ServiceNow, Inc.

plays 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 return your question, press star one again. Thank you. I would now like to turn the call over to Darren Yip, Senior Vice President of Investor Relations and Market Insights. Please go ahead.

Thank you. Good afternoon and thank you for joining ServiceNow's 3rd Quarter 2025 Earnings Conference Call. Joining me are Bill McDermott, our Chairman and Chief Executive Officer, Gina Massantuno, our President and Chief Financial Officer, and Amit Zaveri, President, Chief Product Officer, and Chief Operating Officer. During today's call, we will review our 3rd Quarter 2025 results and discuss our guidance for the 4th 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 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 discussed today are non-GAAP, except for revenues. Remaining performance obligations are 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 delivered another set of stunning quarterly results that absolutely shattered expectations. Subscription revenue growth was 20.5% year-over-year in constant currency. one full point above the high end of guidance. CRPO growth was 20.5% year-over-year in constant currency, 2.5 points above our guidance. Operating margin was 33.5%, three full points above our guidance. Free cash flow margin was 17.5%. We had 103 deals. greater than a million in net new ACV, six of which were greater than 10 million in net new ACV. Technology workflows had 50 deals over a million, including six over 5 million. ITSM, ITOM, and ITAM were all in 15 of our top 20 deals, with double-digit deals over a million. Together, security and risk combined for 12 of the top 20 deals with three deals over a million. That risk and security business combined is now a billion ACV business, our fifth business to cross the billion-dollar threshold. CRM and industry workflows were in 14 of the top 20 with 15 deals over a million. And core business workflows We're in 13 of the top 20 with 14 deals over a million. Here's the headline. ServiceNow is one of the most durable, consistent, over-performing growth companies in the enterprise software industry. When you think about brands shaping the future, you have GPU leaders like NVIDIA, hyperscalers, foundation models, and one company integrated and all together the AI workflow company, ServiceNow. It used to be the Mag7. Now there's a new category. I'm calling this the Super 8. That's the Mag7 plus ServiceNow. That's right, the Super 8. As you'll hear from Gina, our confidence in the future has never been stronger. So we're raising guidance, again, heading into the fourth quarter. This team knows how to focus, innovate for our customers, execute at global scale, and most importantly, how to win. We've only scratched the surface of the market opportunity for this platform. This new enterprise AI neighborhood is a dynamic place to live. Our now assist net new ACV to date beat expectations once again in Q3. Our AI products are on pace to exceed a half a billion in ACV this year. Excellent progress toward beating our one billion target next year, and we're totally focused on surpassing it. We saw 12 now assist deals over a million, including one over 10 million. Our AI control tower deal volume more than quadrupled quarter over quarter in Q3. And just since the end of May, AI agent assist consumption has increased over 55X. That's the foundation of a beautiful hockey stick that's coming to you. For our customers, it's all about AI business transformation. IDC forecasts AI IT spending will be 1.3 trillion through 2029. And here's why ServiceNow is winning. Our platform sits at the core of the enterprise technology estate. ServiceNow is championed by the very leaders who are designing the AI reference architectures of the future. Beginning with autonomous IT, we're helping those leaders solve enterprise grade AI challenges. Governance is one of those mission critical areas. Machines simply can't govern themselves AI is like any other enterprise asset. It needs to be cataloged, tracked, supervised, and secured. ServiceNow's configuration management leadership gives us and our customers a clean single pane of glass to govern all artificial intelligence. How is it working? Where it's adding value and where it's hallucinating. This is AI-enabled orchestration of all the other AI. Every single enterprise in every industry wants this real-time AI control tower. Another challenge is getting beyond the hype to fast business value. The root cause of nearly every failed deployment of enterprise technology in history is a lack of integration. And even the ones that worked, Took years to get to positive ROI. To change this paradigm, AI has to run east to west across the enterprise and north to south up and down the tech stack. ServiceNow's AI platform can do this like no other. For every process that transcends departments and systems, ServiceNow's workflow engine is creating the road map that AI agents follow to get work done. Without cross-enterprise workflows, so-called agentic AI is just another one-dimensional chatbot. Enterprises gravitate to ServiceNow because we have a system of intelligence and a system of action on one integrated AI platform. Legacy systems of record where enterprises want a modern alternative are being composed as AI native workflows on the ServiceNow AI platform. We all have personal experiences with AI apps on our phones. Enterprise AI is different. It's much harder. To put AI to work for people takes more than a language model or a rebranded wrapper on legacy tech. It takes domain expertise, which ServiceNow has curated over two decades and trillions of automated workflows. It also takes empathy, as every customer's AI journey is unique. You don't build trust in this industry by forcing customers to conform. You build it by meeting them where they are. That's where the operative word in ServiceNow's strategy is any, any cloud, any model, any data source, any agent. It's why we were so early partnering with all three hyperscalers, the foundation model companies and the systems of record. We neutralized complexity for our customers, giving them a clear roadmap. to cycle down old systems over time as their AI readiness matures. Our customers recognize the time is now to shape their future. AI is the new UI. The ServiceNow AI experience breaks the cycle of siloed systems and bolt-on agents with a unified AI interface for voice, images, data, and text. and ServiceNow are partnering to bridge the gap between design intent and enterprise execution. Through an MCP integration, teams can seamlessly transition from visual design in Figma to fully functional enterprise-grade applications on the ServiceNow platform. This integration empowers developers, regardless of skill level, to use Figma design as direct prompts in the now assist build agent. We see a bright future, intelligent agents working side by side with people to resolve issues, complete tasks, and take action. In the context of value creation for customers, partners, employees, and shareholders, Enterprise AI keeps every ServiceNow stakeholder on the same side. This is a once in a generation opportunity. It's like minting a new currency that underpins a limitless new economy. The more we keep getting this right, the more we'll reach our full potential as the AI defining enterprise software company of the 21st century. To ground this in special way, in a special and specific market, let's talk customer experience. Enterprise has invested a lot into legacy CRM deployments. For all that investment, they got a sprawling mess of instances and silos. They want a better way with AI. This applies to many legacy vendors, some more than others. Here's why ServiceNow is reshaping the customer experience market. Our AI experience turns CRM into an AI-first system of action that drives growth and customer loyalty. In sales, a new AI-powered CPQ solution accelerates quote generation, and this is going to free business to focus on relationships. In service, AI agents flag at-risk cases, automate resolutions, and empower teams to act before SLAs are breached. This spans the entire customer lifecycle from first contact to resolution. Customers like Thrive and Pure Storage are using ServiceNow CRM to personalize support, connect data, AI, and workflows, and scale service excellence. With a global technology services company, we are streamlining service models and enhancing customer experiences through agentic workflows. A hardware manufacturer selected ServiceNow CPQ and manufacturing solution to scale sales and service without increasing cost. A leading global technology company tripled their CPQ commitment with ServiceNow. What began with one product and one channel turned into a breakout success. The customer saw the impact And now they're scaling it across partners and a dozen more products. A European auto manufacturer selected ServiceNow CPQ for its configuration, and it's selling this globally. What's fascinating is that these conversations are actually coming to us. The appetite for change is everywhere. We're also meeting the moment with great partners like Genesis. Unified experience from Genesis and ServiceNow merges contact centers, CRM, and service operations into a single agentic AI-powered platform. Through agent-to-agent orchestration between Genesis Cloud and ServiceNow, AI agents will collaborate autonomously on tasks to deliver fast resolutions, seamless customer experiences, and stronger customer loyalty. ServiceNow always goes where the customer needs us to go. In this case, that's to the core of a better CRM because the status quo just isn't cutting it. Let's spend a moment on U.S. Federal, which had a great Q3, beating NNACV expectations handily. In the quarter, We saw Now Assist pilots quickly converting into deals as agencies realized fast time to value and compelling ROIs. Like other industries, our AI control tower is gaining attention as agencies look to enforce governance and manage risk within their AI estate. The GSA OneGov agreement opens the door for broader federal and government adoption of ServiceNow. This simplified model reduces complexity and makes it easier for agencies to adopt more of our AI platform over time. That positions us well for upgrading standard customers to ProPlus. Through the agreement, the ServiceNow AI platform is estimated to boost efficiency by 30%. saving the federal government billions over the next five years, and it will accelerate agentic AI transformation. In closing, ServiceNow's strategic relevance has never been higher, and it's soaring right now. When you look at the Zurich release, every innovation from vibe coding to agentic playbooks and enterprise-grade security is purpose-built to unlock the full value of agentic AI. helping teams act faster, work smarter, and build trust as they scale. Gartner just published the first ever 2025 Magic Quadrant for Business Orchestration and Automation Technologies, affectionately called BOTH. So get on board, because ServiceNow is the leader, the furthest for its completeness of vision placement of all companies. We have a rock solid core business with the biggest opportunity in our history to provide the AI control tower. We have a next generation CRM business at the doorstep of substantial legacy disruption. We have AI data and workflows integrated into a single AI architecture, world's leading brands, like the great Nvidia, the world's first $5 trillion company. Congratulations, Jensen, our great friend, and your wonderful company. Also, AstraZeneca, Volkswagen Group, Ulta Beauty, 7-Eleven Japan, FedEx, DataWorks, and countless other companies are working with ServiceNow and excited to do so. Periods of systemic change always reveal new pillars on which The future is being built. This is the one moment in time when everything will change and we won't do it with AI alone. We need AI that works for people. We need a bias for exponential thinking for Renaissance level creativity to finally solve some of the world's biggest challenges. Our customers, our partners and our team are all in. to build that future on the ultimate platform, ServiceNow, the AI platform for business transformation. Thank you for your time and interest. I look forward to your questions. I'll hand things over to our President and Chief Financial Officer, Gina Mastantuno. Gina, over to you.