ServiceNow, Inc.

Ladies and gentlemen, thank you for standing by. My name is Sherelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q4 2023 ServiceNow earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, Simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Please bear in mind that only one question will be allowed for the Q&A session. I would now like to turn the call over to Darren Yip, Vice President of Investor Relations. Darren, the floor is yours.

Good afternoon, and thank you for joining ServiceNow's fourth quarter and full year 2023 earnings conference call. Joining me are Bill McDermott, our Chairman and Chief Executive Officer, Gina Massantuno, our Chief Financial Officer, and CJ Desai, our President and Chief Operating Officer. During today's call, we will review our fourth quarter 2023 results and discuss our guidance for the first quarter and full year 2024. 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. Please refer to today's earnings press release and our SEC filings, including our most recent 10Q and 2022 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 revenues, remaining performance obligations or RPO, current RPO, and cash and investments. To see the reconciliation between these non-GAAP and GAAP measures, please refer to today's earnings press release and investor presentation, which are both posted on our website at investors.servicenow.com. A replay of today's call will also be posted on our website.

With that, I'll turn the call over to Bill. Thank you, Darren, and thank you very much, everyone, for joining today's call. ServiceNow closed an outstanding 2023 with a beyond expectations Q4. Here's the state of our business. Artificial intelligence is injecting new fuel into our already high-performing growth engine. The company's Q4 results tell that story. Subscription revenue grew by 25.5% at constant currency. That's 200 basis points above the high end of our guidance. CRPO growth is 23% at constant currency, also 200 basis points above our guidance. Operating margin was over 29%. That's approximately 200 basis points above our guidance. We had 168 deals greater than a million dollars in net new ACV, up from 126 a year ago, a 33% increase. ServiceNow's Q4 performance is packed with milestones spanning the full breadth of our portfolio. With technology, customer, and creator, we now have three workflow businesses, over a billion dollars in ACV. We have 11 individual product lines with north of 250 million in ACV. ITSM, ITOM, and ITAM each had double-digit deals over a million dollars in Q4. Security and risk combined for 12 of the top 20 with nine deals over a million. Customer, employee, and creator workflows Each had double-digit deals over a million. Our large new logo count continued to accelerate in Q4. We had a record 10 new customers signing deals over a million in NNACV, including a $10 million win with a very large global financial services firm, which is our largest new customer logo in history. Global iconic brands such as Chipotle, Air France, TIAA, NTT, Data Group Corporation, and Bosch are digitally transforming with ServiceNow. We're proud that TIAA, one of our first 10 customers, is still expanding their business with us through new out-of-the-box functionality so they can accelerate time to market. Following a record Q3, public sector continued its strong growth in Q4 with key wins, including the United States Army, US Postal Service, and Australian Department of Defense Digital Delivery Group. We are extremely proud to have finished 2023 operating at the rule of 55 plus. As you'll hear from Gina, Our 2024 guidance reflects our ongoing belief in ServiceNow's strategic relevance. Our core business is rock solid and growing. Our perimeter is growing. Our platform adoption is growing. We are in fact in a new era of business transformation powered by AI. This is unlocking massive opportunity in the enterprise software industry. And ServiceNow is extremely well positioned, not only to lead this movement, but to define it. 2023 was the latest successful milestone on this journey, and we intend to make 2024 an even greater success. To say we're fired up would be an understatement. Let's spend some time framing the dimensions of this new AI world. Gartner estimates $5 trillion in tech spending in 2024, growing to $6.5 trillion by 2027. That means that spending will grow another trillion dollars in only two years, accelerating from the decade plus it took for us to get to $5 trillion. For the first time in a decade, IT services will become bigger. than communication services in 2024. Gartner estimates that by 2027, nearly all of the growth in worldwide IT spending will come from software and IT services. And when you drill deeper into the Gartner forecast between 2023 and 2027, $3 trillion will be spent on AI. What we have here is a strong, durable market being supercharged by a once-in-a-generation secular trend. ServiceNow has been investing, innovating, and preparing for this wave for years, which is why we're catching it so early. We have a long track record of commercializing breakthrough technologies. When our pro SKUs were introduced, we saw very exciting traction and customer adoption. Our Pro Plus offerings, which we launched just four months ago with our Vancouver release, are outperforming the pace of the Pro upgrade cycle. Exciting. The results in our first full quarter since launch validate this trajectory. Siemens AG is using Now Assist for HR service delivery to resolve HR cases faster. for its entire global workforce. This is one example of many. And as always, ServiceNow's strength in our capacity to deploy net new innovation, especially our ambitious GenAI roadmap. In Q4, we released significant new capabilities. Virtual agent update drives faster issue resolution through advanced conversational AI chat. Employees get the immediate answers they need. Businesses get higher self-solve rates, and it only takes 15 minutes to set it up. Our text-to-workflow capability dramatically increases developer productivity. ServiceNow's developers have been using text-to-code for several months. They are generating high-quality code using text to describe the type of code they want. This has increased our developer innovation speed by 52%. Now Assist for Field Service Management reduces costs while increasing revenue by helping technicians get the job done in the first visit, identifying the necessary equipment, providing repair recommendations, and automating follow-up at speed. Beyond the platform itself, we see AI as a 360 degree strategic imperative. It's why ServiceNow joined the AI Alliance to advance open, safe, and responsible AI. It's also why we are continuing to grow our strategic partnerships to ensure every enterprise can use AI as the cornerstone of business transformation. Today, We expanded our strategic alliance with EY to co-create solutions for generative AI governance for our customers. And of course, EY will also be using ServiceNow's generative AI capabilities to enhance experiences for all of their employees. We also unveiled another major expansion to our partner program. The latest addition in a series of investments as partners are building new business models on the ServiceNow platform. These are two examples of many. I've told ServiceNow's team worldwide that the company is now moving into phase five, the culmination of our long-term goal of surpassing $10 billion in ACV, which incidentally only a handful of software companies have ever achieved. We have so much runway ahead for the long-term growth of this company. There are two key elements of our strategy, execution and scale. Execution, we know, is an art form. Scale is all about capitalizing on new opportunities as a truly global platform company. One of those in our market-making alliance was Visa. Today, ServiceNow and Visa announced a five-year strategic alliance to transform payment service experiences In the initial phase of the alliance, the companies will launch ServiceNow Disputes Management built with Visa, a single connected solution for disputes resolution. This GenAI-powered solution will offer end-to-end dispute resolution for customers globally, everything from the first indication of a questionable charge to early investigation to final resolution. Another example is our growing partnership with AWS. Beginning this month, ServiceNow will be available as a SaaS offering in the AWS marketplace. From an automation perspective, we have long believed that identifying legacy process challenges is an active stimulant for new workflows. That's the beauty of our platform. The architecture gives us limitless ways to accelerate speed to value for our customers. And the more workflows we drive, the more value we create. That's why we tucked in Ultimate Suite, a task mining company to enhance intelligent automation across the Now platform. If we can help customers find it, ServiceNow can fix it. And we fix it in complete harmony with any existing software landscape delivered in a consumer-grade user experience. CEOs don't want to wait another decade for technology to finally deliver on its promise. One told me, I'm tired of excuses coming into my boardroom. We need new innovation and new experiences, and we need it now. That's obviously music to our ears and nicely on brand for ServiceNow. There's plenty more to discuss about the company we're building and the progress we're making. We have more accolades than time to listen to them. Top analyst firms rank ServiceNow as a leader in 14 separate reports in 2023 for our automation and AI capabilities. Glassdoor's recent U.S. Best Places to Work lists ServiceNow as number three overall and number one in software. One of our proudest achievements is the American Opportunity Index. This index is database. They study what really happens to employees at America's largest companies over time. ServiceNow scored fifth, and that's out of 400 companies overall, and ServiceNow was the number one technology company on the index. That means the people who have fought hard to build a great company are being rewarded with a great life. This all means so much to us because culture is the glue that binds a winning team together. We have world-class professionals at ServiceNow who care deeply about our customers and our partners. Since Fred Luddy invented the company, we've all made our contributions to help ServiceNow emerge as the hungry and humble winner it is. We believe in our platform. We stick together and we try to have some fun along the way too. That's why the results show up the way they do. It's also why over 1 million people applied to work here last year. To all of our shareholders who continue to invest your trust and service now, we thank you and we've got your back. We're building a masterpiece here, and we're only getting started. 2024 will show that we're putting AI to work for the world, because now, as ever, the world works with ServiceNow. I look forward to the questions and the discussion we'll have shortly. In the meantime, I'd like to turn the call over to our outstanding Chief Financial Officer, Gina.