace , and he was like , oh wow , this is a whole different conversation because this is what I'm doing now .

Operator: In fact, you could even automate that supply chain on the fly if you found that that TikTok ad hit a strike zone for you in the marketplace. He was like, "Oh, wow. This is a whole different conversation because this is what I'm doing now, and this is how my people are spending their time, and this is the fragmented nature of the customer relationship across multiple clouds." I said, "I understand." He said, "Please, can you bring your people in right away?" I said, "You got me. You don't need anyone else. Let's just do it." He said, "Let's go for it." That's where it's at.

Speaker #4: And this is how my people are spending their time. And this is the fragmented nature of the customer relationship across multiple clouds.

Speaker #4: And I said , I understand . And he said , please , can you bring your people in right away ? And I said , you got me .

Speaker #4: You don't need anyone else . Let's just do it . And he said , let's go for it . So that's where it's at .

Speaker #7: I'll just add, I think Bill talked about the CRM use case. The one which we are seeing a lot of interest in is this idea of autonomous.

Amit Zavery: I'll just add, I think Bill talked about the CRM use case. The one which we're also seeing a lot of interest in is this idea of autonomous IT, where you have zero cases being created, all automatically being solved for any kind of IT incidents. Security is another use case which is becoming very, very common for us, where incident management for any kind of issue which we might have inside the company with VPNs or security-related stuff as well. The idea of triaging and case resolution for those kinds of use cases is becoming a big part of this whole workflow where customers are adopting it very fast because it reduces the cost, automates the system, gets better efficiency, but also much more predictability in terms of how you run and operate your individual departments as well. It's helping that. The same thing is happening with HR.

Speaker #7: It , where you have zero cases been created . All be solved for any kind of IT incidents . Security is another use case which is becoming very , very common for us .

Speaker #7: Where incident management for any kind of issue that we might have inside the company with VPNs or security-related matters as well.

Speaker #7: The idea of triaging and case resolution for those kinds of use cases is becoming a big part of this whole workflow, where customers are adopting it very fast because it reduces cost, automates efficiency, and provides much more predictability in terms of how you run and operate your individual departments as well.

Speaker #7: So it's helping that same thing happening with HR. We're doing something similar with finance, supply chain, and procurement. All of these areas have specific prepackaged flows.

Amit Zavery: We're doing something similar with finance, supply chain, procurement. All of these areas have particular specific prepackaged flows we provide, which makes them much more automated going forward.

Speaker #7: We provide, which makes them much more automated going forward.

Speaker #5: And then to your second question , Arjun , on the 500 million in expected ACV for now , assist subscription versus consumption . First , I want to just mention that we continue to see price uplifts for now .

Darren Yip: To your second question, Arjun, on the $500 million in expected ACV for Now Assist, subscription versus consumption. First, I want to just mention that we continue to see price uplifts for Now Assist of over 30%, which is powerful. Of the $500 million, while we're seeing incredible growth in assists, consumption won't materially start impacting for a little while. That $500 million at this point is just the subscription piece. As you think about the flywheel and the longer-term opportunity, it's extraordinary.

Speaker #5: Assist of over 30% , which is powerful . Of the 500 million . While we're we're seeing incredible growth in assists . Consumption won't materially start impacting for a little while .

Speaker #5: So that 500 million at this point is just just the subscription piece . So as you think about the flywheel and the longer term opportunity , it it's it's extraordinary .

Speaker #2: We have time for one last question, and your last question comes from the line of Keith Beckman with BMO. Your line is open.

[Company Representative]: We have time for one last question. Your last question comes from the line of Keith Beckman with BMO. Your line is open.

Speaker #18: Many thanks for taking the question . I wanted to drill down if I could , on the security piece . highlighted in the prepared remarks and the question really relates to , are you actually seeing an acceleration as security crosses into that 1 billion ACV threshold in , does it include benefits from AI within the context of security , and if so , how ?

Operator: Many thanks for taking the question. I wanted to drill down, if I could, on the security piece. It was highlighted in the prepared remarks. The question really relates to, are you actually seeing an acceleration as security crosses into that $1 billion ACV threshold? Does it include benefits from AI within the context of security? If so, how? Gina, since I'm just on the last question, I just wanted to sneak in one more. Your previous guidance on margins for 2026 were plus 100 for operating and plus 50 for free cash flow. Does that still hold on the higher base? That's it for me. Congratulations on the quarter. Thank you.

Speaker #18: And Gina , since I'm just I'm the last question , I just wanted to sneak in one more . Your previous guidance on margins for 26 were plus 100 for operating and plus 50 for free .

Speaker #18: Cash flow . Does that still hold on the higher base ? And that's it for me . Congratulations on the quarter . Thank you .

Speaker #7: So, let me address the security question. You have definitely the big tailwind we're seeing, as AI creates a lot of security issues for every company out there.

Amit Zavery: Let me keep addressing the security question you have. Definitely, the big tailwind we're seeing is AI creates a lot of security issues for every company out there. When you're starting to adopt so many different pieces of technology in AI, you need to be able to manage them, have visibility, control. If any incident happens, you have to do that proactively, support that, and fix that very quickly across the organization. The CSOs are coming to us asking for help to really automate the processes of resolution, incident management, and triaging those cases as well. That's a big tailwind for us. The second is around risk management as well because every company is worried about what exposure you have, what systems you're using, how much you're paying for it, and what outcome you got out of it, right?

Speaker #7: And when you start adopting so many different pieces of technology in AI, you need to be able to manage them. You need visibility, control, and to address any incidents that happen.

Speaker #7: You have to do that, proactively support that, and fix that very quickly across the organization. So the CISOs are coming to us asking for help to really automate that.

Speaker #7: Processes of resolution incident management and triaging those cases as well . So that's a big tailwind for us . Second is around risk management as well , because every company is worried about what exposure do you have , what systems are you using ?

Speaker #7: How much are you paying for it, and what outcomes did you get out of it? Right. So our risk management profile we created in our security business gives you that full visibility.

Amit Zavery: Our risk management profile we created in our security business gives you that full visibility. AI Control Tower as part of our security products really makes a huge difference. That's why we're seeing a very, very good adoption interest. As you heard, we crossed the $1 billion ACV threshold and are very, very excited about what we can do in this area. We keep on investing to make sure that we take a lot more part of this market because there's a lot of demand driving this kind of request to us.

Speaker #7: So, the AI Control Tower, as part of our security products, really makes a huge difference. That's why we're seeing a very, very good adoption interest.

Speaker #7: And as you heard, we crossed a $1 billion ACV threshold and are very, very excited about what we can do in this area.

Speaker #7: And we keep on investing to make sure that we take a lot more part of this market, because there is a lot of demand driving this kind of request to us.

Speaker #5: And then on your second question , Keith , on the previous margin guidance , the raises that we're making to 2025 , margin and free cash flow margin guidance , certainly accelerates the trajectory of our margin accretion .

Darren Yip: On your second question, Keith, on the previous margin guidance, the raises that we're making to 2025 margin and free cash flow margin guidance certainly accelerate the trajectory of our margin accretion. I'm not going to update guides yet. I'll share more specifics on 2026 and long-term margin outlook next year. We're certainly encouraged by the operational efficiencies that we're already seeing from AI because they're providing clearly incremental leverage and additional headroom for further margin expansion. However, as you know, if there's opportunities for us to make good ROI investments to accelerate growth, we will make them. The other thing I'll just comment on, you're seeing a bit of lower CapEx as a result of data center spend rationalization as some of our workloads move to hyperscalers. We definitely are excited about the potential for incremental margin expansion.

Speaker #5: I'm not I'm not going to . Update guides yet . I'll share more specifics on 2026 and long term margin outlook next year .

Speaker #5: We're certainly encouraged by the operational efficiencies that we're already seeing from AI, because they're providing clearly incremental leverage and additional headroom for further margin expansion.

Speaker #5: However, as you know, if there are opportunities for us to make good ROI investments to accelerate growth, we will make them.

Speaker #5: The other thing I’ll just comment on is that you’re seeing a bit of lower CapEx as a result of data center spend rationalization, as some of our workloads move to hyperscalers.

Speaker #5: And so we definitely are excited about the potential for incremental margin expansion. We always reserve the right to reinvest back into the business.

Darren Yip: We always reserve the right to reinvest back into the business if we see opportunities for higher growth. What this ServiceNow business shows, I think, with our Q3 results and the guide is that we have incredibly durable long-term growth opportunities with absolute best-in-class margin profile that continues to accelerate and accrete.

Speaker #5: If we see opportunities for higher growth . But what this service now business shows , I think with our Q3 results and the guide is that we have incredibly durable , long term growth opportunities with absolute best in class margin profile that continues to accelerate and accrete .

Speaker #4: Gina , if I may add one thing to your very perfect comments , this is the only enterprise software company in the world that , for the last ten years , has operated above the rule of 50 plus .

Operator: Gina, if I may add one thing to your very perfect comments, this is the only enterprise software company in the world that for the last 10 years has operated above the rule of 50+ between the 20+% revenue growth and the free cash flow growth of the company, the only one in the enterprise. You have every reason to believe the next 10 are going to be even more exciting because of the AI revolution. We're pumped up.

Speaker #4: Between the 20 plus revenue growth and the free cash flow growth of the company , the only one in the enterprise . So you have every reason to believe the next ten are going to be even more exciting because of the AI revolution .

Speaker #4: We're pumped up .

Speaker #2: Ladies and gentlemen , that concludes today's call . You may know . Disconnect . Thank you and have a great day .

[Company Representative]: Ladies and gentlemen, that concludes today's call. You may now disconnect. Thank you, and have a great day.

[Analyst]: Please wait. The conference will begin shortly.