Q4 2025 ServiceNow Inc Earnings Call

January 28, 2026

Conference call all lines have been placed on mute to prevent any background noise.

After the speakers remarks, there will be a question and answer session.

If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad,

Operator: Thank you for standing by. At this time, I would like to welcome everyone to the Q4 and Full Year 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 withdraw your question, simply press Star one again. We do ask you to limit yourself to one question for today's event. Thank you. I would now like to turn the call over to Darren Yip, Senior Vice President of Investor Relations and Market Insights. You may begin.

If you would like to withdraw your question, simply press star 1. Again, we do ask you to limit yourself to 1 question for today's event.

Thank you. I would now like to turn the call over to Darren. Yep. Senior vice president of investor relations and Market insights. You may begin.

Good afternoon and thank you for joining service. Now's fourth quarter 2025 earnings conference. Call joining me, our bill McDermott, our chairman and chief executive officer Gina mastantuno, our president, and Chief Financial Officer, and Amit zveri President Chief product officer and Chief Operating Officer.

During today's call, we will review our fourth quarter, 2025 results and discuss our guidance for the first quarter and full year 2026.

Darren Yip: Good afternoon, and thank you for joining ServiceNow's Q4 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 Q4 2025 results and discuss our guidance for the Q1 and full year 2026. 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.

Q4 2025 ServiceNow Inc Earnings Call

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Q4 2025 ServiceNow Inc Earnings Call

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Wednesday, January 28th, 2026 at 10:00 PM

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Darren Yip: 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 or 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.

Bill McDermott: Enterprise AI will be the largest driver of return on the multi-trillion-dollar super cycle of investment in AI infrastructure. The real payoff comes when trillions of tokens move beyond pilots to be embedded directly into the workflows where business decisions are made. ServiceNow is the gateway to this shift, serving as the Semantic Layer that makes AI ubiquitous in the enterprise. We are also the great consolidator of hundreds of feature and function-specific software solutions into end-to-end business processes with our AI Control Tower for business reinvention. You need AI plus workflows, because AI is probabilistic, which by definition means we can't be certain about the results. Workflow orchestration is deterministic, predictable, no randomness, which is required given the sophistication and governance of running global enterprises. AI doesn't replace enterprise orchestration. It depends on it. It depends on governance. It depends on scale.

Bill McDermott: We saw great brands already purchasing Assist packs in Q4 across a variety of industries, including financial services, manufacturing, healthcare, life sciences, public sector, and technology. Overall, the number of workflows and the number of transactions each grew over 33%, from 60 billion to 80 billion, and from 4.8 trillion to 6.4 trillion, respectively, and the growth continues. I continue to hear speculation about seat compression. If all we did was look at available seats in our target market, there would be an estimated 1.3 billion seats in that target market, so we've barely scratched the surface. And of course, we're looking far beyond seats alone with our hybrid business model for billions of devices, agents, and assists. On the back of this momentum, we're guiding to 20% subscription revenue growth for 2026. And by now, everyone knows how ServiceNow rolls.

Bill McDermott: We use M&A to expand into an even larger TAM, and it is now beyond $600 billion, based entirely on where our customers need us to go, where we know we can build exciting growth businesses. Our announced plans to acquire Veza and Armis happened in rapid succession because this assembles three critical layers for enterprises to operate securely in an agentic AI world: visibility, identity, and orchestration. With our fast-growing $1 billion-plus CACV security and risk business, the timing to expand the opportunity could not be better. Post-Armis, we do not see any other large white spaces that are necessary to complete our platform vision for security. ServiceNow's organic growth strategy, with opportunistic tuck-ins for tech and talent, remains unchanged: AI, data, workflows, security.... We are one of the few companies totally in control of our own destiny. We are playing offense on our tippy toes.

Bill McDermott: That's why we're announcing an incremental $5 billion share repurchase authorization with an immediate ASR of $2 billion. Here's another fact: ServiceNow has one unifying objective, which is simply to be the AI-defining enterprise software company of the 21st century. IDC estimates there will be 2.2 billion AI agents in the world by 2030. Millions of those will be built on the ServiceNow platform. Whatever isn't built on our platform will be governed and secured by our AI Control Tower. ServiceNow is a build or buy winner. We'll win with the builders because they want ServiceNow for our data fabric, our agents, governance, and security. We'll win for buyers because they want best-of-breed, AI-native workflows and agents to reinvent their status quo in IT, HR, CRM, app development, and beyond. We have a pristine Rule of 55+ financial profile, a comprehensive integrated platform architecture.

Bill McDermott: We closed a $1 million-plus Assist Pack deal with a leading US consumer services company after customer service agents generated a 400% ROI. After a year of deployment, the customer needed 8 times more assists as they transitioned customer support operations to predominantly automated interactions. This is minimizing operating costs, shortening support resolution times, and enhancing the overall customer experience. They are flipping the support model from 80% human-led, 20% automated, to 80% automated, and 20% human-led. In Q4, we closed a landmark seven-figure deal with a complex high-tech manufacturer, involving an end-to-end takeout of a legacy CRM competitor. They turned to ServiceNow CPQ to solve their complex deal evaluations, replacing manual spreadsheets and unsuccessful legacy tools. In combination with CSM, Workflow Data Fabric, Now Assist, and other products, too, our customer trusted ServiceNow as their AI Control Tower for business reinvention.

Bill McDermott: A leading European telecom provider is building an AI-driven CRM solution for the telecom industry with ServiceNow. They consolidated 7 internal systems using ServiceNow CRM, and they're gonna modernize even further to sell, serve, and support its own customers. This is reducing cost by 30%, reducing cycle time from order to fulfillment by 25%, and resolving 20% more work orders on the first request. A leading Canadian real estate company selected ServiceNow CRM platform to integrate all aspects of their resident support and field operations with a unified data model. The customer leveraged ServiceNow to gain real-time operational visibility, optimize dispatch, and automate work order management. This drove efficiency gains that delivered more than 100% ROI. A global business services company deployed ServiceNow agents for incident classification and resolution, resulting in initial time savings of 13% for agents involved.

Bill McDermott: One of Europe's largest drugstore chains used ServiceNow to transform its customer service, cutting the time it took customers to receive support from 9 minutes to 30 seconds, and resolving customer issues with 98% accuracy. ServiceNow was selected by a large US county in a seven-figure deal to replace a legacy, highly customized IT platform. They are supporting election operations by consolidating manual, fragmented processes into our AI platform, leveraging native, ITSM, asset management, custom app development, and offline mobile capabilities. A large US agency is using ServiceNow as the foundation of its IT modernization strategy. They're consolidating all IT services on ServiceNow, replacing more than 40 disparate tools currently in use. And looking ahead, they plan to use ServiceNow agentic AI capabilities to expand self-service and reduce operational overhead. Everyone talks about AI. We deliver business outcomes with AI.

Bill McDermott: Last quarter, we announced a collaboration with FedEx Dataworks. While supply chains are more critical than ever, many companies still lack the predictive intelligence needed to coordinate today's complex value chains. We're combining ServiceNow's orchestration with FedEx's unique data DNA to provide procurement leaders with trusted insights in our source-to-pay solution. FedEx is also expanding beyond just source to pay. Its partnership will leverage the capabilities of the ServiceNow AI platform. Other great brands like Adobe, Accenture, EY, Fiserv, Siemens, Panasonic Avionics, and BT have all saved millions and millions, and they're using ServiceNow to grow their business, and we could go on and on. So let's talk a little bit about our great partners. Our ecosystem includes all three hyperscalers. They're all great companies. The language model companies, they're excellent, too.

Bill McDermott: Systems integrators, pure-play ServiceNow partners, and independent software vendors, they're all building their futures on our AI platform. Think about this: ServiceNow and Microsoft have announced a deep AI integration, connecting copilots, agents, and data across Microsoft 365 and the ServiceNow AI platform to deliver seamless orchestration, governance, and enterprise-wide automation. The collaboration introduces Microsoft's Agent 365 integration, and it's anchored by ServiceNow's AI Control Tower. It sets a whole new standard for enterprise AI interoperability, moving organizations from isolated AI experiences to autonomous AI workflows that drive efficiency and return on investment. ServiceNow and Anthropic have announced an expanded partnership to integrate Claude models more deeply into the ServiceNow AI platform. Through the collaboration, ServiceNow is also bringing leading Claude models into ServiceNow to support secure, compliant AI across numerous industries.

Bill McDermott: ServiceNow also announced a new collaboration with OpenAI to enable direct customer access to frontier model capabilities, custom ServiceNow AI solutions, and increased speed with no bespoke development required. Under this agreement, OpenAI models will be a preferred intelligence capability for several agentic use cases offered to ServiceNow enterprise customers. ServiceNow and NTT DATA have expanded our strategic partnership to accelerate AI-led transformation for global enterprises, designating NTT DATA as a strategic AI delivery partner. This includes co-developing and co-selling AI-powered solutions. Also, scaling NTT DATA's use of ServiceNow's AI platform, and together, we will operationalize AI responsibly, advancing new deployment models and embedding AI engineering expertise into transformation projects. Again, these are just a few of the many strategic partnerships. Before I wrap up, let me give you a few more facts about our strategic expansion in AI security.

Bill McDermott: As you know, we're going through the regulatory clearance process, but we can say this: the combination of Veza and Armis with ServiceNow AI Platform will create something that is mission critical for enterprise AI. In the agentic era, if companies want to scale AI, trust and governance that span any cloud, any asset, any AI system, and any device, these are all non-negotiable. So here's the problem enterprises face today. AI adoption is expanding the attack surface exponentially. Companies are deploying autonomous agents across their operations, but they're only able to see a small fraction of their digital estate. Traditional security tools do not address connected assets, especially unmanaged IoT devices, operational technology, and medical equipment. To make matters worse, leaders have no control over who and what can access critical systems and data, and they have no coordinated way to remediate vulnerabilities before they become breaches.

Bill McDermott: Here's where ServiceNow's strategic vision comes into play. First, Armis will solve the visibility problem. Armis provides real-time agentless discovery and classification of every asset across the entire enterprise: IT, OT, IoT, medical devices, industrial controllers, and even shadow IT that bypasses procurement. This creates a continuously updated map of the enterprise environment. Armis is already protecting over 40% of the Fortune 100, precisely because they've cracked the visibility challenge. Second, Veza will solve the identity governance problem through its patented access graph technology. Veza maps access relationships and privileges across humans, machines, and AI agents in real time. This is critical because AI agents need dynamic, context-aware permissions. An agent working for a senior manager needs different access than the same agent working for a junior employee, and those permissions must be governed continuously, not set once and forgotten.

Bill McDermott: CISOs have told us this is the bottleneck preventing AI agent deployment at scale. When both of these are integrated into ServiceNow's AI Platform and AI Control Tower, this is how orchestration goes from theory to reality. When we combine Armis asset visibility with Veza's identity governance and ServiceNow's business context, CMDB, which maps every asset to the services, processes, and teams it supports, you create something highly differentiated, a unified end-to-end security exposure and operation stack that can see, decide, and act across the entire technology footprint. Let's make this concrete for you. Armis discovers a vulnerability on an unmanaged IoT device in a manufacturing plant. That exposure insight automatically flows into ServiceNow's AI Control Tower. Now, you understand which production line depends on that device, which team owns it, and what the financial impact of downtime would be.

Bill McDermott: Simultaneously, Veza maps who and what has access to that device and related systems. ServiceNow then automatically prioritizes the risk based on business impact, triggers the appropriate remediation workflow, routes it to the right team with the right permissions, and tracks resolution, all before an incident has a chance to occur. This is autonomous, proactive cybersecurity. Not alerts that sit in a queue, not manual coordination across fragmented tools, not security theater either. This is intelligent action at machine speed, governed by unified policies, executed through an automated workflow machine. We just closed the largest quarter ever for OT in Q4. Customers recognize the expanded security capabilities these acquisitions will unlock, and they are encouraging us to go even deeper and broader with them on OT. Our customers are very excited, and so are we. In closing, ServiceNow is exactly where the world needs it to be.

Bill McDermott: The AI Control Tower for business reinvention, situated in the core of the enterprise, in the core of enterprise AI, with the capabilities to automate, orchestrate, and integrate any business process. With Moveworks from ServiceNow, we put AI to work for people, a front door to the agentic enterprise for every single employee in the world. We have the Workflow Data Fabric to map the right information to the right workflows. We have the most innovative technology operating system in the world, the only one capable of delivering fully autonomous IT. We have the customer demand to deliver AI-native solutions for the employee experience and the customer experience to modernize expensive legacy systems. With Veza and Armis, we'll have the most comprehensive approach to secure the agentic enterprise. There's only two measurements that matter in enterprise technology. Is there completeness of vision? Is there proven capability to execute?

Bill McDermott: On both counts, it's an enthusiastic yes for ServiceNow, and two things can be true at the same time. You can have fast-growing new market participants building exciting use cases, especially for personal productivity at work. You can also have fast-growing market leaders at the core of enterprise-grade AI... Many postmortems have been written in the enterprise over the years. Most of them, ironically, have been dead wrong. The great Lou Gerstner once said, "Changing business processes in a company is like setting your hair on fire and then using a hammer to put it out." This is hard work. It requires deep domain expertise, industrial-grade technology, and a global distribution engine to reach global enterprises and meet the customer where they are. Operating plans exist to organize a business. Dreams exist to unleash the imagination.

Gina Mastantuono: We identified an adjacent opportunity, moved decisively, integrated flawlessly, and we're already seeing outsized returns. Go-to-market synergies have unlocked significant opportunities as Logik's customer count, as part of ServiceNow, has nearly quadrupled year-over-year in Q4. Finally, Creator Workflows were in 19 of our top 20 deals, with an impressive 32 deals over $1 million in ACV. Moving to our success in driving broader AI adoption, Now Assist continues to outperform all expectations, surpassing $600 million in ACV and tracking well towards our billion-dollar-plus target for 2026. In Q4, deals greater than $1 million nearly tripled quarter-over-quarter, and customer spending more than $1 million grew over 40%. The number of deals that included five or more Now Assist products increased by over 10x year-over-year, as enterprises expand their agentic AI capabilities across their deployments....

Gina Mastantuono: The world is in the midst of an intelligence super cycle, and ServiceNow is capitalizing on this decisive moment in technology, where the strongest companies leverage rapid change to extend their market leadership. Our recent strategic acquisitions bring us incredible talent and create enormous new market opportunities while solidifying our ability to put AI to work securely across every corner of the enterprise. As we integrate these best-in-class capabilities into the ServiceNow AI platform, we're layering on advantages that position us for even stronger, more durable growth over the long term. Our organic growth engine remains fully intact. Our strategy, complete with a disciplined focus on margin expansion, remains unchanged. But the ambition is larger, and our confidence in sustained high organic growth has never been greater. Finally, Bill and I want to express our deepest gratitude to our employees around the world.

They want autonomy in and they want margin improved and growth and we're giving it to them in terms of the buying cycle. What's so cool about this buying cycle is, if you have an Roi and you're fast to Value, which we are with the fastest 1, you don't actually need a budget to get approval on your deal. You just need an executive that wants to win and the CEOs are investing heavily. Our pipelines have never been better. Let me be clear. Never been better. And, uh, don't forget, we gave you those numbers. Um, without actually, you know, full 40-day cycle and Improvement of the in an approval of deals in public sector, um, because of the government shutdown. So we got a lot going on there and we got a lot going on across Industries and across all, uh, segments of a company and finally security grew 100% year-over-year. So our customers are loving on the digital front door from move works, and we're loving having move works.

Instances and people are swiveled sharing between 33 apps a day so it's the radical simplification that comes with AI and 1 thing I wanted to double down on is you can see our user account is growing. Uh you can see it's growing in harmony with our revenue and you can also see that our margins are growing. So we're really the winning hand for companies that want the consolidator and they want to consolidate or now that's different than it was 6 years ago when I told you with a platform of platforms and we work with everybody, we still do but we have to respond to what the customer wants and they want cost out. They want autonomy in and they want margin improved and growth and we're giving it to them in terms of the buying cycle. What's so cool about this buying cycle is, if you have an Roi and you're fast to Value, which we are with the fastest 1, you don't actually need a budget to get approval on your deal. You just need an executive that wants to win and the C.

And then do you want to let me add things about the monetization of AI? Uh, Alex. So we already, of course, have been selling this hybrid pricing model and we already seeing a lot of customers now, add assist packs. Uh, we shared in the earnings already that we had many customers with average deal size of 500k. And some in multi- 7 figured uh, range, uh, renewing. And adding more suspects when they're running out of tokens. So that adoption. And that consumption is starting to happen, very, very fast, especially now that they're using a genetic use cases and workflows, uh, to run the business and once they start using 1, they start using many more and that's where the cisp passes starting to come in. So the consumption part has been adding to our subscription Revenue quickly as well and and the key to that building on what Ahmed said, which is so important. This is where a cross functional also comes in. So heavily because these deals in many cases have 7 or more service Now, Products built into them. So we're not confined by we can make 1, Buy in the Enterprise happy, we're actually making a team.

Range, uh, renewing. And adding more assistance packs when they're running out of tokens, so that the adoption and that consumption is starting to happen, very, very fast, especially now that they're using a genetic use cases and workflows, uh, to run the business. And once they start using 1, they start using many more and that's where the cisp packs are starting to come in. So that consumption part has been adding to our subscription Revenue quickly as well and and the key to that building on what Ahmed said, which is so important. This is where a cross functional also comes in. So heavily because these deals in many cases have 7 or more service Now, Products built into them. So we're not confined by we can make 1 in the Enterprise happy. We're actually making a team that reports to the CEO happy. So, the Strategic relevance is elevated considerably and these assists we've been telling you now

Yeah, hi. This is sanjit Singh for Keith Weiss and congrats on proving out the durability of both of the business uh throughout the year. I want to follow up on some of the themes of in Q3 particularly the Federal Business. If you give me, give us some color on how Federal performed via your X-ray relative to your expectations. I know we had a good run. Shut down to deal with. Um, you know, there's some large deals in the pipeline just how that sort of shaped up in Q4 and what the prospects are looking like for balance of the year in 2026 on the side side. Thank you. Yeah. Well, it was really great about the FED business is even with the shutdown, unless days to do business, you know, you have to comply with the procurement procedures. And as, you know, 40 days is um, a minimum standard. We would still able to get um very very nice deals. Um, and our 1 gov offering has been really well received. Um, so we're seeing a very big pipeline in public sector. What didn't happen in 2025 is only good news.

Yeah, hi, this is sanjit Singh for Keith Weiss, and congrats on, proving out the durability of growth in the business, uh, throughout the year. I wanted to follow up on some of the themes of in Q3 particularly the Federal Business. If you give me, give us some color on how Federal performed via your expected relative to your expectations. I know we had a government shutdown. That deal with, um, you know, there's some large deals in the pipeline just how that sort of shaped up in Q4 and what the prospects are looking like for the balance of the year in 2026 on the FED side. Thank you. Yeah. Well, it was really great about the FED business is even with the shutdown, unless days to do business, you know, you have to comply with the procurement procedures. And as, you know, 40 days is um, a minimum standard. We were still able to get um very very nice deals. Um and our 1 gov offering has been really well received. Um so we're seeing a very big pipeline in public sector. What didn't happen in 2025 is only good news.

Thanks Gabrielle for for the question. So listen, I'm really excited about the overall guide from a margin perspective. The fact that despite um, some headwinds and grow gross, margins were able to increase operating margin guidance by 100 day basis points and free cash flow by another 100 after increasing. By 350. This year is pretty remarkable. I'd say on the gross margin headwind, the, the, the bulk of it is actually our, our, very strategic focus on moving more towards hyperscalers that have slightly lower gross margins at this stage of the game given our, um, capacity there with them, then our internal. Now those margins are margin business. You'd want me to take every single day and we're offsetting Eddie headwind down below the line with the with with efficiencies. Um, as we continue to scale up those hyperscale or deals, margins, get even better. And so you can count on service now.

Uh, I'm it and I we're no sooner celebrating and their campus with their spouses and everything. Then we also closed on that and then had armas and Baeza come to you within like a few days. So probably it was a little bit. What's going on over there in service now? And I noticed that we lost about 10 billion in market cap on that because of the worry. So now the worry is gone. You can give us back the market cap and know we're not going after anything large. We now have them in the family and we're going to grow them. Like we do everything else and I would want to make 1 Thing clear and I'll give Ahmed a chance to do. This is really important. We chose assets also that were heavily integrated with service now already. Um so this isn't 1 of those, How's the integration going to go? It already went. So um maybe I'm going to give you a little caller on that. Okay, thanks Bill. So the way we've been doing uh, clearly we have this 1 platform philosophy and we continue to invest

Work for data fabric, making it easy for us to really have processes as well as a lot of the domain expertise, which come from vza and armies. Make make it integrated into a lot of the capabilities. We provide in our 1 platform over time some of the capabilities which we have on 1 platform will be available through our Miss and Visa but they are right now, completely integrated in the process oriented way and allowing customers to get advantage of those Integrations straight away without having to wait, replatform or do things, which are not going to be more architecturally. Correct? So with architecturally, we've been very thoughtful about how we bring all these Technologies, while getting customer adoption quickly as well as value created for customers. And this un uan is really, very very modern way of integrating and providing uh technical Superior way of integrating and bringing products together.

We chose assets also that were heavily integrated with service now already. Um, so this isn't 1 of those, How's the integration going to go? It already went. So um, maybe I can give you a little caller on that. Yeah, thanks Bill. So the way we've been doing uh, clearly we have this 1 platform philosophy and we continue to invest that way. What RMS and vza has been doing. We've been integrating those products using a technology called Universal agentic Network, which is built on mCP, and worked for data fabric, making it easy for us to really have processes as well as a lot of the domain expertise, which come from vesa and our mids make make it integrated into a lot of the capabilities. We provide in our 1 platform over time some of the capabilities which we have on 1 platform will be available through our Miss and vesa but they are right now, completely integrated in the process oriented way and allowing customers to get advantage of those Integrations straight away without having to wait replatform or do things which are not going to be more architecturally, correct. So with architect

Uh, thank you, and, uh, congrats on the really strong finish of the year and guidance for the upcoming year. You know, I think one of the exciting, um, announcements that have been coming out are your partnerships with OpenAI and Anthropic, um, you know, one obviously today and one a few days ago. Um, and I couldn't help but notice, in reading those, um, you know, it looks like both of them are making some investments in helping with, uh, your customers and getting traction and scaling. Um, maybe you can share a little bit more about those partnerships and, and obviously, now with multiple of them, there's also kind of the question of decisions for customers, like, which one would you focus on? Like, how do you think through which partner to pull in when, and how are the partners investing and kind of helping you get even more, um, you know, out of, uh, the customer opportunity and really driving the business faster.

Thanks for the question. So as you know, we've been always working with many many of the hyperscaler, uh, scalars as well as the large language model providers and we we had open ecosystem as a mindset with the large language provider, like open AI uh and throughout big as well as Google and Gemini. We allow customer choice, we have prompt engineered and made sure that those models work with our products and customers, don't really have to worry about what the underneath, the covers, what language we are using, they can choose if they want to and and use any 1 which we provide out of the box. What we have done over time now is with each of these providers, there are some unique capabilities, we think we can take to Market. So for example, open AI, what we're doing around voice, Ai and speak to speech, uh, real time multimodal as well as multilingual capabilities. So our CRM products can now have voice capabilities with open AI as, as a preferred model so that we can have much more differentiated offering using what, we know from domains perspective, as well as contacts, and adding the open AI.

And availability of default choices for customers. So they can choose anything they want to, and then we'll provide some unique use cases, which will be done with individual. Uh, providers like openai and entropic, where they have interest to come to go jointly to Market and build those unique Solutions as well. So customer guidance is pretty straight forward. They can choose any of the models, everything will work, but there might be some of these individual use cases. We Believe could really be turbocharged with some of these providers. And typically in the infrastructure, the model providers are providing 5, 10% of value. And 90% of Ip has been built by service. Now, to really provide that context, driven Enterprise use cases out of the box for customers to get value instantly and, and Peter because your question is so strategic and so important, I just like to build on, on this excellent answer. We, we have to recognize the Harmony and the synchrony synchronicity between these models and service now and the the idea that these models are eating Enterprise software,

Which is a wipe coding tool, allows any customer to build any workflow on top of service now. And we use uh, uh, Claude as the underlying technology to generate some of the code. And then we provide the contacts, the security, the governance on top of that using build agent to run those workflows on top of service now as well. So, we findings was unique, use cases, which might be useful with 1 of these individual providers and they want to take those products to go to market with us. We of course, collaborate with them and tell them about, what's the issues with any model? Maybe, what kind of efficiencies we can get out of it, how can we optimize it? So, our customers get value. But we still keep this idea of openness and availability of default choices for customers, so they can choose anything they want to. And then we'll provide some unique use cases, which will be done with individual, uh, providers like open Ai and anthropic where they have interest to come to go jointly to Market and build those unique Solutions as well. So, a customer guidance is pretty straight forward. They can use any of the models, everything will work, but there might be some of these individual use cases. We Believe could

Enterprises make with AI is to treat it as a kind of bolt-on tool that you access now. And then, but the way to get much better results is to make Ai and integral part of how we we get work done. And it has to be woven into the whole range of things workers do every day. That's where you actually start to see where these systems are adding value. And it's also why we're partnering with service now. So it's kind of like, where the decisions in the business takes place, is in the workflow and the models need that to have the business impact and really to be Resolute with the sea Suite of these corporations. So I think that it's really a match made in heaven. I think it's going to be a great Tailwind for our growth and I hope that we help them grow too. So it's really a nice, nice thing and, uh, I'm glad today. We had a chance to clear it all up.

In service now and the, the idea that these models are eating enterprise software, may be true in some cases, but obviously, it's not true. In our case, they're actually leaning into us because of the Innovation on our platform and the broad reach of our go to market Global engines. So these are very enticing and interesting factors in their decision to team up with us. Um, but it also really does manifest itself. I think it's something that Dario said when he said obviously the found co-founder of uh, anthropic he said a common error that enterprises make with AI is to treat it as a kind of bolt-on tool that you access now. And then, but the way to get much better results is to make Ai and integral part of how we get we get work done and it has to be woven into the whole range of things workers do every day. That's where you actually start to see where these systems are adding value. And it's also,

Allows you to do kill switches, where you can now go and shut down any agent which is going rogue, prevent any kind of, uh, nefarious activities, as well as do red teaming and ensure you are making, uh, uh, security as a prevalent and most important aspect of what you're doing before you go and deliver AI agents. And that really has opened up a lot of customers' ability to now adopt agentic use cases, because before they were worried about losing control, security, governance, and compliance. Now with AI Control Tower, we're able to give them that ability and remove that barrier out of the way. And that's where we saw this huge amount of new use cases emerge with customers, and they're starting to adopt things around incident management, triaging, and things like that very quickly because we can give you that real-time visibility and full control. So these are real questions and things we've been addressing, and it has really worked out, and AI Control Tower has grown so fast for us because that takes on, head-on, as a heterogeneous product out there. And, and Patrick, one thing I would say as an example, I'll give—

AI is a cross-functional sport. There's only 1 cmdb in the world that behaves like service now where they know where all the people are, all the places are and all the things are on 1 platform and then you apply the AI in all of our know-how that aren't just outlined and they're running quickly. So he's got to make change fast, he doesn't have years, he has weeks and months, so we give him a business case to show them an incredible benefit on the service. Now platform, and then they looked at what we did with armas and vza and they say, we're all in please roadmap that into the thinking because I want to have 1 instance, I want to have 1 single view of my entire Enterprise and I'm going with service. Now in that conversation, we were basically consolidating them out of about 479 Legacy tools and that's what's happening out there because AI is changing the game. But this is the consolidator platform.

And understanding how much they going to spend and what they are going to get out of it, going to complete 100% consumption, maybe too early in some of the cases. So I think there's a hybrid model that seem to be resonating with my customers. They know what the, uh, the envelope they have, what they will be consuming beyond that, how much it will cost them. And a lot of times customers even have come back and say, you know what, I have been using a lot more than entitled to, I will just Renew on do an expansion on the thing with another higher subscription. So it might not be just consumption driven. So we just want to give that flexibility as some products. We do do consumption only already by the way, right? So we do things like, storage or additional things. You might want to use for capacity. Uh, we're doing that in some tokens around, workflow data fabric from integration perspective. So wherever it makes sense, we will do that. As we go more and more AI native. In terms of packaging, we want to continue, still to make sure that we don't confuse our customers too much and make it so difficult difficult for them to predict what they're going to spend that they can keep on staying on the sidelines.

Mad. Maybe I'll give you my perspective, and of course, I will and G. I can add that, uh, you know, we keep on thinking about what's the best way to give customer value and show them what they can get out of a product, right? So we keep on getting input from them in terms of what kind of pricing and packaging works for them. Typically, what we've seen customers do want flexibility, but they also want predictability. So without having some kind of guardrails and understanding how much they going to spend and what they are going to get out of it, going to complete 100% consumption, maybe too early in some of the cases. So I think that the hybrid model has seemed to be resonating with my customers. They know what the, uh, the envelope they have, what they will be consuming beyond that, how much it will cost them. And a lot of times customers even have come back and say, you know what, I have been using a lot more than entitled to, I will just Renew on do an expansion on the thing with another higher subscription. So it might not be just consumption driven. So we just want to give that flexibility that some products. We do do consumption only already by the way, right? So we do things like storage or

Yeah, Brian, I think as I said, we definitely want to make sure customers have choice and they can use any of those, uh, foundational models as well as now LLM. In many cases, we've seen customers may end up using, uh, frontier models, because some of the use cases might make sense with the frontier models. Our inferencing as part of the overall workload is still very low as a percentage of cost or usage-wise, right? Uh, as they use tokens, we have a lot of other work we do on top of the inferencing part of it, which is really the whole context data management, the integration, understanding the particular workflow and required for, uh, the use case they want to go and deliver on it. So that's really where most of the power goes in. And, uh, I would say in the long term I would see more of the frontier models as the inferencing models versus our now LLM, but there are sovereign requirements, private data center requirements, things customers want to deploy in like, uh, uh, on-prem—got all these models don't work. And that's where we would probably still continue using a lot of

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