ServiceNow, Inc.

Thank you for standing by. My name is Kathleen and I will be your conference operator today. At this time, I would like to welcome everyone to the ServiceNow second quarter 2025 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. And if you would like to withdraw your question, press the star one again. I would now like to turn the call over to Tyron Yip, Senior Vice President, Head of Investor Relations and Market Insights. Please go ahead.

Good afternoon, and thank you for joining ServiceNow's second quarter 2025 earnings conference call. Joining me are Bill McDermott, our Chairman and Chief Executive Officer, Gina Messantuno, our President and Chief Financial Officer, and Amit Saveri, President, Chief Product Officer, and Chief Operating Officer. During today's call, we will review our second quarter 2025 results and discuss our guidance for the third quarter and full year 2025. 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 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 welcome everyone to today's call. ServiceNow's Q2 results were outstanding. They continue our long track record of elite-level execution, and we are at the forefront of enterprise AI. Subscription revenue growth was 21.5% in constant currency, two points above our guidance. CRPO growth was Also 21.5% in constant currency, two points above our guidance. Operating margin was 29.5%. That's over 2.5 points above our guidance. Free cash flow margin was 16.5%, up 3% year on year. We had 89 deals greater than a million in net new ACV. 11 of those deals were greater than 5 million in net new ACV. All our workflow businesses performed very well in the quarter. Technology workflows had 40 deals over a million, including four over 5 million. ITSM, ITOM, ITAM, security and risk were all in at least 15 of the top 20 deals. CRM and industry workflows continued its strong momentum in 17 of our top 20 deals, with 17 of those deals over a million. And core business workflows also had a great quarter in 16 of the top 20 deals, with seven deals over a million. The global environment is the fastest changing in history. Outcomes like beat and raise are a testament to the ServiceNow AI platform, our world-class team, and partner ecosystem. Let's talk about what's driving the growth. It's AI, data, and workflows. NowAssist Net New ACV to date beat expectations once again in Q2. Our key AI ProPlus deal count, including ITSM, CSM, and HR, was up over 50% quarter on quarter. We also closed our largest NowAssist deal to date at over $20 million. We had 21 deals with five or more NowAssist products and Plus products were included in 18 of our top 20 deals. The AI hype cycle has not slowed for good reason. Enterprises in every industry and every region of the world have AI transformation as priority number one. IT budgets are highly resilient and increasingly focused on strategic mission critical AI platforms. Our position is highly differentiated. because AI work is cross-functional work. ServiceNow integrates the entire tech stack on-prem or in the cloud, any system, any LLM, any data source, and we bring all of that data into a single model. From there, we elevate into the workflow layer where you take action on that data wherever it lives. Then we move into the AI layer, not just automation, but true AI agents executing real tasks to drive outcomes across business processes. Hire to retire, procure to pay, design to product, quote to cash, and sale to service. The long history of enterprise tech can be described in a single word, pain. That's because people and devices and apps and data and clouds They don't work well together. Without ServiceNow, we run the real risk of a new generation of pain, this time with AI agents scattered around like spare parts. We have no intention, ladies and gentlemen, of allowing that to happen. Control Tower isn't just a name for our solution. It's the ultimate metaphor for how ServiceNow helps customers govern the agentic enterprise. We help customers take advantage of everyone's innovation, ours and others. We put investments together. We make it all work. With demand as high as it is, our next AI program is called Now Next AI. And this is getting our engineering teams deployed to get customers live fast. These are only a few of the many reasons you're seeing real momentum in these results. And we're only just getting started. Q2 has also showed ServiceNow's growing differentiation in enterprise data. Workflow data fabric was included in 17 of our top 20 largest deals. Customers recognize the value of combining data, analytics, and AI. They embrace our vision of workflow data fabric and agents working together to drive faster, smarter outcomes. On the underlying technology level, Raptor DB Pro continued to gain traction, and every major region beat expectations in Q2. As I summarized earlier, all our workflows are growing, especially CRM front office workflows. The CRM opportunity for ServiceNow is massive. According to industry experts, agentic AI represents a seismic shift that could render traditional CRM obsolete. By the end of this decade, enterprises will adopt systems of action driven by autonomous front-end agents. The future isn't a CRM screen. It's omnipresent AI agents embedded in everyday tools. With our sales and order management solution, and our acquisition of Logic AI, we're not just entering CRM. We're reimagining it now. We're delivering a fully integrated AI-powered front office, sales and service, streamlined operations, and dramatically improved time to revenue. And customers are responding to our innovation. We secured several notable wins with strong momentum in CRM and widespread adoption of our end-to-end capabilities. One of the largest building supply companies in the U.S. selected ServiceNow CPQ to support configuration and quoting at scale for their largest distribution network. ExxonMobil plans to implement ServiceNow AI and agents to deliver enhanced employee experiences, improved operational processes, and fast response time across its enterprise services. Standard Chartered will use ServiceNow AI Control Tower with RapidDB to help govern, secure, and realize value from agentic AI. Merck and Company is adopting the ServiceNow AI platform to transform security operations, enhancing control over IT assets, reducing risk, and strengthening data compliance across the enterprise. The state of California is using ServiceNow CRM across multiple departments to better serve its constituents, employees, and the business community. Banco do Nordeste do Brasil is transforming customer service with ServiceNow AI, delivering tailored solutions that anticipate customer needs and deepen engagement across the broad network of customers and partners. Intuit. is expanding its long-time relationship with ServiceNow to remove friction with done-for-you agentic AI experiences for their employees. Starbucks, a multiyear ServiceNow customer, is using our AI capabilities to enhance its technology ecosystem, rolling out ServiceNow and select support centers to drive greater satisfaction at every touchpoint. The North Carolina Department of Transportation will use ServiceNow AI Control Tower to govern all of their AI solutions across the agency, ensuring industry compliance and control as they scale their modernization efforts. In a very exciting new partnership, Capzone Impact Investments and ServiceNow are developing a national network of next-gen solutions to modernize mission-critical facilities. ServiceNow's risk management, enterprise asset management, and AI-powered automation capabilities will create a fully digital maritime manufacturing capability in the United States. There's no greater satisfaction than seeing world-class brands working with ServiceNow. There's no better example than our great partner and friend, NVIDIA. They are redefining employee support with ServiceNow AI, with intelligent AI agents that proactively resolve issues, deliver personalized help, and provide answers in milliseconds. Customers are not only choosing our tech. They're investing in our team. Under Amit Zaveri's leadership, our product engineering and design teams are the best in the enterprise. They're building too much net new innovation. to cover in these remarks. That's a good thing. ServiceNow has delivered a complete, integrated, enterprise-ready agentic platform for every agentic requirement. This includes AI control tower, AI agent fabric, and a no-code AI agent studio. In just 60 days, we've already surpassed our initial net new ACV expectations for AI Control Tower for the full year. Today, we're announcing Agentic Workforce Management, a new standard for hybrid team leadership. This allows employees and agents to work seamlessly and securely with each other to deliver real business outcomes. We also acquired Data.World to deliver innovative data governance, and these solutions are built for this agentic AI era, which is why it's so precious to us. This is the only data catalog platform built on a knowledge graph with the highest user adoption in the data catalog and governance category, period. We just have so much to talk about in this company right now. The partnership expansions with Nvidia, UKG, Zoom, and countless others are illuminating the centricity of ServiceNow in enterprise AI. That's why we see new recognition in Forrester Waves, IDC MarketScapes, and Gartner Research. It's why millions are applying to work for the company so they can be part of this movement. We made an intentional choice at ServiceNow to put AI to work for people. Yes. ServiceNow AI is driving substantial productivity increases for our customers. And while efficiency and productivity are major benefits, it doesn't stop there. This is a breakthrough innovation elixir unlike anything we've ever seen in human history. People and AI together will create new businesses, new discoveries, and catalyze economic growth in every corner of the world. The world works with ServiceNow because We are delivering AI to empower people everywhere so they can be the ones who lead their organizations forward to new horizons. I'll leave you with this point. Analysts predict agentic AI will be ubiquitous, embedded in software, platforms, and applications, transforming user experiences and workflows. AI is the new UI, and that's why the software industrial complex of the 21st century is converging into ServiceNow as the extensible AI operating system for the agentic enterprise. This gives us a monumental future of value creation for our customers and shareholders. Thank you for your time. Now I'll hand things over to our President and Chief Financial Officer, Gina Massantuno. Gina, over to you.