Q1 2026 ServiceNow Inc Earnings Call

April 22, 2026

Operator: Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q1 2026 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 that time, simply press star, then the number one on your telephone keypad. I would now like to turn the call over to Darren Yip, Vice President of Investor Relations and Market Insights. Darren, please go ahead.

Speaker #2: At this time, I would like to welcome everyone to the first quarter 2026 ServiceNow Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

Speaker #2: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during that time, simply press star, then the number 1 on your telephone keypad.

Speaker #2: I would now like to turn the call over to Darren Yip, Vice President of Investor Relations and Market Insights. Darren, please go ahead. Good afternoon and thank you for joining ServiceNow's first quarter 2026 Earnings Conference Call.

Darren Yip: Good afternoon, and thank you for joining ServiceNow's Q1 2026 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 Q1 2026 results and discuss our guidance for the Q2 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.

Speaker #2: Joining me are Bill McDermott, our Chairman and Chief Executive Officer; Gina Mastantuono, our President and Chief Financial Officer; and Amit Zaveri, President, Chief Product Officer, and Chief Operating Officer.

Speaker #2: During today's call, we will review our first quarter 2026 results and discuss our guidance for the second quarter 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.

Speaker #2: 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 #2: 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.

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 our 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 #2: 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.

Speaker #2: Unless otherwise noted, all financial measures and related growth rates we discuss today are non-GAAP, except for revenues, remaining performance obligations (RPO), current RPO, and cash and investments.

Speaker #2: To see the reconciliation between these non-GAAP and GAAP measures, please refer to our press release and investor presentation, which are both posted on our website.

Speaker #2: 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. Thank you very much, Darren, and welcome, everybody, to today's call.

Bill McDermott: Thank you very much, Daren, and welcome everybody to today's call. There's a lot of noise out there, so let's get straight to the point. Here's the ServiceNow update. We're the AI Control Tower for business reinvention in the center of a growing $600 billion-plus total addressable market. We have a $28 billion RPO business that's growing at 23.5% year-over-year. The most open enterprise platform that protects customer choice. With active users on our platform continuing to grow, thousands of partnerships around the platform expanding daily, AI-native packaging and pricing on our fully autonomous platform, a la no sidecar AI at ServiceNow, a world-class team with a proven track record of building truly global businesses at scale. Our Q1 results are consistent with a company of this stature, once again exceeding our guidance metrics across the board.

Speaker #2: There's a lot of noise out there, so let's get straight to the point. Here's the ServiceNow update. We're the AI-controlled tower for business reinvention in the center of a growing $600 billion-plus total addressable market.

Speaker #2: We have a $28 billion RPO business that's growing at 23.5% year over year. The most open enterprise platform that protects customer choice, with active users on our platform continuing to grow—thousands of partnerships around the platform expanding daily. AI-native packaging and pricing on our fully autonomous platform—a la no sidecar AI at ServiceNow. A world-class team with a proven track record of building truly global businesses at scale.

Speaker #2: Our first quarter results are consistent with a company of this stature, once again exceeding our guidance metrics across the board. Subscription revenue grew 19% in constant currency, above the high end of our guidance. CRPO constant currency was a robust 21% growth, one point above our guidance. Operating margin was 32%, a half a point above our guidance, and free cash flow margin was 44%.

Bill McDermott: Subscription revenue grew 19% in constant currency above the high end of our guidance. CRPO constant currency was a robust 21% growth, one point above our guidance. Operating margin was 32%, a half a point above our guidance, and free cash flow margin was 44%. We had 16 deals greater than $5 million in NNACV and five deals greater than $10 million in NNACV. Now Assist NNACV to date continues to outperform even our expectations. The number of customers spending $1 million-plus grew over 130% year over year. Deals over $1 million grew more than 30% year on year in Q1. Moveworks closed seven-figure deals in Q1. They closed more deals than they did the entire year last year. Now has merged with our employee experience business and rebranded as EmployeeWorks.

Speaker #2: We had 16 deals greater than $5 million in NNACV, and 5 deals greater than $10 million in NNACV. NNACV to date continues to outperform even our expectations.

Speaker #2: The number of customers spending a million-plus grew over 130% year over year. Deals over a million grew more than 30% year on year in Q1.

Speaker #2: MoveWorks closed seven-figure deals in Q1. They closed more deals than they did in the entire year last year. Now, it has merged with our employee experience business and rebranded as EmployeeWorks, so Bob and Shah, the former CEO of MoveWorks, now runs the whole show there, and that business grew 5x year over year.

Bill McDermott: Bhavin Shah, the former CEO of Moveworks, now runs the whole show there, and that business grew 5x year over year. We have a great story in Moveworks coming into ServiceNow. Our sales CRM NNACV grew more than 5x year over year. That's quintupled with deal count growing over 80% year over year. With the surface area so broad, our goals for ServiceNow are clear. Here they are. Fast time to value for our customers, revenue growth acceleration, margin expansion, reduced stock-based compensation, and outperforming our own rule of 55+ standard. To say we're excited for Knowledge and Financial Analyst Day on 4 May in Las Vegas would be an understatement. We have a lot to share with you, and the board of directors are very proud of ServiceNow and the way it's performing. The company is on track for our best year ever.

Speaker #2: So we have a great story in MoveWorks coming into ServiceNow. Our sales CRM NNACV grew more than 5x year over year—that's quintupled—with deal count growing over 80% year over year.

Speaker #2: We're the surface area so broad, our goals for ServiceNow are clear. Here they are. Fast time to value for our customers, revenue growth acceleration, margin expansion, reduced stock-based compensation, and outperforming our own rule of 55-plus standard.

Speaker #2: To say we're excited for Knowledge and Financial Analysts Day on May 4th in Las Vegas would be an understatement. We have a lot to share with you.

Speaker #2: And the board of directors are very proud of ServiceNow and the way it's performing. And the company is on track for our best year ever.

Speaker #2: Since our last print, speculation about enterprise AI has persisted, and that's okay. That's what earnings calls are for—to clear things up. My answer's always the same.

Bill McDermott: Since our last print, speculation about enterprise AI has persisted, and that's okay. That's what earnings calls are for, to clear things up. My answer is always the same. There has never been a tailwind for ServiceNow like AI. Since Fred Luddy started the company, we've always focused our platform on the jobs our customers needed done. Let me bring this to life for you in five hypergrowth areas. The first, our core IT business. There has never been a more compelling moment to be the CIO's system of record. We're often described as the ERP for IT. When an enterprise fully deploys ServiceNow, it's not just software, it's an end-to-end operating system. Today, an average Fortune 500 company has 100 million lines of custom code to manage their business.

Speaker #2: There has never been a tailwind for ServiceNow like AI. Since Fred Luddy started the company, we've always focused our platform on the jobs our customers needed done.

Speaker #2: Let me bring this to life for you in five hyper-growth areas. The first, our core IT business. There has never been a more compelling moment to be the CIOs' system of record.

Speaker #2: We're often described as the ERP for IT. When an enterprise fully deploys ServiceNow, it's not just software—it's an end-to-end operating system. And today, an average Fortune 500 company has 100 million lines of custom code to manage their business.

Speaker #2: And this excludes the code in other systems of record where there are billions and billions of lines of code. As code volume increases 20X by 2030, the complexity of managing this explosion of code will increase exponentially.

Bill McDermott: This excludes the code in other systems of record where there are billions and billions of lines of code. As code volume increases 20x by 2030, the complexity of managing this explosion of code will increase exponentially. The volume of tickets generated by this complexity will also explode. In this scenario, the number of tickets hitting an ITSM system will increase by 50x compared to today. The biggest IT buyer in the enterprise was, is, and will continue to be the CIO. This remit will substantially expand by the complexity of the agentic business. ServiceNow's relevance grows in direct correlation with the expansion of innovation across the AI ecosystem. Think of us as the workhorse for workflow. The second is AI security. We're thrilled that the Armis acquisition closed earlier than expected, which as you'll hear from Gina, gives us some nice acceleration in full year subscription revenue growth.

Speaker #2: The volume of tickets generated will explode. In this scenario, the number of tickets hitting an ITSM system will increase by 50x compared to today.

Speaker #2: The biggest IT buyer in the enterprise was, is, and will continue to be the CIO. This remit will substantially expand by the complexity of the agentic business.

Speaker #2: ServiceNow's relevance grows in direct correlation with the expansion of innovation across the AI ecosystem. Think of us as the workhorse for workflow. The second is AI security.

Speaker #2: We're thrilled that the Armis acquisition closed earlier than expected, which, as you'll hear from Gina, gives us some nice acceleration in full-year subscription revenue growth.

Speaker #2: Yevgeny Dibrov, the excellent CEO of Armis, will run our security business, building on ServiceNow's outstanding foundation. And here's the problem. Companies are playing agents with zero visibility.

Bill McDermott: Yevgeny Dibrov, the excellent CEO of Armis, will run our security business, building on ServiceNow's outstanding foundation. Here's the problem. Companies deploying agents with zero visibility, therefore, they're unable to see the unmanaged IoT, OT, and medical devices lacking unified access control with no coordinated way to remediate vulnerabilities before they become breaches. Today, ServiceNow addresses this challenge holistically. As the asset intelligence foundation for the AI Control Tower, Armis solves visibility, real-time agentless discovery of every asset, IT, OT, IoT, medical devices, shadow IT. A continuously updated map that traditional tools can never achieve. Nine out of ten Fortune 10 companies already rely on Armis. We're excited to deploy it throughout the top 2,000 and beyond. Veza solves the identity governance. Patented access graph technology maps access across people, machines, and AI agents in real time. Dynamic, context-aware permissions that are governed continuously, not set once and forgotten.

Speaker #2: Therefore, they're unable to see the unmanaged IoT, OT, and medical devices lacking unified access control with no coordinated way to remediate vulnerabilities before they become breaches.

Speaker #2: Today, ServiceNow addresses this challenge holistically. As the asset intelligence foundation for the AI control tower, Armis solves visibility. Real-time agentless discovery of every asset, IT, OT, IoT, medical devices, shadow IT, a continuously updated map that traditional tools can never achieve.

Speaker #2: 9 out of 10 Fortune 10 companies already rely on Armis. We're excited to deploy it throughout the top 2,000 and beyond. Veza solves the identity governance.

Speaker #2: Patented access graph technology maps access across people, machines, and AI agents in real-time. Dynamic context-aware permissions that are governed continuously. Not set once and forgotten.

Speaker #2: This is the active directory for AI agent identities. This business will continue to be run by the excellent CEO of Veza, Tarun Thakar. ServiceNow is the biggest piece of the puzzle.

Bill McDermott: This is the active directory for AI agent identities. This business will continue to be run by the excellent CEO of Veza, Tarun Thakur. ServiceNow is the biggest piece of the puzzle. Our existing billion-dollar plus security business ties everything together as the action layer for the CISO. Armis asset visibility plus Veza's identity governance, plus ServiceNow's business context, CMDB, equals a unified end-to-end security stack that could see, decide, and act across the entire technology footprint. Nothing else in the market does this, nothing. With Mythos as one example, security activity is skyrocketing. The actions run through this platform, alerts, tickets, actions, resolutions, they're all revenue drivers for ServiceNow. Enterprises can't afford experiments in today's risk environment. They need ServiceNow as their strategic defense shield for the enterprise. The third is AI native CRM.

Speaker #2: Our existing billion-dollar-plus security business ties everything together as the action layer for the CISO. Armis asset visibility, plus Veza's identity governance, plus ServiceNow's business context, CMDB, equals a unified end-to-end security stack that can see, decide, and act across the entire technology footprint.

Speaker #2: Nothing else in the market does this. Nothing. With Mythos as one example, security activity is skyrocketing. The actions run through this platform. Alerts, tickets, actions, resolutions—they're all revenue drivers for ServiceNow.

Speaker #2: Enterprises can't afford experiments in today's risk environment. They need ServiceNow as their strategic defense shield for the enterprise. The third is AI-native CRM. We say AI control tower for business reinvention.

Bill McDermott: We say AI Control Tower for business reinvention because there's no more immediate need for reinvention than legacy CRM. It's a little ironic that a category promising a 360-degree view of the customer has left most enterprises spinning around in circles. Best run businesses need a dramatically different and better way. Customers tell the story better than we can. A multi-market European telco faced 85+ fragmented applications, no standard quoting process, and a CPQ setup where introducing a single new product took three months. ServiceNow sales CRM with CPQ collapsed this to one week. A global power technology leader across 190 countries has gone live with phase three of its ServiceNow deployment, replacing legacy CPQ. Using AI-driven blueprint automation, the company is reducing new product introduction time from six months to six weeks.

Speaker #2: Because there's no more immediate need for reinvention, then legacy CRM. You know, it's a little ironic that a category promising a 360-degree view of the customer has left most enterprises spinning around in circles.

Speaker #2: Best-run businesses need a dramatically different and better way. Customers tell the story better than we can. A multi-market European telco faced 85-plus fragmented applications.

Speaker #2: No standard quoting process, and a CPQ setup where introducing a single new product took three months. ServiceNow's sales CRM with CPQ collapsed this to one week.

Speaker #2: A global power technology leader across 190 countries has gone live with phase three of its ServiceNow deployment. Replacing legacy CPQ. Using AI-driven blueprint automation, the company has reducing new product introduction time from six months to six weeks.

Speaker #2: A regional Latin American bank is live with ServiceNow. They're building a full front office experience for relationship managers. Agenic AI is scanning portfolios and auto-generating leads.

Bill McDermott: A regional Latin American bank is live with ServiceNow, building a full front office experience for relationship managers. Agentic AI is scanning portfolios and auto-generating leads using propensity logic tied to their data lake. Because legacy CRM represents such a significant expense line for enterprises, the demand for an AI alternative is immediate. ServiceNow is not only bringing a technologically superior solution, we help customers swap out legacy SaaS vendors and go live fast with AI. The fourth area is AI-native front door and the employee experience. As people use more of their AI tools like ChatGPT, enterprise leaders urgently want their employees to enjoy a clean conversational experience. ServiceNow introduced EmployeeWorks, combining Moveworks, conversational AI, and enterprise search with ServiceNow's unified portal and autonomous agentic AI workflows.

Speaker #2: Using propensity logic tied to their data lake. Because legacy CRM represents such a significant expense line for enterprises, the demand for an AI alternative is immediate.

Speaker #2: ServiceNow's not only bringing a technology superior solution, we help customers swap out legacy SaaS vendors and go live fast with AI. The fourth area is AI-native front door and the employee experience.

Speaker #2: As people use more of their AI tools like ChatGPT, enterprise leaders urgently want their employees to enjoy a clean conversational experience. ServiceNow introduced Employee Works.

Speaker #2: Combining Move Works, conversational AI, and enterprise search with ServiceNow's unified portal and autonomous agentic AI workflows. This is available in Teams, Slack, or any browser to turn natural language requests into governed multi-system execution for nearly 200 million employees so far.

Bill McDermott: This is available in Teams, Slack, or any browser to turn natural language requests into governed multi-system execution for nearly 200 million employees so far. We launched midway through Q1, and it's already closed many deals above $1 million. You'll also see some exciting new experiences, and we will announce this in a big way at Financial Analyst Day in Vegas. As more employees converge on our conversational experience, ServiceNow will deliver intelligence from any source, putting AI to work for people. The fifth area is Workflow Data Fabric. We all know that AI is only as valuable as the data itself. Enterprises are frantically organizing and cleansing data from countless disparate sources. Workflow Data Fabric connects data across systems. It adds business context via a unified data catalog and applies policy-based governance controls. With ServiceNow, AI understands how an enterprise actually works so they can take trusted action.

Speaker #2: We launched midway through Q1, and it's already closed many deals above $1 million. You'll also see some exciting new experiences, and we will announce this in a big way at Financial Analyst Day in Vegas.

Speaker #2: As more employees converge on our conversational experience, ServiceNow will deliver intelligence from any source putting AI to work for people. The fifth area is workflow data fabric.

Speaker #2: We all know that AI is only as valuable as the data itself. Enterprises are frantically organizing and cleansing data from countless disparate sources. Workflow Data Fabric connects data across systems; it adds business context via a unified data catalog and applies policy-based governance controls.

Speaker #2: With ServiceNow, AI understands how an enterprise actually works, so they can take trusted action. I explain the five areas for one good reason: all of them have the capacity to eclipse the size and growth trajectory of ServiceNow as it stands today itself.

Bill McDermott: I explained the five areas for one good reason. All of them have the capacity to eclipse the size and growth trajectory of ServiceNow as it stands today itself. For years, we've strengthened a common platform architecture for these businesses and for others we're incubating to harness enterprise AI. ServiceNow has thousands of system connections, a live knowledge graph, and real enterprise context. We accommodate any model aligned to customers' policies, permissions, and rules, and every decision in ServiceNow is auditable end to end. Our platform delivers workflow execution across IT, HR, CRM, and security. It's not recommendations, it's outcomes that matter. Our AI Control Tower provides real-time visibility across every agent and every workflow, because governance has to be foundational, not retrofitted. This architecture is a big reason why we recently announced the entire ServiceNow portfolio is AI native.

Speaker #2: And for years, we've strengthened a common platform architecture for these businesses and for others we're incubating to harness enterprise AI. ServiceNow has thousands of system connections, a live knowledge graph, and real enterprise context.

Speaker #2: We accommodate any model, align to customers' policies, permissions, and rules, and every decision in ServiceNow is auditable end to end. Our platform delivers workflow execution across IT, HR, CRM, and security.

Speaker #2: It's not recommendations; it's outcomes that matter. Our AI control tower provides real-time visibility across every agent and every workflow. Because governance has to be foundational, not retrofitted.

Speaker #2: This architecture is a big reason why we recently announced the entire ServiceNow portfolio is AI-native. AI, data, security, and governance are now built into every product and package—not a separate purchase.

Bill McDermott: AI, data, security, and governance are now built into every product and package, not a separate purchase. This is a deliberate break from sidecar AI. We're not bolting intelligence onto disconnected systems. We're combining context with execution on a single platform. ServiceNow's Context Engine is the differentiated capability here. It learns from every decision ever made in a company, grounding each AI agent action in live context, approval chains, asset dependencies, identity relationships, and business rules. We've now trained over 95 billion annual workflows and more than 7 trillion transactions, and our 22 years at the center of the world's most sophisticated enterprises is really showing up, because it brings unmatched intelligence to every decision. This compounds with every workflow we run, making the platform smarter over time. In fact, in every millisecond.

Speaker #2: This is a deliberate break from sidecar AI. We're not bolting intelligence onto disconnected systems. We're combining context with execution on a single platform. ServiceNow's context engine is the differentiated capability here.

Speaker #2: It learns from every decision ever made in a company grounding each AI agent action in live context, approval chains, asset dependencies, identity relationships, and business rules.

Speaker #2: We've now trained over 95 billion annual workflows and more than 7 trillion transactions, and our 22 years at the center of the world's most sophisticated enterprises is really showing up.

Speaker #2: Because it brings unmatched intelligence to every decision. And this compounds with every workflow we run making the platform smarter over time. In fact, in every millisecond.

Speaker #2: For example, it knows which asset is tied to a compliance process, which approval chain applies to a given cost threshold, and which vendor's history should inform how a request should be handled.

Bill McDermott: For example, it knows which asset is tied to a compliance process, which approval chain applies to a given cost threshold, and which vendor's history should inform how a request should be handled. When people ask, what's the difference between ServiceNow AI and the foundation models, you can boil it down to one word, context. I read that one of our customers referred to ServiceNow this way. The control tower is the quarterback. It figures out which agent or LLM to use. Merge that with a quote from the Hall of Fame coach, Bill Walsh, "Chaos is the quarterback's natural environment." Ladies and gentlemen, there's plenty of chaos in today's enterprises. You have hyperscalers, systems of record, foundation models, data lakes, homegrown tools, and agents coming at you from everywhere. That's why our platform is totally open.

Speaker #2: So when people ask, 'What's the difference between ServiceNow AI and the foundation models?' you word: context. I read that one of our customers referred to ServiceNow this way: 'The control tower is the quarterback.'

Speaker #2: It figures out which agent or LLM to use. Merge that with a quote from Hall of Fame coach Bill Walsh: "Chaos is the quarterback's natural environment." Ladies and gentlemen, there's plenty of chaos in today's enterprises.

Speaker #2: You have hyperscalers, systems of record, foundation models, data lakes, homegrown tools, and agents coming at you from everywhere. That's why our platform is totally open.

Speaker #2: We integrate with all of them. Because ServiceNow is the only enterprise AI platform that converts that chaos to control. We would not trade positions with anyone.

Bill McDermott: We integrate with all of them because ServiceNow is the only enterprise AI platform that converts that chaos to control. We would not trade positions with anyone. Let me give you a quick overview of a couple of announcements we just recently rolled out. ServiceNow launched Autonomous Workforce, teams of AI specialists with the defined roles that execute enterprise work end-to-end with built-in governance, auditability, and human escalation. Our own deployment in ServiceNow is resolving 90% of employee IT requests with a specialist resolving assigned cases 99% faster than human agents. That's an AI specialist. In the AI native platform announcement, you might have missed Build Agent, which gives us developer openness, another meaningful unlock. Developers can build from any integrated developer environment, Claude Code, Cursor, Codex, Windup, and deploy them directly to ServiceNow. This expands the addressable builder community significantly. Build Agent's skills isn't just a developer tool.

Speaker #2: Let me give you a quick overview of a couple of announcements we just recently rolled out. ServiceNow launched Autonomous Workforce—teams of AI specialists with defined roles that execute enterprise work end to end, with built-in governance, auditability, and human escalation.

Speaker #2: Our own

Speaker #1: Deployment in ServiceNow is resolving 90% of employee ID requests, with the specialist resolving assigned cases 99% faster than human agents. That's an AI specialist in the AI-native platform announcement.

Speaker #1: You might have missed Build Agent, which gives us developer openness. Another meaningful unlock: developers can build from any integrated developer environment—Claude, Code, Cursor.

Speaker #1: Codex , windsurf and deploy them directly to ServiceNow This expands the addressable builder community significantly Build agent skills isn't just a developer tool , it's the on ramp to an ecosystem where every custom agent is automatically governed .

Bill McDermott: It's the on-ramp to an ecosystem where every custom agent is automatically governed, data connected, and workflow integrated from the moment it deploys. With Enterprise Service Management Foundation, we are expanding our opportunity in the mid-market as well. With deployment in weeks, not months, this is the direct expansion of our addressable customer base. One early example is Robinhood. Robinhood is deflecting 70% of employee requests before human intervention. They've already eliminated 2,200 hours of manual effort monthly, and the success just continues. I know many are interested in the progress of our hybrid business model, especially with regard to consumption pricing. You'll be happy to know that 50% of net new business now comes from a non-seat-based pricing model, including tokens and other assets such as infrastructure, hardware, and connectors. Our hybrid pricing model gives customers the best of both worlds.

Speaker #1: Data connected , and workflow integrated from the moment it deploys with enterprise service management Foundation , we are expanding our opportunity in the mid-market as well .

Speaker #1: With deployment in weeks , not months . This is the direct expansion of our addressable customer base . One early example is Robinhood Robinhood is deflecting 70% of employee requests before human intervention They've already eliminated 2200 hours of manual effort , monthly , and the success just continues .

Speaker #1: I know many are interested in the progress of our hybrid business model, especially with regard to consumption and pricing. You'll be happy to know.

Speaker #1: That 50% of net new business now comes from a non seat based pricing model , including tokens and other assets such as infrastructure , hardware and connectors Our hybrid pricing model gives customers the best of both worlds predictable foundational seat licenses combined with usage based scalability It's the freedom to scale AI adoption without a friction that the customers love .

Bill McDermott: Predictable, foundational seat licenses combined with usage-based scalability. It's the freedom to scale AI adoption without a friction that the customers love. We continue to see the hockey stick taking shape. One example is British Engineering and Technology Company, 45,000 employees, 50 countries. They're using ServiceNow autonomous workflows, employee self-service, and it's jumped the usability and the outcome by 3x with 38,000 tickets now deflected. Resolution time is down by 2 entire days. A leading online travel company is using ServiceNow agentic AI to deliver 11 million autonomous AI resolutions annually for HR and IT alone. They've freed employees to focus on strategic work. Processes that once took days now take minutes. The results are transformational. Over 230% ROI, 45,000 hours back to their people, and millions saved annually. These and many stories like them validate our hybrid thesis. As the business value emerges, refresh upgrades follows.

Speaker #1: We continue to see the hockey stick taking shape One example is British engineering and technology company . 45,000 employees , 50 countries . They're using ServiceNow autonomous workflows .

Speaker #1: Employee self-service , and has jumped the usability and the outcome by three X with 38,000 tickets . Now deflected resolution time is down by two entire days A leading online travel company is using ServiceNow , a AI to deliver 11 million autonomous AI resolutions annually For HR and IT alone , they've freed employees to focus on strategic work processes that once took days .

Speaker #1: Now take minutes . The results are transformational . Over 230% ROI 45,000 hours . Back to their people and millions saved annually These and many stories like them , validate our hybrid thesis as the business value emerges Refresh upgrades follows We'll have more on this at fad .

Bill McDermott: We'll have more on this at FAD. We really can't wait. We're seeing continued meaningful acceleration in the partner ecosystem. There is deep technical collaboration between ServiceNow engineers and OpenAI technical advisors. OpenAI native voice and text models are integrated directly into the ServiceNow AI platform, and they're using us as a gateway into the enterprise. If you think about it, ServiceNow AI specialists are working side by side with Google Gemini AI agents. They're doing this across 5G networks, retail, and IT operations with zero data movement and zero gaps in governance. Claude models are also deeply integrated into ServiceNow AI platform for developers and employees. ServiceNow, NTT Docomo, and StarHub are developing the industry's first intercarrier autonomous roaming resolution model on the ServiceNow AI platform. ServiceNow and Cohesity announced a partnership to deliver agent resilience by combining ServiceNow's AI Agent Control Tower with Cohesity's immutable point-in-time data recovery.

Speaker #1: We really can't wait We're seeing continued meaningful acceleration in the partner ecosystem . There is deep technical collaboration between ServiceNow engineers and open AI Technical advisors Open AI native voice and text models are integrated directly into the ServiceNow AI platform and they're using us as a gateway into the enterprise If you think about it , ServiceNow , AI specialists are working side by side with Google , Gemini AI agents They're doing this across 5G networks , retail , and it operations with zero data movement and zero gaps in governance Claude models are also deeply integrated into ServiceNow , AI platform for developers and employees ServiceNow , NTT DoCoMo , and StarHub are developing the industry's first Inter-carrier autonomous roaming resolution model on the ServiceNow AI platform ServiceNow , and Cohesity announced a partnership to deliver agent resilience by combining ServiceNow AI agent control Tower with Cohesity immutable point in time data recovery ServiceNow and Carahsoft expanded our partnership to extend ServiceNow AI platform availability .

Bill McDermott: ServiceNow and Carahsoft expanded our partnership to extend ServiceNow AI platform availability. This opens all Carahsoft's commercial channels, in addition to its established government network of 10,000-plus resellers. There's so much to talk about. I want to leave some for Q&A. A colleague today reminded me of something Warren Buffett often quotes from Benjamin Graham. In the short run, markets are voting machines, and right now uncertainty is winning the vote. Don't worry, in the long run, they are weighing machines. I'll tell you, I'll get on that scale with that ServiceNow brand on my chest any day. We look at it. We studied it. We dare anyone to bring a better solution to the market than ServiceNow. We are the rules and the rails of business. When you're faced with these results, trust what you see. You have every reason to believe your own eyes.

Speaker #1: This opens all Carahsoft commercial channels in addition to its established government network of 10,000 plus resellers . There's so much to talk about .

Speaker #1: I want to leave some for Q&A , but a colleague today reminded me of something Warren Buffett often quotes from Benjamin Graham . In the short run , markets have voting machines , and right now , uncertainty is winning the vote .

Speaker #1: But don't worry , in the long run , they are weighing machines . And I'll tell you , I'll get on that scale with that ServiceNow brand on my chest any day .

Speaker #1: We look at it. We studied it. We dare anyone to bring a better solution to the market than ServiceNow. Now.

Speaker #1: We are the rules and the rails of business . When you're faced with these results , trust what you see . You have every reason to believe your own eyes Don't fall for the parlor trick .

Bill McDermott: Don't fall for the parlor trick that one touch button can replace 22 years of excellence. This is not a company that shrinks from challenges. It rises to every opportunity. To all our shareholders, thank you for your continued belief in ServiceNow. We will never let you down. I'll leave you with this. There's a perfect correlation between enterprise AI from any source and ServiceNow's expansion. We're letting it rip. Whether it's built or bought, ServiceNow will unlock more value out of every dollar spent on AI in the enterprise. That's a guarantee. There are a lot of things AI can do for your business, and we love them all. There's also a lot of things AI can do to your business, and we want to protect you. We have incorporated this in how we've composed this company organically, and with the integration of Moveworks, Veza, and Armis.

Speaker #1: That one touch button can replace 22 years of excellence . This is not a company that shrinks from challenges . It rises to every opportunity .

Speaker #1: To all our shareholders . Thank you for your continued belief in service . Now . We will never let you down . I'll leave you with this .

Speaker #1: There's a perfect correlation between enterprise AI from any source and ServiceNow, Inc. expansion. We're letting it rip, whether it's built or bought.

Speaker #1: ServiceNow will unlock more value out of every dollar spent on AI in the enterprise . That's a guarantee There are a lot of things AI can do for your business , and we love them all .

Speaker #1: There's also a lot of things AI can do to your business , and we want to protect you We have completed this in how we've composed this company organically and with the integration of Move works , visa and AMAs , our platform has gone from land and expand to control and compound AI that thinks workflows that act all production grade enterprise scaled ServiceNow is the AI defining enterprise software company .

Bill McDermott: Our platform has gone from land and expand to control and compound. AI that thinks, workflows that act, all production-grade, enterprise scaled. ServiceNow is the AI-defining enterprise software company of the 21st century. We're just getting started. I'll hand things over to our President, Chief Financial Officer, Gina Mastantuono. Gina, over to you.

Speaker #1: Of the 21st century . We're just getting started . I'll hand things over to our president and chief Financial Officer Gina Mastantuono . Gina , over to you .

Gina Mastantuono: Thank you, Bill. Q1 was another quarter of outstanding execution. The team delivered strong results, beating the high end of our guidance across all top-line and profitability metrics. Now Assist continues to see incredible demand, which has had a nice pull effect and driven outperformance across emerging products like AI Control Tower and RaptorDB Pro. Q1 subscription revenues were $3.671 billion, growing 19% year over year in constant currency and above the high end of our guidance. This includes about a 75 basis point headwind from delayed closings of several large on-premise deals in the Middle East due to the ongoing conflict in the region. RPO ended the quarter at approximately $27.7 billion, representing 23.5% year over year constant currency growth. Current RPO was $12.64 billion, representing 21% year over year constant currency growth, a 100 basis point beat versus our guidance. Across our workflows, we saw broad-based demand.

Speaker #2: Thank you . Bill Q1 was another quarter of outstanding execution . The team delivered strong results , beating the high end of our guidance across all top line and profitability metrics .

Speaker #2: Now, with this, we continue to see incredible demand, which has had a nice pull effect and driven out across emerging products like AI Control Tower and Raptor DB Pro. Q1 subscription revenues were $3.671 billion, growing 19% year over year in constant currency and above the high end of our guidance.

Speaker #2: This includes about a 75-basis-point headwind from delayed closings of several large on-premise deals in the Middle East due to the ongoing conflict in the region.

Speaker #2: RPO ended the quarter at approximately 27.7 billion , representing 23.5% year over year . Constant currency growth Current RPO was 12.64 billion , representing representing 21% year over year .

Speaker #2: Constant currency growth , a 100 basis point beat versus our guidance across our workflows . We saw broad based demand Technology workflows had 33 deals over a million , including five over 5 million service ops and item were each in 17 of our top 20 deals .

Gina Mastantuono: Technology workflows had 33 deals over $1 million, including 5 over $5 million. Service ops and ITAM were each in 17 of our top 20 deals, and security and risk was in 15. CRM and industry workflows were in 16 of our top 20 deals, with 16 over $1 million, driven by strength in CPQ and sales and order management. Core business workflows had 13 deals in the top 20, with 12 over $1 million. Creative workflows had 16 deals in the top 20, with 11 over $1 million. From an industry perspective, transportation and logistics continued to lead the way with net new ACV growing over 280% year over year. Financial services posted impressive growth, surpassing 65%, followed by energy and utilities growing at 45% year over year.

Speaker #2: And security and risk was in 15 CRM, and industry workflows were in 16 of our top 20 deals, with 16 over a million, driven by strength in CPQ and Sales.

Speaker #2: In order management, Core Business Workflows had 13 deals in the top 20, with 12 over $1 million, and Creative Workflows had 16 deals in the top 20, with 11 over $1 million.

Speaker #2: From an industry perspective , transportation and logistics continued to lead the way , with net new ACV growing over 280% year over year Financial services posted impressive growth surpassing 65% , followed by energy and utilities growing at 45% year over year Telecom and media also delivered robust growth in the quarter , and US public sector outperformed in Q1 , closing ten deals over $1 million .

Gina Mastantuono: Telecom and media also delivered robust growth in the quarter, and US public sector outperformed in Q1, closing 10 deals over $1 million. Our renewal rate, inclusive of Moveworks, was a strong 97% in the quarter. We ended Q1 with 630 customers generating over $5 million in ACV. Furthermore, we had five more customers cross the $50 million threshold versus last year. We closed 16 deals greater than $5 million in net new ACV in the quarter, including five deals over $10 million. The power of our better together platform model was evident, as 17 of our top 20 deals included seven or more products. Our strategic focus on landing the right new customers also continues to see success. New logo ACV growth accelerated to over 50% year-over-year in Q1, which included our largest net new logo deal ever at over $15 million.

Speaker #2: Our renewal rate , inclusive of Move works , was a strong 97% in the quarter . We ended Q1 with 630 customers generating over $5 million in ACV Furthermore , we had five more customers crossed the 50 million threshold versus last year .

Speaker #2: We closed 16 deals greater than 5 million in net new ACV in the quarter , including five deals over 10 million . The power of our Better Together platform model was evident as 17 of our top 20 deals included seven or more products .

Speaker #2: Our strategic focus on landing the right new customers also continues to see success New logo ACV growth accelerated to over 50% year over year in Q1 , which included our largest net new logo deal ever at over 15 million .

Gina Mastantuono: Now Assist continues to outperform expectations, putting it on a trajectory to exceed our billion-dollar target for 2026. In Q1, deals including three or more Now Assist products grew nearly 70% year over year, including 36 deals with five or more products. The signal is clear. Customers are moving past experimentation into full-scale, enterprise-wide AI investment. We'll provide further details about these trends next month in Las Vegas. I would note that with our new AI native packages, our Now Assist ACV target will continue to capture only the incremental contribution from our AI capabilities. Turning to Moveworks, we took their great conversational AI and enterprise search capabilities, integrated them with Employee Center Pro in under three weeks, and drove it through our incredible go-to-market distribution network, launching EmployeeWorks as a unified AI front door in February. The results speak for themselves.

Speaker #2: Now, as this continues to outperform expectations, it's putting it on a trajectory to exceed our $1 billion target for 2026 in Q1.

Speaker #2: Deals , including three or more now assist products , grew nearly 70% year over year , including 36 deals with five or more products The signal is clear customers are moving past experimentation into full scale , enterprise wide AI investment .

Speaker #2: We'll provide further details about these trends next month in Las Vegas. I would note that with our new AI-native packages, our assist ACV target will continue to capture only the incremental contribution from our AI capabilities.

Speaker #2: Turning to move works , we took their great conversational AI and enterprise search capabilities , integrated them with employee Pro in under three weeks , and drove it through our incredible go to market distribution network , launching employee works as a unified AI .

Speaker #2: In February . The results speak for themselves , themselves . As Bill mentioned , we've already closed six deals above a million in net new ACV .

Gina Mastantuono: As Bill mentioned, we've already closed 6 deals above $1 million in net new ACV. We're just getting started. AI Control Tower also continues to build momentum with average deal sizes more than doubling quarter-over-quarter in Q1. Customers recognize that as AI agents' growing capability, a governed platform to run them isn't optional, it's essential. With the proliferation of AI across the enterprise, we're also seeing increasing adoption of RaptorDB Pro. Deal volume grew 80% year-over-year in Q1 and included 5 deals over $1 million. Turning to profitability, non-GAAP operating margin was 32%, 50 basis points above our guidance, driven by AI OpEx efficiencies. Our free cash flow margin was 44%. In Q1, we executed a $2 billion accelerated share repurchase and bought back approximately 20.2 million shares, double the amount we repurchased in all of 2025.

Speaker #2: We're just getting started. AI Control Tower also continues to build momentum, with average deal sizes more than doubling quarter over quarter in Q1.

Speaker #2: Customers recognize that as AI agents grow in capability, a governance platform to run them is not optional. It's essential with the proliferation of AI across the enterprise.

Speaker #2: We're also seeing increasing adoption of Raptor DB Pro. Deal volume grew 80% year over year in Q1, and included five deals over a million.

Speaker #2: Turning to profitability , non-GAAP operating margin was 32% , 50 basis points above our guidance , driven by AI opex efficiencies . Our free cash flow margin was 44% in Q1 .

Speaker #2: We executed a $2 billion accelerated share repurchase and bought back approximately 20.2 million shares, double the amount we repurchased in all of 2025.

Gina Mastantuono: As of the end of the quarter, we had approximately $4.2 billion of authorization remaining. Together, these results continue to demonstrate our ability to drive a strong balance of world-class growth, profitability, and shareholder value. Moving to our outlook. I'm thrilled to announce the early close of our acquisition of Armis, which will significantly expand our TAM and accelerate our subscription revenue growth. While we expect some near-term headwinds to margins as we integrate the business this year, strong AI efficiencies internally from Now on Now and our underlying platform leverage will normalize our operating and free cash flow margin expansion trajectory in 2027 and beyond. Our guidance captures that momentum while taking a prudent view of the geopolitical environment, particularly the conflict in the Middle East and its potential impacts to deal timing.

Speaker #2: As of the end of the quarter , we had approximately 4.2 billion of authorization remaining Together , these results continue to demonstrate our ability to drive a strong balance of world class growth , profitability , and shareholder value .

Speaker #2: Moving to our outlook, I'm thrilled to announce the early close of our acquisition of Armis, which will significantly expand our TAM and accelerate our subscription revenue growth.

Speaker #2: While we expect some near-term headwinds to margins as we integrate the business this year , strong AI efficiencies internally from now on , now , and our underlying platform leverage will normalize our operating and free cash flow margin expansion trajectory in 2027 .

Speaker #2: And beyond . Our guidance captures that momentum . While taking a prudent view of the geopolitical environment , particularly the conflict in the Middle East and its potential impact to deal timing .

Gina Mastantuono: With that in mind, for 2026, we are raising our subscription revenues by $205 million at the midpoint to $15.735 billion to $15.775 billion, representing 20.5% to 21% year-over-year growth on a constant currency basis. This includes a 125 basis point contribution from Armis. We now expect subscription gross margin of 81.5% and operating margin of 31.5%, which include a 25 basis point and 75 basis point headwind from Armis, respectively. We expect free cash flow margin of 35%. This includes a 200 basis point headwind from Armis, and GAAP diluted weighted average outstanding shares of 1.04 billion. For Q2, we expect subscription revenues between $3.815 billion and $3.820 billion, representing 21% to 21.5% year-over-year growth on a constant currency basis. We expect CRPO growth of 19.5% on a constant currency basis. Both subscription revenue and CRPO include 125 basis point contribution from Armis.

Speaker #2: With that in mind , for 2026 , we are raising our subscription revenues by 205 million at the midpoint to 15.735 billion to 15.775 billion , representing 20.5 to 21% year over year growth on a constant currency basis .

Speaker #2: This includes a 125 basis point contribution from Armis. We now expect subscription gross margin of 81.5%, and operating margin of 31.5%, which included a 25 basis point and 75 basis point headwind from Armis and other factors, respectively.

Speaker #2: We expect free cash flow margin of 35%. This includes a 200-basis-point headwind from MS, and GAAP diluted weighted average outstanding shares of 1.04 billion for Q2.

Speaker #2: We expect subscription revenues between 3.815 billion and 3.820 billion , representing 21 to 21.5% . Year over year growth on a constant currency basis .

Speaker #2: We expect CRPO growth of 19.5% on a constant currency basis. Both subscription revenue and CRPO include a 125 basis point contribution from MAS.

Gina Mastantuono: We expect an operating margin of 26.5%, which includes a 125 basis points headwind from Armis, and we expect 1.04 billion GAAP diluted weighted average outstanding shares for the quarter. In conclusion, Q1 was another proof point of what this business is built to do. We exceeded the high end of our top line and profitability guidance metrics, continued to grow free cash flow, and return substantial capital to shareholders, all while accelerating platform innovation that will define the next decade of enterprise reinvention for an AI enterprise. I've had a front row seat to one of the most remarkable growth trajectories in enterprise software. I'll tell you, what we are building right now, the combination of agentic AI, workflow orchestration, security, and data fabric, all on one platform, this is the chapter that makes everything else look like the preamble.

Speaker #2: We expect an operating margin of 26.5%, which includes a 125 basis point headwind from Armis, and we expect 1.04 billion GAAP diluted weighted average outstanding shares for the quarter. In conclusion, Q1 was another proof point of what this business is built to do.

Speaker #2: We exceeded the high end of our top line and profitability guidance metrics continue to grow . Free cash flow and return substantial capital to shareholders , all while all while accelerating platform innovation that will define the next decade of enterprise reinvention .

Speaker #2: For an AI enterprise . I've had a front row seat to one of the most remarkable growth trajectories in enterprise software , and I'll tell you what we are building right now , the combination of Agentic AI workflow orchestration , security , and data fabric all on one platform .

Gina Mastantuono: You're all invited to hear more about it at our upcoming financial analyst day on 4 May, which will be webcast on our investor relations website. Finally, Bill and I would like to thank all of our employees for their continued hard work and dedication. I also want to extend a big welcome to the Armis and Veza teams to the ServiceNow family. With that, I'll open it up for Q&A.

Speaker #2: This is the chapter that makes everything else look like the preamble . You're all invited to hear more about it at our upcoming Financial Analyst Day on May 4th , which will be webcast on our Investor Relations , Investor relations website Finally , Bill and I would like to thank all of our employees for their continued hard work and dedication .

Speaker #2: I also want to extend a big welcome to the AMAs and Visa teams to the ServiceNow family. With that, I'll open it up for Q&A.

Gina Mastantuono: At this time, if you would like to ask a question, press star, then the number one on your telephone keypad. To withdraw your question, simply press star one again. We kindly ask that you limit yourself to one question for today's call. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Mark Murphy with JP Morgan. Please go ahead.

Operator: At this time, if you would like to ask a question, press star, then the number one on your telephone keypad. To withdraw your question, simply press star one again. We kindly ask that you limit yourself to one question for today's call. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Mark Murphy with JP Morgan. Please go ahead.

Speaker #3: At this time, if you would like to ask a question, press star, then the number one on your telephone keypad.

Speaker #3: To withdraw your question, simply press star one again. We kindly ask that you limit yourself to one question for today’s call.

Speaker #3: We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Mark Murphy with J.P. Morgan.

Mark Murphy: Thank you so much. Bill, you had mentioned 90 days ago that the global business was performing well, and at that time, it had included the Middle East during Q4. Can you double-click on what exactly you saw during Q1 amidst the Iran war? I'm just curious, are the deferrals related to governments, sovereign-backed, or private sector entities? You mentioned these were on-prem. Were they AI or non-AI? Just finally, do you think that these would snap back relatively quickly if the conflict is resolved here during Q2?

Speaker #3: Please go ahead .

Speaker #4: Thank you so much . So , Bill , you had mentioned 90 days ago that the global business was performing well . And at that time it had included the Middle East .

Speaker #4: You during Q4 Can can you double click on what exactly you saw during Q1 amidst the Iran war I'm just curious , you know , are the deferrals related to governments or sovereign backed or private sector entities ?

Speaker #4: The you mentioned these were on prem and were they AI or non AI ? And then just finally , do you think that these would snap back relatively quickly if the conflict is resolved here during Q2

Bill McDermott: Yeah. First of all, Mark, thank you very much for the question. Let me first of all begin the answer with, we just beat and raised. It was a beat and raise, not an excuse that there happens to be a conflict or war in Iran. We're not making any excuses. Our results are great. What we did explain is that there is a slight impact to the guide in going forward in Q2 as a result of the war, because you have to remember, when you're dealing with the sovereign cloud in the Middle East, everything that happens in the Middle East is recognized as on-premise revenue. It's not linear or ratable. It happens all at once. When there's a delay, it has a natural impact, and we just mention that as a statement of fact that impacts slightly the guide.

Speaker #1: Yeah . First of all , Mark , thank you very much for the question . And let me first of all , begin the answer with we just beat and raised .

Speaker #1: So it was a beat and raise, not an excuse that there happens to be a conflict or war in Iran. We're not making any excuses.

Speaker #1: Our results are great. What we did explain is that there is a slight impact to the guide in going forward, in Q2.

Speaker #1: As a result of the war , because you have to remember , when you're dealing with a sovereign cloud in the Middle East , everything that happens in the Middle East is recognized as on premise revenue .

Speaker #1: So it's not linear or ratable. It happens all at once. So when there's a delay, it has a natural impact.

Speaker #1: And we just mentioned that as a statement of fact that impacts slightly . The guide . But I want to be clear . Like everything is activated properly , the conversations are going on .

Bill McDermott: I want to be clear. Everything is activated properly. The conversations are going on, people are back in their offices now, and we don't have any long-term matter for those shareholders to be concerned with.

Speaker #1: People are back in their offices now, and we don't have any long-term matter for the shareholders to be concerned with.

Gina Mastantuono: Mark, I would just add, that we kept the full year guide. We didn't reduce it for any potential conflicts. It was a few on-prem deals that slipped in the quarter, and you know on-prem has a larger impact to revenue. We feel very confident in the results. We feel very confident in the guide.

Speaker #2: And , Mark , I would just add , right , that we kept the full year guide . We didn't reduce it for any potential conflicts .

Speaker #2: Right . So it was a few on prem deals that slipped in the quarter . And you know , on prem as a larger impact to revenue But we feel very confident in the the results .

Mark Murphy: Thank you for that, Gina. Just as a quick follow-up, it's great to see the very clear AI traction that the business is carrying. Can you just comment on, with the pricing changes and AI, less of a, I think Bill's term was not a sidecar and embedded natively, with the shift to the Foundation, Advanced, and Prime tiers, how will you measure and kind of derive that analysis to AI revenue stream, just going forward under the new methodology? Is it simple and straightforward, or do you have to make some new assumptions?

Speaker #2: We feel very confident in, in, in the guide.

Speaker #4: And thank you for that , Dina . And just as a quick follow up , it's great to see the very clear AI .

Speaker #4: You know , traction that the business is carrying . Can you just comment on with the pricing changes and , you know , AI less ?

Speaker #4: I think Bill's term was not a sidecar . And embedded natively with the shift to the foundation and advanced in prime tiers . The how , how will you measure and kind of derive that , that now assist AI revenue stream just going forward under the new methodologies ?

Bill McDermott: Yeah. I'm going to give you one headliner, Mark, out of respect for your great company, and you personally, that you might find interesting. Gina will be mad at me because it's something we were hoping for FAD, but in the circumstances we operate in, I think disclosure is a good thing. We had a goal to be $1 billion on our AI commit this year, as you know, and I think we might have understated that a little bit. We're already talking about $1.5 billion now, and it's on a run. To specifically answer your question, I think it's appropriate for Amit to give you some G2 on how we structured it and why we know it's a winner. Amit?

Speaker #4: It's simple and straightforward . Or do you have to you have to make some assumptions .

Speaker #1: Yeah , I'm going to just give you one headliner Mark at a respect for your great company . And you personally that you might find interesting .

Speaker #1: Jean will be mad at me because it's something we were hoping for , for fad , but in the circumstances , we operate in , I think disclosure is a good thing .

Speaker #1: You know, we had a goal to be at a billion on our AI commit this year. As you know—and I think we might have understated that a little bit.

Speaker #1: We're already talking about a billion and a half now, and it's on a run. So, to specifically answer your question, I think it's appropriate for Ahmed to give you some G2 on how we structured it and why we know it's a winner.

Amit Zavery: Thanks, Bill. Hey, Mark. The way we're thinking about this, and we've announced our pricing capabilities, is that AI capabilities are in each of the SKUs now. What we did with Pro Plus, which was a higher-end SKU with Assist, are now available also for the foundation and advanced SKUs. All of our products now have AI built in. The incremental Assist part of it is what is going to be counted as our AI revenue. It's pretty straightforward, very easy to measure, easy to track, and no confusion there. Be very clear that it's only going to be the AI part which will count towards the AI revenue that we discuss going forward.

Speaker #1: Ahmed . Thanks , Bill . Hey , Mark . So the way we're thinking about this and we've announced a pricing capabilities , is that AI capabilities are in each of the SKUs .

Speaker #1: Now . And what we did with Pro Plus , which was our higher end skew with assist , are now available also for the foundation and advanced cues .

Speaker #1: So all of our products now have AI built in, and the incremental assist part of this was going to be counted as our AI revenue.

Speaker #1: So it's pretty straightforward , very easy to measure , easy to track . And there's no confusion there . And we're very clear that it's only going to be the AI part , which will count towards the AI revenue .

Gina Mastantuono: To be very clear, Mark, we have the exact same methodology, and we will continue to capture only the incremental contribution from the AI capabilities. That $1.5 billion that Bill talked about, we're measuring the exact same way as we always measured. We're just hitting our goals a lot quicker than we ever thought we would.

Speaker #1: We discussed going forward .

Speaker #2: So, to be very clear, Mark, we have the exact same methodology, and we will continue to capture only the incremental contribution from the AI capabilities.

Speaker #2: And so that $1.5 billion that Bill talked about, we're measuring the exact same way as we always measured. We're just hitting our goals a lot quicker than we ever thought we would.

Mark Murphy: Okay. Great to hear about a $500 million increase on that number. Thank you so much.

Bill McDermott: Thank you, Mark.

Speaker #4: Okay, great to hear about a $500 million increase on that number. Thank you so much.

Bill McDermott: Your next question comes from the line of Brad Zelnick with Deutsche Bank. Please go ahead.

Operator: Your next question comes from the line of Brad Zelnick with Deutsche Bank. Please go ahead.

Speaker #5: Thank you . Mark

Speaker #3: Your next question comes from the line of Brad Zelnick with Deutsche Bank. Please go ahead.

Brad Zelnick: Great. Thanks so much for taking the question. Bill, we've been really impressed hearing from early adopters of Control Tower and how strategic it's seen for enabling the deployment of agentic apps.

Speaker #6: Great. Thanks so much for taking the question, Bill. We've been really impressed hearing from early adopters of Control Tower and how strategic it's seen for enabling the deployment of Agentic apps.

Brad Zelnick: We also realize that agentic orchestration is emerging as a very noisy and competitive space. How do you see ServiceNow's differentiation evolving from here amidst all the noise?

Speaker #6: But we also realized that agentic orchestration is emerging as a very noisy and competitive space. How do you see ServiceNow’s differentiation evolving from here?

Bill McDermott: Yeah, I'll start, and then, Amit, by all means, feel free to join in. We have data, and that data has been built over 22 years in this, quote-unquote, "ERP for IT," or that system of record. As you know, we've expanded the boundaries end to end of what this platform can do. Think now about 95 billion workflows and more than 7 trillion transactions getting trained at sub-second speed for everything that happens in an enterprise to that data. The context and the Context Engine that we have built to be that AI Control Tower for business reinvention, managing the humans and the agents, and coalescing that in this unbelievable platform is what gives us the context advantage that nobody can match. I just want to give you one sidecar.

Speaker #6: Amidst all the noise ?

Speaker #5: Yeah , I'll start and then , Ahmet , by all means , feel free to join in . We have data and that data has been built over 22 years .

Speaker #5: And this quote unquote , ERP for it or that system of record . And as you know , we've expanded the boundaries end to end of what this platform can do .

Speaker #5: So think now about 95 billion workflows and more than 7 trillion transactions getting trained at sub-second speed for everything that happens in an enterprise to that data.

Speaker #5: So, the context and the context engine that we have built to be that AI control tower for business reinvention—managing the humans and the agents and coalescing that in this unbelievable platform—is what gives us the context advantage that nobody can match.

Bill McDermott: Yesterday, we had the board of directors in, and we had one of the really great CIOs in the world, and she basically said, we are the control rail for all the key business processes that run through her global corporation. She said that she would never even think about it, but if you think about the fractional cost that ServiceNow is to her IT budget, she would never even think about addressing that line item because it's so important. If you did, it would have to be at least 10 times more expensive to even try to fix or change it. There you have it. Amit, please give some color on the differentiation.

Speaker #5: And I just want to give you one sidecar. Yesterday, we had the board of directors in, and we had one of the really great CIOs in the world.

Speaker #5: And she basically said, you know, we are the control rail for all the key business processes that run through her global corporation.

Speaker #5: And she said that she would never even think about it. But if you think about the fractional cost that ServiceNow is to her IT budget, she would never even think about addressing that line item because it's so important.

Speaker #5: But if you did, it would have to be at least ten times more expensive to even try to fix or change it.

Amit Zavery: Thanks, Bill. Hey, Brad, the way we think about this is that, one, we're going beyond just orchestration. There's a lot of context, as Bill mentioned, and we introduced something called Context Engine, which tracks not what the decision was made, but why it was done. It brings in a lot of information from the workflows and the environment, and the systems we've been running for many, many years already. Second, we're also building out this idea of Autonomous Workforce. You have a full AI specialist which do the full task of which humans do today and replaces that with end-to-end capabilities. You don't have to worry about orchestration, AI agent management, figuring out how to integrate them, and do the whole heavy lift of security compliance, and control around it, right?

Speaker #5: So there you have it. And Ahmed, please give some color on the differentiation.

Speaker #1: Thanks , Bill . So hey , Brad , the way we think about this is that one , we're going beyond just orchestration .

Speaker #1: There's a lot of context , as Bill mentioned , and we've introduced something called context engine , which tracks not what our decision was , what a decision was made , but why it was done .

Speaker #1: So it brings in a lot of information from the workflows and the environment and the systems we've been running for many, many years already.

Speaker #1: Second , we also building out this idea of autonomous workforce . You have a full AI specialist , which do the full task of which humans do today and replaces that with end to end capabilities .

Speaker #1: So you don't have to worry about orchestration, AI agent management, figuring out how to integrate them, and doing the whole heavy lift of security, compliance, and control around it, right?

Amit Zavery: With the AI Control Tower, you have the full visibility across an enterprise-wide, while we give you the full capability of doing the actioning end to end. Which is very different than just saying take pieces of technologies and build it yourself and figure out a way to orchestrate it. We do provide you an orchestration engine, which is very, very comparable to everybody else and very differentiated with the context data. We also are up-leveling that with a solution and outcome-driven mindset, so it changes the game for a lot of our customers because they don't have to worry about the heavy lift they have to do otherwise.

Speaker #1: With AI Control Tower , you have the full visibility across an enterprise wide while we give you the full capability of doing the actioning end to end , which is very different than just saying , take pieces of technologies and build it yourself and figure out a way to orchestrate it .

Speaker #1: We do provide the orchestration engine , which is very , very comparable to everybody else and very differentiated with the context data . But we also upleveling that with a solution , an outcome driven mindset .

Speaker #1: So it changes the game for a lot of our customers because they don't have to worry about the heavy lift they have to do.

Brad Zelnick: Thank you, guys. Very, very helpful.

Bill McDermott: Thanks, Brad.

Gina Mastantuono: Thanks, Brad.

Speaker #1: Otherwise

Bill McDermott: Your next question comes from the line of Gabriela Borges with Goldman Sachs. Please go ahead.

Operator: Your next question comes from the line of Gabriela Borges with Goldman Sachs. Please go ahead.

Speaker #6: Thank you, guys. Very, very helpful.

Speaker #2: Thanks , Brad .

Speaker #3: Your next question comes from the line of Gabriela Borges with Goldman Sachs. Please go ahead.

Gabriela Borges: Hi. Good afternoon. Thank you. Bill, Amit, and Gina, I appreciate all of the detail on the new products. What I wanted to ask you about is the risk that customers start to negotiate you down on the more classic parts of the ServiceNow stack in order to essentially free up budget for some of the newer products. I'd love to hear a perspective on how you're navigating some of those conversations when customers say, "We're getting so much value from the AI part of the stack, which means the classic part of the stack may actually be less valuable to us, therefore give us more of a discount on that." Would love your perspective. Thank you.

Speaker #7: Hi . Good afternoon . Thank you . Bill . And Gina , I appreciate all of the detail on the new products . What I wanted to ask you about is the risk that customers start to negotiate .

Speaker #7: You down on the more classic parts of the service . Now stack in order to essentially free up budget for some of the newer products , I'd love to hear a perspective on how you're navigating some of those conversations .

Speaker #7: When customers say , we're getting so much value from the AI part of the stack , which means , well , the classic part of the stack may actually be less valuable to us .

Bill McDermott: Yeah. Thank you, Gabriela. One thing I can tell you from being in the industry for quite some time and running another global corporation that was the biggest in the world, one thing that I've learned is when you innovate on the platform, whatever the platform is, it reinvigorates the core. When you do smart M&A, it also double down reinvigorates the core. If you look at any company of size, scale, and significance, that's always true. No, we're not getting negotiated down on the core. Actually, we're redoubling our focus on it because that system of record for IT, where we started and founded the company, has now become more important than ever. There's a higher appreciation for it because of AI, because it's the pivot point by which we extend to all the other functions of a company.

Speaker #7: Therefore, give us more of a discount on that. We'd love your perspectives. Thank you.

Speaker #5: Yeah . Thank you . Gabriela . One thing I can tell you from being in the industry for quite some time and running another global corporation , that was the biggest in the world .

Speaker #5: One thing that I've learned is when you innovate on the platform , whatever the platform is , it reinvigorates the core . And when you do smart M&A , it also double down , reinvigorates the core .

Speaker #5: And if you look at any company of size , scale , and significance , that's always true . So no , we're not getting negotiated down on the core .

Speaker #5: Actually, we're redoubling our focus on it because that system of record for it, where we started and the company, has now become more important than ever.

Speaker #5: So there's a higher appreciation for it because of AI, because it's the pivot point by which we extend to all the other functions of a company.

Bill McDermott: It's also the pivot point to our Workflow Data Fabric and the Context Engine that Amit just discussed. There is no great autonomous AI platform end to end. There is no great Control Tower. There is no great Workflow Data Fabric. There is no great integration layer that ties into the hyperscalers, the language models, the systems of record without that unbelievable core that Fred Luddy built into the company 22 years ago. From that genesis of strength, everything else has been built. Actually, I see the core having a major resurgence as a result of AI. Remember what I said in the script, it's all about also this increase in code and this increase in AI activity. I'll finish it with Armis. Armis is going to be our Instagram, and I'll tell you why. The number 3 economy in the world is cybercrime.

Speaker #5: It's also the pivot point to our workflow data fabric and the context engine that Amit just discussed . So there is no great autonomous AI platform , end to end .

Speaker #5: There is no great control tower, there is no great workflow data fabric, there is no great integration layer that ties into the hyperscalers.

Speaker #5: The language models , the systems of record . Without that unbelievable core that Fred Luddy built into the company . 22 years ago , and from that , that that genesis of strength , everything else has been built .

Speaker #5: So actually , I see the core having a major resurgence as a result of AI . And remember what I said in the script , it's all about also , this increase in code and this increase in AI activity .

Speaker #5: And I'll finish it with Armas. Armis is going to be our Instagram. And I'll tell you why. The number three economy in the world is cybercrime.

Bill McDermott: It's $1 trillion a month. We now have a situation where on the IT and the OT landscape of every major corporation, we are managing the agents and the humans, and we are managing the landscape of the threat actors. If you think about a single intrusion from an AI agent, it will cost a commercial customer $5 million and a public sector customer $10 million. You have to look to ServiceNow quickly, and you'll need that core to illuminate the power of Armis. Those are issues that have not even happened yet. We just got Armis on Monday. You're looking at a tailwind here that has. I've never seen it. Get ready for major revenue acceleration.

Speaker #5: It's a trillion a month. We now have a situation where, on the IT and the OTT landscape of every major corporation, we are managing the agents and the humans, and we are managing the landscape of the actors.

Speaker #5: And if you think about a single intrusion from an AI agent, it will cost a commercial customer $5 million, and a public sector customer $10 million. You have to look to ServiceNow quickly, and you'll need that core to illuminate the power of Armis.

Speaker #5: So those are issues that have not even happened yet . We just got Armis on Monday . So you're looking at a tailwind here that has I've never seen it .

Amit Zavery: Yeah. If I can add to what Bill mentioned about the stack. We have redone everything in our platform to be AI native, Gabriela. Everything which we do in terms of how we orchestrate, how we manage workflows, how we bring resolution and action out of it, as well as all the things we do with data, it's all been rewritten with AI native mindset. That is available today. Existing customers are getting that capability as part of the upgrades, and they don't have to do anything. Our platform becomes that AI native for all of our customers. Now there's not really a pressure in terms of any of the discussions. They all want to modernize, and they're getting it very quickly and simply.

Speaker #5: So get ready for major revenue acceleration.

Speaker #1: Yeah. If I can add to what Bill mentioned about the stack. So, we have redone everything in our platform to be AI native.

Speaker #1: Gabriela . So everything which we do in terms of how we orchestrate , how we manage workflows , how we bring resolution and action out of it , as well as all the things we do with data .

Speaker #1: It's all been rewritten with AI, native mindset. So that is available today. So existing customers are getting that capability as part of the upgrades.

Speaker #1: They don't have to do anything. And our platform becomes that AI-native for all of our customers. So now there's not really a pressure in terms of any of the discussions.

Amit Zavery: They're getting the benefit of all the new innovations we're bringing into our platform, and all the customers get that instantly as we deliver these AI native products.

Speaker #1: They all want to modernize and they're getting it very , very quickly . And simply . And they're getting the benefit of all the new innovations we're bringing into our platform and all the customers get that instantly as we deliver this AI native products .

Gabriela Borges: Thank you.

Gabriela Borges: Peter, your next question comes from the line of Peter Reid with AllianceBernstein. Please go ahead.

Operator: Peter, your next question comes from the line of Peter Reid with AllianceBernstein. Please go ahead.

Speaker #7: Thank you

Speaker #3: Peter, your next question comes from the line of Peter Weed with AllianceBernstein. Please go ahead.

Peter Reid: Thank you, and appreciate all the detail on the latest releases. I guess I've got a follow-up there. You announced the Autonomous Workforce in February, which was really exciting, including the GA of the level one service desk coming here in Q2 along with EmployeeWorks. Help us kind of understand that long-term strategy and vision, and how does that complement the existing Now Assist products? Maybe narrowing in on one example here, help us understand the richness of where you're going.

[Company Representative] (AllianceBernstein): Thank you, and appreciate all the detail on the latest releases. I guess I've got a follow-up there. You announced the Autonomous Workforce in February, which was really exciting, including the GA of the level one service desk coming here in Q2 along with EmployeeWorks. Help us kind of understand that long-term strategy and vision, and how does that complement the existing Now Assist products? Maybe narrowing in on one example here, help us understand the richness of where you're going.

Speaker #8: Thank you . And appreciate all the detail on the latest releases . I guess I've got a follow up there You announced the autonomous workforce in February , which was really exciting , including the G a of the level one service desk coming here in quarter two , along with the employee works .

Speaker #8: Help us kind of understand that long term strategy and vision . And how does that complement the existing now assist products ? Maybe , you know , narrowing in on like one example here kind of kind of help us understand the richness of where you're going .

Amit Zavery: Yes, Peter, thanks for that question. Our vision here is pretty ambitious and kind of game-changer in the market. What we're doing with an Autonomous Workforce is to really provide an end-to-end resolution for different functions companies run inside their enterprise today. Taking this example of level one support engineer. Today, a lot of tickets get deflected, of course, when somebody has an issue or question they ask for, and we help that with our EmployeeWorks, where we give them self-service and help them resolve that issue a customer or employee might have. But some things do require help, and they usually go to human to get that thing resolved.

Speaker #1: Yes, Peter, thanks for that question. So our vision here is pretty ambitious and kind of a game changer in the market.

Speaker #1: What we're doing with autonomous workforce is to really provide an end-to-end resolution for different functions companies run inside their enterprise today.

Speaker #1: So, taking this example of a level one support engineer today, a lot of tickets get deflected. Of course, when somebody has an issue or question, they ask for.

Speaker #1: And we help that with our employee workflows, where we give them self-service and help them resolve that issue. A customer or employee might have, but some things they do need require help, and they usually go to a human to get that thing resolved.

Amit Zavery: What we're doing is taking that pain and the burden away from human and putting that into this level one support specialist, AI specialist, which will now understand the intent and the question and figure out how to resolve it based on the exact learning they've had for many of the data we provide underneath the covers, and then get that resolution in a very short amount of time. Typically, a human requires around two days based on the case volume to resolve it. We are now able to do that in less than 20 minutes. The employee or customer is getting their information quickly, and the issue resolved immediately without having to wait on a human agent to really do this. That changes the game for every enterprise, right? Because now you're reducing the workload on the employees themselves.

Speaker #1: And what we're doing is taking that pain and the burden away from human and putting that into this Level One support specialist, AI specialist, which will now understand the intent and the question and figure out how to resolve it based on the learning they've had from many of the data we provide underneath the covers.

Speaker #1: And then get that resolution in a very short amount of time—typically, a human requires around two days, based on the case, to resolve it.

Speaker #1: We are now able to do that in less than 20 minutes. So the employee or customer is getting their information quickly, and the issue is resolved immediately without having to wait on a human agent to really do this.

Amit Zavery: You're getting them moving on with the job very fast. As well as now we are just taking away also the human labor cost, which now we can also monetize beyond what we used to charge for just the issue management before. It opens up and expands our TAM considerably. Plus, it becomes much more value driven than just being able to provide you software. That's really the vision we have. We have around 20 different roles like this been delivered by May. You'll see that at our Knowledge event.

Speaker #1: And that changes the game for every enterprise , right ? Because now the workload on the employees themselves , you're getting them moving on with the job very fast as well as now we are just taking away also the human labor cost , which now we can also monetize beyond what we used to charge for just the issue management before .

Speaker #1: So, it opens up and expands our TAM considerably. Plus, it becomes much more value-driven than just being able to provide you software.

Speaker #1: So that's really the vision we have and we have around 20 different roles like this being delivered by May . You'll see that at our knowledge event and all the discussions we were having with customers , and quite a few of them are live right now , and they're seeing this immediate value add by taking this kind of a technology without having to build all the AI underpinnings , doing all the security work , the compliance work and training , the models and doing the spare part work , and then worrying about upgrades and maintenance to those kind of thing .

Amit Zavery: All the discussions we've been having with customers and quite a few of them are live right now, and they're seeing this immediate value add by taking this kind of a technology without having to build all the AI underpinnings, doing all the security work, the compliance work, and training the models, and doing the spare part work, and then worrying about upgrades and maintenance, those kind of things. We take away all that pain point while giving the outcome of AI completely out of the box in our products today. That's really the vision. It's really playing out very well and very bullish about what we can do here based on the context and information we've had. You can't just do with the large language model or any of the technology by itself.

Speaker #1: We take away all that pain point while giving you the outcome of AI completely out of the box in our, in our, in our products today.

Speaker #1: So that's really the vision . It's really playing out very well and very , very bullish about what we can do here based on the context and the information we've had , which you can't just do with the large language model or any of the technology by itself , given our historical experience in this thing , we are able to bring that knowledge and resolve it for our customers .

Amit Zavery: Given our historical experience in this thing, we are able to bring that knowledge and resolve it for our customers.

Bill McDermott: One thing that's interesting, Peter, just to use ServiceNow as a benchmark, Gina has captured $ half a billion in productivity on the back of what Amit just said. The agents are 99% faster than the human. 90% of our cases on employee and customer issues are now resolved by the agents, the level one agents Amit is talking about. If you think about a company of our size and scale, we're able to go in a year and exit the year into a new year with the same head count. That's a company that's growing at the rule of 56 between free cash flow and revenue. There's not too many of them out there. I want to invest in some. I'm on the lookout.

Speaker #5: And one thing that's interesting , Peter , just to use ServiceNow as a benchmark , Gina's captured a half a billion in productivity on the back of what Amit just said .

Speaker #5: So the agents are 99% faster than the human. Ninety percent of our cases on employee and customer issues are now resolved by the agents.

Speaker #5: The level one agents Ahmed is talking about. And if you think about a company of our size and scale, we're able to go in a year and exit the year into a new year with the same headcount.

Speaker #5: And that's a company that's growing at the rule of 56 between free cash flow and revenue. There's not too many of them out there.

Peter Reid: Well, that's a pretty bullish outcome. Help us understand the pricing that you're able to achieve as a result of the value you're bringing?

[Company Representative] (AllianceBernstein): Well, that's a pretty bullish outcome. Help us understand the pricing that you're able to achieve as a result of the value you're bringing?

Speaker #5: I want to invest in some of them. I'm on the lookout.

Speaker #8: That's a pretty bullish outcome. Help us with the pricing that you're able to achieve as a result of the value you're bringing.

Amit Zavery: Yeah. Peter, this is part of our current AI native pricing, right? More you use, more assists you'll end up consuming based on the entitlements you have. Over time, we can look at beyond what we do today from the pricing perspective, but today it kind of becomes much simpler for customers. When they see this issue's been resolved or question's been handled and us helping them manage their problems inside the enterprise, we can now easily now monetize that through our assist pricing structure we have. Now it's available across all our product tiers, so it could start anywhere they want to.

Speaker #1: Yeah . So , Peter , the way this is part of our current AI native pricing , right ? So more you use , it's more assist , you land up using a consuming based on the entitlements you have .

Speaker #1: So, over time, we can look at beyond what we do today from the pricing perspective. But today, it kind of becomes much simpler for customers when they see these issues being resolved or questions being handled.

Speaker #1: And us helping them manage their problems inside the enterprise, we can now easily monetize that through our Assist pricing structure we have, and now it's available across all our product tiers.

Peter Reid: Thank you.

[Company Representative] (AllianceBernstein): Thank you.

Bill McDermott: Thank you, Peter.

Speaker #1: So it could start anywhere they want to.

Bill McDermott: Your next question comes from the line of Keith Weiss with Morgan Stanley. Please go ahead.

Operator: Your next question comes from the line of Keith Weiss with Morgan Stanley. Please go ahead.

Speaker #8: Thank you .

Speaker #5: Thank you , Peter .

Speaker #3: Your next question comes from the line of Keith Weiss with Morgan Stanley. Please go ahead.

Keith Weiss: Excellent. Thank you guys for taking the question. I wanted to directly go sort of at, I think, a topic that a lot of us are dancing around in sort of our initial questions. I'm excited about the opportunity of ServiceNow. You guys are obviously excited about the opportunity for ServiceNow. The stock is down 12% after hours, so something's not getting through to investors. I would say there's probably two parts to that equation. One is a lack of clarity on the inorganic contribution to Q1. There's Veza in there's Pyramid Analytics in there, and we don't quite know how much of a contribution it is. I think investors are wondering whether it really was a Q1 beat on an organic basis. Then for the full year, outside of adding Armis and currency, the full year number doesn't really move at all. We're wondering when.

Speaker #8: Excellent . Thank you guys for taking the question . I wanted to directly go sort of at a topic that a lot of us are dancing around in sort of our initial questions .

Speaker #8: I'm excited about the opportunity of ServiceNow. You guys are obviously excited about the opportunity for ServiceNow. The stock is down 12% after hours.

Speaker #8: So , so something's not getting through to investors . And I would say there's probably two parts of that equation . One is a lack of clarity on the inorganic contribution to Q1 .

Speaker #8: There's AsIn in there, there's Pyramid Analytics in there. And we don't quite know how much of a contribution it is. So I think investors are wondering whether it really was a Q1 beat on an organic basis.

Speaker #8: And then for the full year, outside of adding AMAs and currency, the full year number doesn't really move us at all.

Keith Weiss: When are we going to see this acceleration? When are we going to see the benefits of ServiceNow's positioning for this generative AI opportunity? Because we are seeing it in the AI labs, right? AI labs added $5 billion in net new ARR in Q1 alone, each one, right? And we're talking about $1.5 billion for Now Assist when we get to the end of the year. It seems like they're getting an outsized proportion of the gain. When does ServiceNow participate in a way that's more analogous to the AI labs that we're actually getting organic positive revisions? Thank you.

Speaker #8: And we're wondering when, like, when are we going to see this acceleration? When are we going to see the benefits of ServiceNow positioning for this generative AI opportunity?

Speaker #8: Because we are seeing it in the AI labs, right? The AI, AI labs added $5 billion in net new IRR in Q1 alone.

Speaker #8: Each one. Right. And we're talking about $1.5 billion for now. Assist when we get to the end of the year, it seems like they're getting an outsized proportion of the gain.

Speaker #8: So, when does ServiceNow participate in a way that's more analogous to the AI labs, where we're actually getting organic, positive revisions? Thank you.

Gina Mastantuono: Keith, there's a lot of questions there. I'll tackle them one by one. Veza closed in the middle of March, and it's a small tuck-in. Pyramid is even smaller. They had very tiny contribution, which is why we're not calling it out. We would've beat regardless. We did talk about 75 basis points of on-prem, pushed out to Q2. On-prem year-over-year is a little bit more than a point lower in Q1 of this year versus last year. If you just exclude the on-prem, and by the way, we want hosted, we love hosted. On-prem being lower is not a bad thing, but it does impact the numbers. We actually have seen a couple of those on-prem deals already close in Q2, but it was a timing issue. That's the answer on Q1.

Speaker #2: So , Keith , there's a lot of questions there . I'll tackle them one one by one . So we visa and so visa closed in the middle of March and it's a small tuck in pyramid is even smaller .

Speaker #2: So they had very , very , very tiny contribution , which is why we're not calling it out . So we would have beat regardless .

Speaker #2: We did talk about 75 basis points of on prem , not pushed out to Q2 . So on prem year over year is a little bit more than a point lower in Q1 of this year versus last year .

Speaker #2: So if you , if you , if , if you just exclude the on prem . And by the way , we want hosted , we love hosted and on prem being lower is not a bad thing , but it does impact the numbers .

Speaker #2: We actually have seen a couple of those on prem deals already closed in Q2 , but it was a timing issue . So that's that's the answer on Q1 .

Gina Mastantuono: We feel very good and strong that we continue to have strong organic growth on top of these great acquisitions that we've added. We've been very clear on the impact of Armis. I spelled it out across the board in every single metric, so you can see that, yes, we didn't increase the revenue guide excluding Armis, but we didn't take it down either, despite some ongoing conflicts. We held, and we never really, even in the best of times, we rarely increase our revenue guide to the full year after just Q1. It's the smallest quarter that we have. We held the guide, increased with Armis. We're seeing accelerating revenue growth.

Speaker #2: We feel very good and strong that we continue to have strong organic growth on top of these great acquisitions that we've added. And so we've been very, very clear on the impact of AMAs.

Speaker #2: I spelled it out across the board in every single metric. So you can see that, yes, we didn't increase the revenue guide.

Speaker #2: Excluding AMAs , but we didn't take it down either . Despite some ongoing conflicts . So we held and we never really even in the best of times , we rarely increase our revenue guide for the full year after just Q1 .

Speaker #2: It's the smallest quarter that we have, and so we held the guide increased with AMAs. So we're seeing accelerating revenue growth.

Gina Mastantuono: I think the example we gave of Moveworks, of being able to integrate it into EmployeeWorks within 3 weeks, and then very quickly hit it into our distribution network and have more revenue or more deals in Q1 than they had all last year, is a great example of M&A done extremely well. That's number two. To the question on acceleration of revenue growth, we've basically said historically that our guide for 2026 was $1 billion. We just told you now that it's 50% higher than that, $1.5 billion in 2026, which is, I think, pretty darn good for a software company that's building AI into our platform and enables our customers to get the value of AI within our platform with all the guardrail security and governance that they love.

Speaker #2: And I think the example we gave of MoveWorks, of being able to integrate it into Employee Works within three weeks and then very quickly hit it into our distribution network and have more revenue or more deals in Q1 than they had all year last.

Speaker #2: Last year is a great example of M&A done extremely well . So that's number two to the question on on acceleration of revenue growth , we've basically said historically that our that our guide for 2026 was a billion .

Speaker #2: We just told you now that it's 50% higher than that 1.5. In 2026, which is, I think, pretty darn good for a software company.

Speaker #2: That's building AI into our platform, and enables our customers to get the value of AI within our platform with all the guardrails, security, and governance that they love.

Gina Mastantuono: I'm hoping that you'll be at Financial Analyst Day in a couple weeks' time because we will lay out our long-range plan and when we expect to see that flywheel of AI consumption that you're talking about. I can promise you, I think you'll be very excited about what you're going to see.

Speaker #2: I'm hoping that you'll be at Financial Analyst Day in a couple of weeks' time, because we will lay out our long-range plan and when we expect to see that flywheel of AI consumption that you're talking about. And I can promise you, I think you'll be very excited about what you're going to see.

Keith Weiss: Excellent. I will definitely be there. Thank you.

Bill McDermott: Yeah. Keith, I do want to mention, we didn't buy anything with a whole bunch of revenue.

Speaker #8: I will definitely be there. Thank you.

Gina Mastantuono: No.

Bill McDermott: Okay? We didn't buy what's been on the market for 10 or 15 or 20 years to plug a revenue gap. We bought companies that are adding to the AI Control Tower for business reinvention. They are not in a meaningful way and never were intended to be a plug for a revenue gap. We just got them, and we're building out the story with them, and they're going to set the world on fire with re-accelerating revenue growth. The other thing we're doing as we're re-accelerating revenue growth, and by the way, above 20% isn't too bad, right? On a $15 billion company. In terms of accelerating margins, who accelerates margins at the rate that we have? We're a 56 rule company going up, and we're obviously taking SBC down at the same time because we know the shareholders.

Speaker #5: Yeah . And Keith , I do want to mention we didn't buy anything with a whole bunch of revenue . Okay ? We didn't buy what's been on the market for ten or 15 or 20 years to plug a revenue gap .

Speaker #5: We bought companies that are adding to the AI control tower for business reinvention. So they are not in a meaningful way, and not intended to be a plug for a revenue gap.

Speaker #5: We just got them, and we're building out the story with them, and they're going to set the world on fire with reaccelerating revenue growth.

Speaker #5: The other thing we're doing as we're accelerating revenue growth , and by the way , a 20% isn't too bad , right ? And on a $15 billion company , and in terms of accelerating margins , who accelerates margins at the rate that we have .

Speaker #5: So, we're a 56 rule company going up. And we're obviously taking SBC down at the same time, because we know the shareholders.

Bill McDermott: I think the bigger argument for the shareholders is something like, what's the terminal value of a software company? Is the seat-based pricing going to last? Well, when you have many more seats because the surface area you cover is 80% greater than what you used to cover, you're going to do fine on seats, but nobody cares about seats. We had a CIO from one of the biggest companies in the world tell us yesterday she never bought a pricing plan one way or the other. She buys the return on the investment. In our case, we give you the Goldilocks model. You can have it any way you want. You like seats, great. You like consumption, great. You like a blend of the two, great. You want to split the value with us, even greater. We'd love that.

Speaker #5: I think the bigger argument for the shareholders is something like, what's the terminal value of a software company? Is the seat-based pricing going to last?

Speaker #5: Well , when you have many more seats , because the surface area you cover is 80% greater than what you used to cover , you're going to do fine on seats , but nobody cares about seats .

Speaker #5: We had a CIO from one of the biggest companies in the world tell us yesterday, she never bought a pricing plan one way or the other.

Speaker #5: She buys the return on the investment. And so, in our case, we give you the Goldilocks model. You can have it any way you want.

Speaker #5: You like seats . Great . You like consumption . Great . You like a blend of the two . Great . You want to split the value with us even greater .

Bill McDermott: As soon as you show them how big the value is, they say, "I'll take the seats." We got you covered there. In terms of the terminal value, see with your eyes. It's kind of a parlor trick if you think you're going to touch a button from a language model company, and it's going to do everything we just discussed in the complexity of a global corporation. I think having a sustained growth, a predictable growth, an expanding margin company on fire in the global economy, solving major problems is the category you should define us by. Yes, we love the language model companies. That's why we partner with all of them, the same way we did the hyperscalers and even the systems of record. Some of them compete with us vigorously.

Speaker #5: We'd love that. But as soon as you show them how big the value is, they say, I'll take the seats.

Speaker #5: So we got you covered there . And in terms of the terminal value , see with your eyes , you know , it's kind of a parlor trick .

Speaker #5: If you think you're going to touch a button from a language model company and it's going to do everything we just discussed, and the complexity of a global corporation.

Speaker #5: So I think having a sustained growth, a predictable growth, and expanding margin company on fire in the global economy, solving major problems, is the category you should define us by.

Speaker #5: And yes, we love the language model companies. That's why we partner with all of them the same way we did the hyperscalers.

Bill McDermott: That has nothing to do with the fact that we know the customer wants everybody to work nice, and that's why we opened it up to any system. We're very confident in our position, and we're also mindful that customers are spending a lot on AI, but that is incremental. It is not replacing what they're spending on us.

Speaker #5: And even the systems of record. And some of them compete with us vigorously. But that has nothing to do with the fact that we know the customer wants everybody to work.

Speaker #5: Nice . And that's why we opened it up to any system . So we're very confident in our position , and we're also mindful that customers are spending a lot on AI , but that is incremental .

Speaker #5: It is not replacing what they're spending on us.

Keith Weiss: Excellent. Thank you, guys.

Bill McDermott: Thank you.

Bill McDermott: Your next question comes from the line of Alex Zukin with Wolfe Research. Please go ahead.

Operator: Your next question comes from the line of Alex Zukin with Wolfe Research. Please go ahead.

Speaker #8: Excellent. Thank you, guys.

Speaker #5: Thank you

Speaker #3: Your next question comes from the line of Alex Zukin with Wolfe Research. Please go ahead.

Alex Zukin: Thank you, guys, for taking the question. Bill, maybe start for you. Just maybe give us a characterization of the overall enterprise spending environment right now, and not just in the Middle East, but maybe globally. There's this pervasive sense of, at least from investors, of this AI anxiety where customers are a bit more hesitant to maybe make bigger purchases because of some of the uncertainty. Maybe not of what's available now, but what's kind of coming given the rapid pace of innovation. Gina, I've got a quick follow-up for you.

Speaker #8: Thank you guys for taking the question . Bill , maybe start for you . Just maybe just give us a characterization of the overall enterprise spending environment right now , and not just in the Middle East , but maybe globally .

Speaker #8: Is there there's a pervasive sense of , at least from investors of this AI anxiety where customers are a bit more hesitant to maybe make bigger purchases because of some of the uncertainty , maybe not of what's available now , but but what's kind of coming , given the rapid pace of innovation .

Bill McDermott: No, Alex, you're right. I think the big thing, and one of our great executives discussed this with the board. He spends a lot of time, especially with the CIO community, CTO, digital officers, and so on, AI officers, too. The environment is very excited about AI. These language model companies are great companies. They're very exciting. They're very excited about AI. The problem is they don't exactly know what to do, so they're somewhat confused. I put together, along with our great team here, an agentic business white paper that has cleared things up for a lot of customers because we're highly respectful of the great companies and what they do, but we're also well aware of what they don't do.

Speaker #8: And then, Gina, I've got a quick follow-up for you.

Speaker #5: Know , Alex , you're right . I think the big thing and one of our great executives discussed this with the board , he spends a lot of time , especially with the CIO community , CTO , digital officers and so on .

Speaker #5: AI officers to the environment are very excited about AI. These language model companies are great companies. They're very exciting. So they're very excited about AI.

Speaker #5: The problem is they don't exactly know what to do. So, they're somewhat confused. I put together, along with our great team here in Agentic, a business white paper that has cleared things up for a lot of customers because we're highly respectful of the great companies and what they do.

Bill McDermott: The customer just wants the truth, and they want to know what they do, meaning it could be a language company, it could be another type of company, and what we do. I think our positioning is really resonating with the customer because they tell us the fact that you are so open. Yes, you're competitive. Yes, you want to win, but you're so open. It's an autonomous platform. You give me the Control Tower. All the language models are welcome. All the hyperscalers are welcome. All the systems of records are welcome. All the data lakes are welcome because that's the environment, this heterogeneous environment that the customer's operating in. It's also a chaotic world. If you look at the geopolitical landscape or even wars around the world, it's hectic out there.

Speaker #5: But we're also well aware of what they don't do . So the customer just wants the truth and they want to know what they do , meaning it could be a language company , it could be another type of company .

Speaker #5: And what we do, and I think our positioning is really resonating with the customer, because they tell us the fact that you are so open.

Speaker #5: Yes , you're competitive . Yes . You want to win , but you're so open . It's an autonomous platform . You give me the control tower , all the language models are welcome .

Speaker #5: All the hyperscalers are welcome, all the systems of record are welcome, all the data lakes are welcome, because that's the environment.

Speaker #5: This heterogeneous environment that the customer’s operating in. And it’s also a chaotic world. If you look at the geopolitical landscape or even wars around the world, it’s hectic out there.

Bill McDermott: I think what you have to do is be highly clarifying, very thoughtful with the customer. The customer, in the end, determines who wins or loses. We're not so caught up in the short-term things. We just want to really double down on that customer relationship. When they see our roadmap, the great innovation that our dear Amit and his team are building into the company, they love the M&As we did. It's a settling effect. It's like, yeah, we're here and we'll be here 22 more years from now taking good care of you. That's really what it is. I tell people there was once a United Airlines commercial where the CEO walks into the boardroom and starts handing out plane tickets and said, "Go visit our customers." That's what you got to do. You got to get in front of them. You got to help them understand.

Speaker #5: So I think what you have to do is be highly clarifying, very thoughtful with the customer. The customer, in the end, determines who wins or loses.

Speaker #5: We're not so caught up in the short-term things. We just want to really double down on that customer relationship when they see our roadmap.

Speaker #5: The great innovation that our dear Ahmet and his team are building into the company—they love the M&A. We did. It's a settling effect.

Speaker #5: It's like , yeah , we're here and we'll be here 22 more years from now . Taking good care of you . That's really what it is .

Speaker #5: I tell people there was once a United Airlines commercial where the CEO walks into the boardroom and starts handing out plane tickets and said, go visit our customers.

Bill McDermott: It's not a time to be anything less than totally empathetic, because these customers, just like the shareholders, they have so much coming at them. We just want to give you a solid, clean story and then let you make the best decision you can based on the facts.

Speaker #5: That's what you got to do . You got to get in front of them . You got to help them understand . And it's not a time to be anything less than totally empathetic , because these customers , just like the shareholders , they have so much coming at them .

Gina Mastantuono: I would just add, Alex, on the numbers and the proof points, right? I talked about 16 deals greater than $5 million in the quarter, 5 deals over $10 million. Talked about, again, second quarter in a row, our largest net new logo land at $15 million, right? Customers are spending. They are understanding the value propositions that we're driving and that we're delivering, and it is showing up in the numbers.

Speaker #5: We just want to give you a solid, clean story, and then let you make the best decision you can based on the facts.

Speaker #5: .

Speaker #2: And then I would just add , Alex , on the numbers and the proof points , right ? I talked about 16 deals greater than 5 million in the quarter , five deals over ten talked about again , second quarter in a row .

Speaker #2: Our largest net new logo land at 15 million . Right . So customers are spending they are understanding the value proposition that that that that we're driving and that we're delivering .

Bill McDermott: For sure. If you guys come to Knowledge, which I hope you do, and please come to the FAD. Our Knowledge attendance, okay, this is a live attendance, live audience. They must be interested because we're totally sold out, and the seats are up 11% year over year already, and we have late sign-ups. The FAD, the Financial Analyst Day, we already have Darren telling us yesterday we're going to have to have a second and third room because the fire marshal said you can't put any more people in that room. If you get there and it's not packed, you'll hold it against me, right? It's packed. Everybody cares about the story, whether it's a customer or it's an investor, and they know ServiceNow has a good heart. We also know that you're rooting for us, so we're working hard.

Speaker #2: And it is showing up in the numbers.

Speaker #5: For sure . And if you guys come to knowledge , which I hope you do , and please come to the fad , our knowledge attendance .

Speaker #5: Okay, this is a live attendance, live audience. They must be interested because we're totally sold out, and the seats are up 11% year over year already.

Speaker #5: And we have late sign ons . The fad , the Financial Analyst Day we already have Darren telling us yesterday we're going to have to have a second and third room because the fire marshal said you can't put any more people in that room .

Speaker #5: And so if you get there and it's not packed , you'll hold it on me , right ? It's packed . Everybody cares about the story , whether it's a customer or it's an investor , and they know ServiceNow has a good heart .

Alex Zukin: Nobody packs a room like you guys do, Bill. Gina, maybe just on the numbers for you. Actually, a $10 million beat in the quarter, and then reiterating the full year, given a $23 million headwind on Q1, actually seems pretty impressive. Maybe what gives you the confidence to be that prudent in the guide? Just any, maybe a little bit more specificity on the headwinds from the CRPO dynamics with Armis.

Speaker #5: And we also know that you're rooting for us. So, you know, we're working hard.

Speaker #8: Nobody packs a room like you guys do . Bill . Gina , maybe just on the numbers for you Actually , a $10 million beat in the quarter .

Speaker #8: And then reiterating the full year , given a $23 million headwind on Q1 actually seems pretty impressive . Maybe . What gives you the confidence to to be that prudent in the guide and then just any maybe a little bit more specificity on the headwinds from the crpo dynamics with Armis .

Gina Mastantuono: Yeah. Listen, I think at the end of the day, the confidence I get is from the incredible team that we have around the table, the incredible go-to-market execution machine, all of the innovation that Amit and the team have been driving, and just the environment that we see ourselves in, right? There's not one person in this company that doesn't spend time with customers every single day. That gives me the confidence in the guide. Thank you for realizing that it's a very strong guide. By the way, the acquisition of Armis, as Bill talked about, it's not about buying revenue, it's about buying incredible talent, incredible technology capabilities that's going to make our AI Control Tower even stronger, right? Building that in is just really strong. I think the headwinds with CRPO dynamics of Armis. There's no CRPO headwind from Armis.

Speaker #2: Yeah. So listen, I think at the end of the day, the confidence I get is from the incredible team that we have around the table.

Speaker #2: The incredible go to market execution machine , all of the innovation that Amit and the team have been driving and just the environment that we that we that we see ourselves in , right ?

Speaker #2: There's not one person in this company that doesn't spend time with , with , with customers . Every single day . And so that gives me the confidence in the guide .

Speaker #2: Thank u for realizing that it's a very strong guide . And by the way , the acquisition of Armis , as Bill talked about , it's not about buying revenue .

Speaker #2: It's about buying incredible talent , incredible technology capabilities that's going to make our AI control tower even stronger . Right ? And so building that in is , is , is just really , really strong .

Gina Mastantuono: There's a tailwind from Armis, so I'm not quite sure what you're referring to there. At the end of the day, CRPO is a strong guide as well, and we feel really good about the overall guidance top to bottom.

Speaker #2: I think the headwinds with crpo dynamics of armis . So there's no crpo headwind from Armis . There's a tailwind from Armis . So I'm not quite sure what you're referring to there , but at the end of the day , Crpo is , is a strong guide as well .

Bill McDermott: Alex, if I may, if you thought about a headwind, if you were referring to the 50 basis points on the margin with regard to Armis, remember, it was originally 100 basis points. Thanks to Gina's efficiency and the company's great Now on Now with Amit, it's 50 basis points. Here's the commitment, okay? By the end of the year, it goes down to zero. That's because of the efficiency we're driving in the company and the great platform that we have. We can actually acquire a substantially interesting company and not impact the margin at all, which is kind of cool, because most companies will make excuses. When you get to FAD, we're going to talk about margin expansion, revenue acceleration. We're going to show you how the stock-based compensation's coming down.

Speaker #2: And we feel really good about the overall guidance, top to bottom.

Speaker #5: And Alex , if I may , if you thought about a headwind , if you were referring to the 50 basis points on the margin with regard to Armis , remember it was originally it was originally 100 basis points , thanks to Gina's efficiency in the company's .

Speaker #5: Great . Now on now with Ahmet , it's 50 basis points , but here's the commitment . Okay , by the end of the year , it goes down to zero .

Speaker #5: That's because of the efficiency we're driving in the company and the great platform that we have . So we can actually acquire a substantially interesting company and not impact the margin at all , which is kind of cool because most companies would make excuses when you get to fad , we're going to talk about margin expansion , revenue acceleration .

Bill McDermott: We're also going to show you just how big this company is going to be in the next few years. We're really ready to roll.

Speaker #5: We're going to show you how the stock-based compensation is coming down. And we're also going to show you just how big this company is going to be in the next few years.

Gina Mastantuono: Yeah. On CRPO, Alex, Armis would have been hired. They have a lot of T for C in their contract, so termination for convenience. Not all of it can go into CRPO, but they are a strong company. We feel great about the potential there.

Speaker #5: So we’re really ready to roll.

Speaker #2: Yeah . And , on and on . Crpo Alex Armus would have been hired . They they have a lot of C4C in their contracts or termination for convenience .

Speaker #2: So not all of it can go into C , Crpo but they are a strong company . We , we , we feel great about the , the , the potential there .

Alex Zukin: That's exactly what I was referring to. Thank you, guys. Maybe headwind was the wrong word.

Bill McDermott: No problem.

Gina Mastantuono: Thank you.

Bill McDermott: We love it, Alex.

Speaker #8: That's exactly what I was referring to . Thank you guys . I used maybe headwind was the right the wrong word .

Gina Mastantuono: Yeah.

Bill McDermott: You gave us a chance to clear some stuff up. That's what the call is for. Thank you so much.

Speaker #5: No problem. Thank you. We love it, we love it. Alex, you gave us a chance to clear some stuff up.

Bill McDermott: Your next question comes from the line of Samad Samana with Jefferies. Please go ahead.

Operator: Your next question comes from the line of Samad Samana with Jefferies. Please go ahead.

Speaker #5: That's what the call is for. Thank you so much.

Samad Samana: Hi, good evening. Thanks for taking my questions. Bill, I wanted to start off with you. Just, there's a lot going on, and we've covered a lot on the call, but I think I saw on LinkedIn that there's a new Chief Strategy Officer. You've obviously completed a lot of M&A recently, and AI is this little thing we all keep talking about. Just help us think through all the changes that are going on inside the organization, and maybe what are the top one or two near-term priorities. Is it integrating the M&A? Is it driving adoption of the AI business? And just were there any other changes relating to the Chief Strategy Officer change? And then I have one follow-up.

Speaker #3: Your next question comes from the line of Samad Samana with Jefferies. Please go ahead.

Speaker #9: Hi . Good evening . Thanks for taking my questions . Bill wanted to start off with you just , you know , there's a lot going on and we've covered a lot on the call , but , you know , I think I saw on LinkedIn that there's a new chief strategy officer .

Speaker #9: You've obviously completed a lot of M&A recently. And AI is this little thing we all keep talking about. Just help us think through all the changes that are going on inside the organization.

Speaker #9: And maybe, what are the top one or two near-term priorities? Is it integrating the M&A? Is it driving adoption of the AI business?

Bill McDermott: Yeah. Samad, I'll let Gina talk about the Chief Strategy Officer, because he's fantastic and he reports to Gina. Just at a macro level, let me just tell you what's going on in the corporation. One is we have a very fired-up company. They're excited, and they're really ready to roll. I think anything that challenges us in the media or talk of software companies and their long-term evolution just puts a bigger chip on our shoulder, so we're totally good with that. I tell them we walked over tougher challenges than this on our way to a fight. That's one thing. The psychology of the company is in great shape. The second thing is we're focused on acceleration of our revenue. We know it's all going to be based upon AI and the hockey stick that's forming around our great platform for autonomous managing the agents.

Speaker #9: And just, were there any other changes related to the Chief Strategy Officer change? And then I have one follow-up.

Speaker #5: Yeah . So I'll let Gina talk about the chief strategy officer because he's fantastic . And he reports to Gina , but just at a at a macro level , let me just tell you what's going on in the corporation .

Speaker #5: One is we have a very fired up company . They're excited and they're really ready to roll . And I think anything that challenges us in the media or , you know , talk of software companies and their long term evolution just puts a bigger chip on our shoulders .

Speaker #5: So we're totally good with that. I tell them, we walked over tougher challenges than this on our way to a fight.

Speaker #5: So that's one thing. The psychology of the company is in great shape. The second thing is we're focused on acceleration of our revenue.

Speaker #5: We know it's all going to be based upon AI and the hockey stick . That's forming around our great platform , autonomous , managing the agents .

Bill McDermott: They're going to be 2.2 billion more agents in the workforce in the next couple of years. We're going to manage ours and everybody else's, too. I think what we've done here in security to really change the game, it's not because there aren't great security companies out there. There are. We integrate with all of them. In fact, great ones like CrowdStrike, my friend George and Nikesh and all these guys, they're terrific. They're doing a great job. What we're doing is something very different. We're still integrating with all of them, but we've expanded the boundaries into OT, which is a new area that AI is going to be especially kind to. We are going to grow a lot. Think of it on the margin side. We're going to accelerate the margins of the company, too.

Speaker #5: There are going to be 2.2 billion more agents in the workforce in the next couple of years. We're going to manage hours. And everybody else's too.

Speaker #5: And I think what we've done here in security to really change the game, it's not because there aren't great security companies out there.

Speaker #5: They are . We integrate with all of them . In fact , great ones like CrowdStrike . My friend George and Nikesh and all these guys , they're terrific .

Speaker #5: They're doing a great job . What we're doing is something very different . We're still integrating with all of them , but we've expanded the boundaries into OTT , which is a new area that AI is going to be especially kind to us .

Speaker #5: So, we are going to grow a lot. So, think of it on the margin side. We're going to accelerate the margins of the company, too.

Bill McDermott: We're going to do these really hard things, and we're going to accelerate the margins. We're looking at a company that's a Rule of 60 company and beyond. We're also taking down the SBC because we want to get it down into single digits because we can, whether you look at it as non-GAAP or GAAP. We want you to love it. We're working on all those things. They're in flight. We're going to give you our story at FAD. You're going to love it. In terms of the big picture also, a great company has to build the best products. We got the best guy with Amit, and his team is unbelievable. With all these acquisitions that we made, again, we didn't buy old-hat companies for the revenue. We bought new, innovative AI companies.

Speaker #5: So we're going to do these really hard things, and we're going to accelerate the margins. And we're looking at a company that's a rule of 60 company and beyond.

Speaker #5: We're also taking down the SBC because we want to get it down into single digits, because we can. Because whether you look at it as a non-GAAP or a GAAP, we want you to love it.

Speaker #5: So, we're working on all those things. They're in flight. We're going to give you our story at PhD. You're going to love it in terms of the big picture.

Speaker #5: Also, a great company has to build the best products. We got the best guy with Ahmed, and his team is unbelievable.

Speaker #5: And all these acquisitions that we made, again, we didn't buy old hack companies for the revenue. We bought new, innovative AI companies.

Bill McDermott: All of these CEOs that came in are running development organizations and businesses for Amit. We have Paul Fipps on the go-to-market side. They work like factory to foxhole. These guys come in, and there's a gigantic synergy between development and the go-to-market, the FDEs in front of customer, and the customer engagement folks that really make sure the adoption of the AI is good. That hockey stick is in its early days. When that kicks in, it's going to be really sensational. It's best products provide the absolute greatest service. We have built the best leadership team. The board said that yesterday, I can't believe the leadership team. It's so stunning. The culture is incredible, and we're expanding the ecosystem at a torrid pace. If you take all that together, it says one thing, growth company. That's what we are.

Speaker #5: All of these CEOs that came in are running development organizations and businesses for Amit. We have Paul Phipps on the go-to-market side.

Speaker #5: They work like factory to foxhole. And so, these guys come in and there's a gigantic synergy between development and the go-to-market.

Speaker #5: The PhD in front of customer and the customer engagement folks that really make sure the adoption of the AI is good. And that hockey stick is in its early days—when that kicks in, it's going to be really sensational.

Speaker #5: So, its best products provide the absolute greatest service. We have built the best leadership team; the board said that yesterday. I can't believe the leadership team.

Speaker #5: It's it's so stunning . The culture is incredible and we're expanding the ecosystem at a torrid pace . So if you take all that together , it says one thing growth company .

Bill McDermott: We're going to sustain it, and we're going to extend it.

Gina Mastantuono: Then with respect to the chief strategy officer change, please don't read anything more into it. Natural attrition. Krishna Gidwani is fantastic. We're very excited to have him on board. He comes to us from Pure Storage, now Everpure, and he's been doing strategy ventures investing, as well as M&A integration for a very long time. We're really excited to have him on board. Our number one priority from a M&A perspective this year is all about integration and integrating these incredible new companies that are part of the ServiceNow family. Krishna is going to help me do that and help Amit do that extremely effectively.

Speaker #5: And that's what we are. And so we're going to sustain it, and we're going to extend it.

Speaker #2: And then with respect to the Chief Strategy Officer, change—please don't read anything more into it. Natural attrition. Krishna Gidwani is fantastic.

Speaker #2: We're very excited to have him on board . He comes from us from pure storage . Now ever pure . And he's been doing strategy ventures , investing as well as M&A integration for a very long time .

Speaker #2: And so we're really excited to have him on board. Our number one priority from an M&A perspective this year is all about integration and integrating these incredible new companies that are part of the ServiceNow family.

Samad Samana: Great. Thanks, Gina. Maybe just a quick follow-up. It's a little bit in the spirit of Keith's questions with a lot going on in terms of the business as well in terms of the revenue streams. The AI revenue number is exceptional. Just, can you help us think about, and I think this helps address the where is the budget dollar coming from? What do NRR trends look like maybe through Q1, just as we reconcile that incremental or that huge AI spend jump as we think about seats still growing. If you translated all that or distilled it to NRR, how is that trend to do maybe Q1 compared to history?

Speaker #2: And Krishna is going to help me do that and help Ahmed do that extremely, as effectively.

Speaker #9: Great . Thanks , Jean . And maybe just a quick follow up . It's a little bit in the spirit of Keith's questions , with a lot going on in terms of the business as well , in terms of like the revenue streams and , you know , the AI revenue number is exceptional .

Speaker #9: Just can you help us think about and I think this helps address the where's the budget dollars coming from ? What , if any , trends look like maybe for the first quarter , just as we as we reconcile that incremental or that huge AI spend jump as we think about still growing , if you translated all that or distilled it to mnour , how is that trended through ?

Gina Mastantuono: Yeah. We don't give NRR on a quarterly basis. It's not trending significantly differently. We'll talk more about all of those trends at FAD. What I'll tell you is that from a budget perspective, we're seeing it come from a lot of different places, right? It's not one place. A lot of people are finding it because labor budgets are coming down. A lot of people are reallocating technology spend and eliminating more point solutions and really leaning into platform consolidation of platforms like ServiceNow. From a budget perspective, it's coming from different places. What we're seeing and hearing from our customers is they are moving full speed ahead out of AI experimentation into full-scale deployment.

Speaker #9: Maybe the first quarter compared to history?

Speaker #2: Yeah , we don't give in RR in our quarterly basis . It's not trending significantly differently . We'll talk more about all of those trends at fad .

Speaker #2: What I'll tell you is that from a budget perspective , we're seeing it come from a lot of different places , right ? It's not one place a lot of people are finding it because labor budgets are are coming down .

Speaker #2: A lot of people are reallocating technology spend and eliminating more point solutions, and really leaning into platform consolidation and platforms like ServiceNow.

Speaker #2: And so, from a budget perspective, it's kind of coming from different places. And what we're seeing and hearing from our customers is they are moving full speed ahead out of AI experimentation into full-scale deployment.

Gina Mastantuono: Leaning in on platforms that they trust, especially as the proliferation of agents and devices, and code is just exploding, to be able to build their governance all on the platform that they know and trust for 22 years is a real point of differentiation for us. Really excited. Bill did take the headline that was supposed to be in FAD but it's all great. Listen, that 50% increase is real. I think you're going to be very excited when you see the trends that we're going to show in a couple of weeks of what we believe AI in ServiceNow is going to drive. AI is not the only part of the strategy. We have incredible CRM products, we have incredible core.

Speaker #2: And so leaning in on platforms that they trust , especially as the proliferation of agents and devices and code is just exploding to be able to build their governance all on the platform that they know and trust for 22 years is a real point of differentiation for , for , for us .

Speaker #2: And so, really excited. Bill did take the headline that was supposed to be in Fad, but you know, it's all great.

Speaker #2: Listen, that 50% increase is real. I think you're going to be very excited when you see the trends that we're going to show in a couple of weeks.

Speaker #2: And what we believe AI in ServiceNow is going to drive—and AI is not the only part of the strategy. We have incredible CRM products.

Gina Mastantuono: What security and risk is going to be able to do now with Armis and Veza combined with the ServiceNow platform is just incredible. Hopefully we'll see you in Vegas in 10 days.

Speaker #2: We have incredible core. And what Security and Risk is going to be able to do—now with our AI and VISA combined with the ServiceNow platform—is just incredible.

Samad Samana: You will, and I look forward to those new headlines. Thank you.

Speaker #2: So hopefully we'll see you in Vegas in ten days.

Gina Mastantuono: Thank you.

Gina Mastantuono: We have time for one more question. Your final question comes from the line of Michael Turrin with Wells Fargo. Please go ahead.

Operator: We have time for one more question. Your final question comes from the line of Michael Turrin with Wells Fargo. Please go ahead.

Speaker #9: You will. And I look forward to those new headlines. Thank you.

Speaker #2: Thank you

Speaker #3: We have time for one more question. Your final question comes from the line of Michael Turenne with Wells Fargo. Please go ahead.

Michael Turrin: Hey, thanks very much. Appreciate you fitting me in. Bill, there are questions you've alluded to around whether you're playing offense or defense with M&A. I was just hoping you could walk us through some of the feedback you're hearing from customers initially and help us think through the time it takes to get this all fully in the hands of your sales org and customers. Gina, just can you help level set your approach to guiding for the newer pieces? We can see the Armis contribution you're assuming, but is there prudence in terms of how you take some of the new pieces and account for the time to ramp, or how would you frame the initial assumptions there? Thanks very much.

Speaker #10: Hey, thanks very much. I appreciate you fitting me in. There are questions you've alluded to around whether you're playing offense or defense with M&A.

Speaker #10: Was just hoping you could walk us through some of the feedback you're hearing from customers initially, and help us think through the time it takes to get this all fully in the hands of your sales org and customers.

Speaker #10: And then, Gina, just can you help level set your approach to guiding for the newer pieces? We can see the AMA's contribution.

Speaker #10: You're assuming, but is there prudence in terms of how you take some of the new pieces and account for the time to ramp?

Bill McDermott: Thank you very much, Michael. I appreciate the question. The company and the customer loves the acquisitions that we did. Loves it. ServiceNow has a great relationship with our customers, and they count on us for innovation. If you look at a company like Moveworks, I mean, literally quintupling our EmployeeWorks business in Q1 that they're here, that's a testament to the fact that the customers, the ecosystem, and obviously our team have already hit the ground running with that, and we expect enormous success with that. If you think about Veza, we just got it. As Gina said, it's a very small revenue buy because we bought the innovation. We bought the entrepreneur's great patented technology.

Speaker #10: Or how would you frame the initial assumptions? There? Thanks very much.

Speaker #5: Thank you very much , Michael . I appreciate the question . The company and the customer loves the acquisitions that we did . Loves it .

Speaker #5: You know , ServiceNow has a great relationship with our customers and they count on us for innovation . And if you look at a company like Move Works , I mean , literally Quintupling , our employee works business in the first quarter that they're here .

Speaker #5: That's a testament to the fact that the customers, the ecosystem, and obviously our team have already hit the ground running with that.

Speaker #5: And we expect enormous success with that . If you think about Vasa , we just got it . And as Gina said , it's a very small revenue by because we bought the innovation , we bought the entrepreneurs great patented technology .

Bill McDermott: Think about it in real-time graph people and the agents in real time, and all the rights and privileges that they do and don't have across a global corporation in seconds, and actually roll that out across an entire corporation to make sure that AI is doing all good things for you and avoiding all the bad things. Armis is already in nine of the ten top ten companies in the world and 40% of the Fortune 100, and they don't have a global footprint in Salesforce like we do. This AI Control Tower vision is massive, and it's actually the biggest thing that I've seen the customer react to since I've been here since 2019, okay? That's a fact. All of that is all upside. We haven't even realized it yet. We're rolling it out.

Speaker #5: Think about it. To, in real time, graph people in the agents in real time, and all the rights and privileges that they do and don't have across a global corporation.

Speaker #5: And seconds. And actually roll that out across an entire corporation to make sure that AI is doing all good things for you.

Speaker #5: And avoiding all the bad things . Armus has already , in nine of the ten top ten companies in the world , and 40% of the fortune 100 , and they don't have a global footprint .

Speaker #5: And sales like we do. And so this AI control tower vision is massive. And it's actually the biggest thing that I've seen the customer react to since I've been here, since 2019.

Speaker #5: Okay . That's a fact . So all of that is all upside . We haven't even realized it yet . We're rolling it out .

Bill McDermott: We're having an all hands meeting tomorrow, and everybody is just so excited and thrilled here. I would just say get excited because the customers are. Quintupling a business, meaning doing in one quarter what they did in a prior year, just gives you an indication when they just joined us, and the other two just joined us, and they'll obviously be part of the Q2 print, and that story is still unfolding as we speak, but it's all going great. Michael, I tell you, we got this thing, man. We really got it. As it relates to all the other participants in the AI universe, this is the part that nobody's accounted for. We love them all because everything that they do contributes to revenue that goes into the ServiceNow platform. Everything.

Speaker #5: We're having an all hands meeting tomorrow and everybody is just so excited and thrilled here . So I would just say , get excited because the customers are and quintupling a business , meaning doing one quarter what they did in a prior year just gives you an indication when they just joined us .

Speaker #5: And the other two just joined us, and you know, they'll obviously be part of the Q2 print. And that story is still unfolding as we speak, but it's all going great.

Speaker #5: So Michael , I tell you , we got this thing , man . We really got it . And , and as it relates to all the other participants in the AI universe , this is the part that nobody's accounted for .

Speaker #5: We love them all because everything that they do contributes to revenue that goes into the ServiceNow platform , everything , whether it's an integration point , whether it's a coalition , whether they're just running with the customer and the customer is running the work through our platform on the execution of the way the world works .

Bill McDermott: Whether it's an integration point, whether it's a co-solution, or whether they're just running with the customer and the customer's running the work through our platform on the execution of the way the world works. It's all hitting our revenue and our growth line. One thing Gina said that's very, very important, the idea of moving from the project to actually moving to the AI process. A lot of the customers hadn't yet deployed all the AI that they have, not because they don't love the solution, but because their company wasn't ready for it yet. We're very much in front of the customer with a customer excellence group and our Forward Deployed Engineers. As that goes live, that hockey stick starts to kick in as they consume the assists and reload the assist packs.

Speaker #5: It's all hitting our revenue and our growth line. One thing Gina said, that's very, very important, is the idea of moving from the project to actually moving to the AI process.

Speaker #5: A lot of the customers hadn't yet deployed all the AI that they have, not because they don't love the solution, but because their company wasn't ready for it yet.

Speaker #5: So we're very much in front of the customer with a Customer Excellence group and our forward-deployed engineers. So, as that goes live, that hockey stick starts to kick in as they consume the assists and reload the assist packs.

Bill McDermott: All of this and more is part of the story that's yet to be told, and yet the story is a beat and raise.

Speaker #5: So all of this and more is part of the story that's yet to be told. And yet, the story is a beaten raise.

Gina Mastantuono: Yeah. I would just add to your question, as you'd imagine with my approach to guidance, certainly I'm being prudent with brand new acquisitions that have just closed. I feel very confident in the guide. I also feel confident that as we ramp and as we build integration into the body of ServiceNow, the opportunity for incremental growth is enormous, and you'll see a lot more about what we think about that into 2027 and beyond in Vegas in 10 days. Prudence in the guide for 2026, significant upside, and we truly believe it's going to help not only accelerate our top-line revenue, but also be a pull on the core, as Bill talked about earlier. M&A done extremely well.

Speaker #2: Yeah . And I would just add to your question , as you would imagine , with my approach to guidance , certainly I'm being prudent with brand new acquisitions that that have just closed .

Speaker #2: I feel very confident in the guide . I also feel confident that there's as we as we ramp and as we build , as we build integration into the , the body of ServiceNow , the opportunity for .

Speaker #2: For incremental growth is , is enormous . And you'll see a lot more about what we think about that into 27 and beyond in Vegas , in , in ten days .

Speaker #2: And so prudence in the guide for . 26 significant upside . And we truly believe it's going to help not only accelerate our top line revenue , but also be a pull on the core .

Speaker #2: As Bill talked about earlier, M&A done, done extremely well.

Gina Mastantuono: Ladies and gentlemen, this concludes today's call. Thank you all for joining the Q1 2026 ServiceNow Earnings Conference Call. You may now disconnect.

Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining the Q1 2026 ServiceNow Earnings Conference Call. You may now disconnect.

Speaker #3: Ladies and gentlemen, this concludes today's call. Thank you all for joining the first quarter 2026 ServiceNow Earnings Conference Call. You may now disconnect.

Operator: Please wait. The conference will begin shortly.

Q1 2026 ServiceNow Inc Earnings Call

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