ServiceNow, Inc.

Good afternoon, ladies and gentlemen. Welcome to the ServiceNow Q4 2022 earnings conference call. At this time, all participants are in a listen-only mode, and please be advised that this call is being recorded. After the speakers prepare for March, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. And if you would like to withdraw your question, simply press star 1 again. And now at this time, I'll turn things over to Darren Yip, Vice President, Investor Relations. Darren, please go ahead.

Good afternoon, and thank you for joining ServiceNow's fourth quarter and full year 2022 earnings conference call. Joining me are Bill McDermott, our Chairman and Chief Executive Officer, Gina Mastantino, our Chief Financial Officer, and CJ Desai, our President and Chief Operating Officer. During today's call, we will review our fourth quarter 2022 results, and discuss our guidance for the first quarter and full year 2023. Before we get started, we want to emphasize that some of the information discussed on this call, such as 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. Please refer to today's earnings press release and our SEC filing including our most recent 10Q and 2021 10K 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 discussed today are non-GAAP except for revenue, remaining performance obligations, or RPO, current RPO, and cash and investments. To see the reconciliation between these non-GAAP and GAAP measures, please refer to today's earnings press release and investor presentation, which are both posted on our website at servicenow.com. A replay of today's call will also be posted on our website. With that, I'll turn the call over to Bill. Bill?

Thank you, Darren, and thank you, ladies and gentlemen, for joining us today. ServiceNow continues to perform as a beyond expectation company. For Q4, we beat guidance with subscription revenue growth of 27.5% in constant currency. Operating margin was 28%, two points above our guidance. Our free cash flow margin was 30%, one point above our guidance. We had 126 deals greater than $1 million in Q4, including our largest deals ever worldwide in EMEA and in Latin America. Our 98% renewal rate remains the industry benchmark. With 25.5% constant currency CRPO growth, we actually had better than expected new business in Q4 with less reliance on early renewals. Based on this new business surge, we are giving a very strong guidance for 2023. Our guidance reflects a disciplined forecast that appropriately balances our well-founded optimism for ServiceNow's business. We'll work hard to go beyond it, and we'll begin that march in Q1. Here's the main takeaway. Even in a complex operating environment, ServiceNow is executing at the rule of 58.5. we are driving net new innovation, fast growth, and operating leverage. ServiceNow is the proverbial safe harbor in all weather conditions. Let me unpack the current environment for you. The secular tailwinds of digital transformation aren't going anywhere. IDC's research makes it clear that technology budgets are growing. they forecast IT spend will grow 5% in 2023, software spend at 8%, and software as a service spend at 15%. So, as businesses increase spend, the only question then is where will all that investment go? And this answer has everything to do with the great reprioritization. The theme in Davos this year was cooperation in a fragmented world. It all begins with a fragmented enterprise. B-level buyers don't want long-term roadmaps to clean up a siloed mess of point solutions. They want integration, speed, automation, great experiences and business impact. A CEO told me, quote, We can't afford 1,000 points of dim light. We need a cohesive plan with a trusted platform, end quote. So this is now, without any doubt, a platform economy. And only a few platforms will be relevant in this shift. And none are as well positioned as ServiceNow. This begins with our business model. ServiceNow was born in the cloud. established itself in IT, and expanded from that core. It accelerates with the realities of the multi-cloud world. Many enterprises are struggling to use public cloud capacity that they have already procured. Enter ServiceNow, which directly enables cloud workload migration. We are the control tower for any architecture, public, hybrid, or multi-cloud. And with open telemetry, we help business build and monitor cloud native applications. This all extends to driving automation. ServiceNow has natively embedded the complete tool set from AI to RPA to process mining in our platform. Now, professional developers and the rest of us, real people like you and me, can build mission-critical applications to automate the world of work. Everything culminates with real business outcomes. ServiceNow integrates the enterprise to deliver better customer service, employee experiences, security, risk management, and next generation business processes like procure to pay. Technology foundation, hyper automation, process orchestration. With this completeness of vision, ServiceNow is the end-to-end platform for digital transformation. If all we did was help existing customers consume everything this platform can do, we would stay a fast-growth company. But, of course, our strategy goes well beyond this, as does our proven ability to execute. Right now, many fine technology companies are working to shift resources from bad businesses to good ones. ServiceNow only has good businesses. Our products and engineering team is building organic, net new innovation with an unmatched level of speed and quality. When we started to sense noise in the macro early in 2022, we shifted immediately to a conservative cost management posture in running the company. This allowed us to focus on execution with our team rather than look to workforce actions for leverage. It also allowed us to continue hiring, especially in engineering and quota-carrying roles. The results tell the story. ITSM was in 14 of our top 20 deals with 15 deals over a million. ITOM was in 16 of the top 20 with 14 deals over a million. Security and risk solutions were in 13 of the top 20 with nine deals over a million. Customer workflows were in 13 of the top 20 with 13 deals over a million. Employee workflows were in 13 of the top 20 with 11 deals over a million. And creator workflows were in 19 of the top 20 with 11 deals over a million. We saw new business growth, new logos, and major expansions with some of our existing customers. The United States Army expanded its ServiceNow roadmap to go well beyond IT. ServiceNow will improve the Army's ability to consolidate service management for its over 1 million active military contractor and civilian population. The Schwartz Group, one of the world's top retailers, will digitize its 11,000 stores, from retail locations to logistics, on ServiceNow as its digital business platform. This transition is a transformation, and it will position the Schwartz Group at the forefront of the next generation retail industry. From Banco do Brasil to AT&T to Sumitomo, we have countless stories that span ServiceNow's workflows, LightStep, geographic regions, and industries. Across the board, we're winning. And as you'll hear from Gina, we grew new business 100% year over year across retail, hospitality, transportation, and logistics. That's only one example. And with the expansion of ServiceNow's impact, we are setting the standard for speed of deployment and business value for our customers. More than three years ago, I stated our ambition to be the defining enterprise software company of the 21st century. And this is an ambition I will see through to its full completion. Following my elevation to Chairman and CEO, I'm delighted to announce that CJ Desai has been promoted to President and Chief Operating Officer. CJ is a leader of consequence well-known in the industry. His track record at ServiceNow speaks for itself, from strengthening our platform to driving our customer experience. This is exactly how we are orchestrating our company to perform on an end-to-end basis from innovation to execution with our customers. And I'd like to personally congratulate CJ for this latest well-deserved endorsement of his leadership. Congratulations, CJ. In other news, we proudly welcome Masato Shizuki as the new president of ServiceNow Japan. He brings a long history of successful leadership with some of the industry's most respected brands. We will elevate ServiceNow Japan to a fourth geographic region, reporting directly to our proven chief commercial officer, Paul Smith. And to add fuel to the growth fire, we rolled out a new partner program to help our ecosystem drive full platform adoption of ServiceNow. We're also getting an enthusiastic reception for the company's premier global initiative, Rise Up with ServiceNow. And under the thoughtful leadership of Laura Kamey, we will continue to rise up. We offer the training and certification to help people build a lifelong career working on this platform. We have never seen so much interest in the ServiceNow franchise around the world as we are seeing right now. And from an ongoing operating perspective, we entered 2023 with much stronger sales coverage on a year-over-year basis. We have the feet on the street. We also see stronger pipeline coverage and the maturity of that pipeline, much more so than we did a year ago. The latest Glassdoor ratings feature ServiceNow as the ninth best place to work in the United States, second best in the United Kingdom. The company is fully invested in all of our stated ESG objectives, with our global impact report coming later this year. All this is a reflection of our proud culture, built on Fred Luddy's founding vision for our company. I was just in Las Vegas last week for our sales kickoff event, and I can tell you, our team is fired up and ready to go for the year ahead. Really fired up. I can only reiterate that we have said consistently, there is only one way forward, and that is innovation. IDC says that by 2027, the number of digital businesses on the S&P 500 will double. Every industry is being reframed by a new paradigm or several. The participants that lean in will lead. The others will fall behind and quickly. For ServiceNow, we are committed to make the world work better for everyone. Our fundamentals are operating at peak performance, net new innovation for our customers, Business impact driving long-term stickiness of our platform. The network effect giving us a competitive moat with multiple avenues for market expansion and profitable growth with a pristine balance sheet. All in all, when people talk about cloud economics, ServiceNow is the blue chip standard. Whatever the world lacks in stability, we will more than offset with relentless execution. Our customers need to automate for cost reduction and to innovate for growth. Yes, ServiceNow helps them do both. The world works with ServiceNow as the end-to-end platform for digital transformation. I'd like to personally thank our customers, partners, and shareholders for their steadfast trust in ServiceNow. You can count on us. We're in your service. We're hungry and humble as ever. I'd like to now hand the call over to our CFO, Gina Mastantuno. Gina, over to you.