ServiceNow, Inc.

Good day and thank you for standing by. Welcome to the Q2 2021 ServiceNow earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 on your telephone keypad. Please be advised that today's conference is being recorded. And if you require any further assistance, just press star 0. I will now turn the call over to your first speaker today, Lisa Banks, Senior Vice President of Finance. You may begin your conference.

Good afternoon, and thank you for joining us for ServiceNow's second quarter 2021 earnings conference call. Joining me are Bill McDermott, our President and Chief Executive Officer, and Gina Mastantuno, our Chief Financial Officer. During today's call, we will review our second quarter 2021 financial results and discuss our financial guidance for the third quarter of 2021 and full year 2021. Before we get started, we want to emphasize that some of the information discussed on this call, particularly our guidance, It's based on information as of July 28, 2021, and contains forward-looking statements that involve risk, uncertainties, and assumptions, including those related to the continued impact of COVID-19 on our business and global economic conditions. The guidance we will provide today is based on our assumptions as to the macroeconomic environment in which we will be operating. Those assumptions are based on the facts we know today. Many of these assumptions relate to matters that are beyond our control and changing rapidly, including, but not limited to, the timeframes for and severity of social distancing and other mitigation requirements, the continued impact of COVID-19 on customers' purchasing decisions, and the length of our sales cycles, particularly for customers in certain industries. Please refer to the press release and the risk factors and MD&A sections of our SEC filing, including our most recent 10Q and our 10K files for fiscal year 2020, for information regarding such risks, uncertainties, and assumptions that may cause actual results to differ materially from those set forth in such forward-looking statements. We'd also like to point out that the company presents non-GAAP measures in addition to and not as a substitute for financial measures calculated in accordance with GAAP. All financial figures we will discuss today are non-GAAP, except for revenues, remaining performance obligations, or RPO, and current RPO or CRPO. To see the reconciliation between these non-GAAP and GAAP results, please refer to our press release filed earlier today in our investor presentation. These and all prior press releases and investor presentations are posted at investors.servicenow.com. A replay of today's call will also be posted on the website. With that, I would now like to turn the call over to Bill.

Thank you, Lisa, and good afternoon, everyone. Welcome to our Q2 earnings call. Our team delivered an outstanding quarter. significantly exceeding the high end of our guidance across all metrics. Subscription revenues were up 31%. Subscription billings were up 30%. Operating margin was 25%. And the number of deals greater than $1 million was 51, up 28% year over year. Free cash flow for the first half of the year was up 34% year over year. an incredible performance by our team an exceptional first half and we have unstoppable momentum and we reflected this in our strong full-year guidance race across the board gina will review the details with you in a few moments the global economy is recovering at the fastest pace in 80 years The enterprise digital transformation market is expected to grow nearly three times faster than GDP in 2021. Business leaders worldwide are facing do or die moments. Business models have changed forever. The pandemic has accelerated the digital imperative. We are in a leading position to capitalize on this unprecedented tailwind. We are giving customers the innovative solutions they need to solve the greatest challenges of our time. The world's biggest challenges are ServiceNow's biggest opportunities, from vaccine management to ESG to the new world of hybrid work. Whatever the challenge, work flows with ServiceNow. We've created a new market, one that respects the billions and billions of dollars of investment that customers have put into their systems of record. We make those investments work for today's digital business demands. The now platform, the platform of platforms. delivers workflow automation with a consumer-grade user experience that inspires our customers, enabling siloed systems across an enterprise to work together, creating more efficient, more productive ways to get work done. ServiceNow is the control tower for digital transformation for every business in every industry serving every persona. The power of the Now platform makes this possible with one data model, one architecture, and one platform to workflow a better world. For example, A premium German auto manufacturer faces huge logistical challenges in maintaining on-target production. Every 30 million parts are processed daily and are dispatched to more than 4,000 supplier locations to production centers in Europe and Mexico. To manage this complexity, ServiceNow provides a single connected supply chain technology platform. ServiceNow analyzes 300,000 data points per month, optimizing the performance of each aspect of the value chain. This is just one example of the power of the Now platform. I'd like to share an overview of our success across ServiceNow's portfolio. Let's begin with our IT workflows. We are the standard for optimizing all IT services and operations. Our core IT workflows remain very strong. ITSM was in 16 of our top 20 deals, with 14 deals over a million dollars. ITOM was in 15 of our top 20 deals, with six deals over a million dollars. Our AI-powered service operations is resonating big time with customers. We saw great wins with leading companies including Travelers and Walgreens Boots Alliance and more. They're working with ServiceNow to support their digital transformation of their enterprises. And we're honored that Maritime and Port Authority of Singapore is working with ServiceNow to accelerate its digital transformation efforts as it looks to make Singapore a leading global port and international maritime center. NPA will leverage the Now platform to drive automation and to improve productivity and employee experience. With employee workflows, we make work better by driving outstanding employee experiences that enhance productivity for employees. anytime, anywhere, while also developing company loyalty, which is particularly important in this environment. The Now platform provides employees a system of action for key events, including onboarding, parental leave, moving, and many more moments that matter for people. Employee workflows were in 13 of our top 20 deals, with six deals over $1 million. Asahi, for example, is focused on expanding growth while reinforcing ESG initiatives that support sustainable value creation. They chose the Now platform to improve the employee experience by providing a single point of contact for employees to improve productivity. They wanted service catalogs so they could standardize HR processes, and they wanted integrations to connect all their siloed workflows. With customer workflows, we're creating a new service paradigm by delivering connected experiences that redefine customer operations for greater speed, agility, transparency, and convenience, all while working with existing systems. Customer workflows were in 10 of our top 20 deals, with four deals over a million dollars. We now have over 2,000 customers running customer service management. Deutsche Telekom is leveraging ServiceNow's telecommunications solution to streamline order management to become the leading B2B telco provider. The Now platform will be at the heart of the order management process, enabling a 360-degree view of orders, inventory, and infrastructure, creating a seamless, connected experience for DT's employees and customers. With creative workflows, we're accelerating software development across the entire enterprise by giving everyone the low-code tools to quickly create applications and beautiful experiences. IDC predicts that more than 500 million apps will be developed by 2023. This is equivalent to the total number of apps that were developed in the past 40 years. For example, Airbus built an innovative tracking application in less than three months using ServiceNow's low-code App Engine. Now, Airbus employees can scan barcodes of any piece of factory equipment to see the relevant information they need in real time. Manufacturing transportation incidents have dropped 20%. In Q2, creator workflows were in 18 of our top 20 deals. Nokia picked ServiceNow's creative workflows to develop custom apps in significantly less time at a fraction of the cost of alternative platforms. These examples show how the combined capabilities of the workflows on the Now platform are better together. they deliver even more value than the sum of their parts. Our introduction of the Now Buying program has helped customers realize those synergies more quickly by simplifying the buying process, providing greater usage flexibility, all while improving business impact. Continuing to build a strong client and alliance ecosystem, we established an enterprise agreement through the Now Buying program with Deloitte, who will take advantage of our whole product suite to facilitate great experiences for their employees and clients while enhancing efficiencies and compliant management for the business. Also in our partner ecosystem, we recently announced our integration with Microsoft Windows 365. This will enable users to easily access cloud PCs directly through Microsoft Teams, regardless of the employee's location in the hybrid work environment. In closing, I am incredibly proud of our team's passion for solving the world's greatest challenges. Our engineering team is second to none. Our go to market organization is the best in the business. And our purpose to make work better for people is resonating. It's been an honor to help turn vaccines into vaccinations for millions and millions of people. It's a privilege to help the world reopen and safely return to the workplace. We are engaging leaders on how we can solve society's biggest problems, improve the lives of people, and help deliver better services to citizens everywhere. We are better than we were yesterday, not as good as we'll be tomorrow. This is a special company with unbridled energy and unprecedented opportunity. We are well on our way to becoming the defining enterprise software company of the 21st century. And I look forward to taking your questions. But first, I'll turn it over to our Chief Financial Officer, Gina. Gina, over to you.