ServiceNow Inc at Citi TMT Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tyler Radke - Citi - Analyst : Gina, I think this is the third or fourth year in a row that you've come, so thanks for supporting our conference. I thought it'd be great, you're in New York City this week, we were just catching up. You've been on the road talking to customers a lot this quarter. I know you have a bunch of meetings this week, but it would be great to just frame for the audience what's top of mind when you, when you're having conversations with customers and how is that different from prior years. Like, what are the priorities for 2025?

Question: Tyler Radke - Citi - Analyst : Right. And obviously, those are some pretty important examples, broad-based, across businesses that you're referencing, but for investors in the room, maybe just high-level frame how ServiceNow is helping those customers. Obviously the platform has expanded dramatically since Fred Luddy founded the company, but how is sort of the vision evolved and how are you helping them from an AI perspective?

Question: Tyler Radke - Citi - Analyst : Right. And that's obviously a really exciting vision in terms of being this orchestration for AI, huge opportunity, hundreds of billions, if not more, but how do you think about the timing? What do you need to do from a product perspective to get there? I know historically, ServiceNow has developed a lot of great in-house functionality. You also recently did acquire Moveworks, which was one of the larger M&A deals that relative to everything you've done historically. So just help us understand what that vision looks like from an organic versus, M&A perspective.

Question: Tyler Radke - Citi - Analyst : Okay, so still kind of tuck in smaller form M&A.

Question: Tyler Radke - Citi - Analyst : Right. So I think it was last year where you sort of set the goal of $1 billion analysis, basically AI, ACV --

Question: Tyler Radke - Citi - Analyst : Just in May, yes. Last year you gave us the initial disclosure of kind of the analysis of ACV which was super exciting. So $1 billion is certainly a big number for next year. At the same time we've seen some pretty prolific growth from a lot of AI startups out there, the cursors, obviously OpenAIs, Anthropics of the world, some of these vibe coding platforms rapidly scaling to $1 billion without a lot of distribution. So how should we just think about like the conservatism of that $1 billion because in some ways you could say, you have a great customer base, you got the distribution advantage and clearly there's massive demand signals for these businesses. So how do you just kind of think about that in the context of some of these private AI companies that are there?

Question: Tyler Radke - Citi - Analyst : But you still feel very strong about that $1 billion.

Question: Tyler Radke - Citi - Analyst : Even with Moveworks not closed yet?

Question: Tyler Radke - Citi - Analyst : Got it. And then as we think about the consumption element of the analysis and ServiceNow's AI revenue, because obviously that's different than signing the subscription and committed contracts, how are you seeing that consumption ramp up now that you've had a lot of exciting product innovation and product launches such as the recent knowledge conference?

Question: Tyler Radke - Citi - Analyst : Right. And for the -- it's great to hear that it's going better than plan. Like, what are some of the biggest use cases where it's where it's taking off that's kind of driving that upside?

Question: Tyler Radke - Citi - Analyst : Yeah, and one of the concerns we hear from investors just on the sass industry in general, but particularly in in support of just the risk of seats declining and I know that's something in the past, you all haven't seen, but is there any changes to that or when do you kind of anticipate, that there could be some declines in seats? Yeah.

Question: Tyler Radke - Citi - Analyst : Right. And probably 95%, keeping the lights on, right, in terms of the maintenance budget. Gina, I did want to touch on Federal because there was some interesting news this morning, with the GSA announcement and obviously this is a big quarter for Federal. It's, no surprise Federal has been a challenge for a lot of software companies this year, but I thought you could just kind of frame for the audience the incrementality, if that's heard of the announcement this morning, was this something you were sort of expecting as it relates to the third quarter, or was this maybe a positive surprise? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 03, 2025 / 4:50PM, NOW.N - ServiceNow Inc at Citi TMT Conference

Question: Tyler Radke - Citi - Analyst : I got you. So more of a 2026 catalyst, obviously nice to see, especially relatively early in September as you're getting.

Question: Tyler Radke - Citi - Analyst : Yeah. Great. And maybe thinking about outside of that, I think you, you've talked about a strong pipeline, heading into year end. Obviously, macro uncertainty is still out there, but what have you seen in the last few weeks or months since we've last spoken in July, I think you were one of the first software companies to report as usual, so how are you feeling about kind of the year end?

Question: Tyler Radke - Citi - Analyst : Right. And that consolidation, I mean, that sounds like a good recipe for large deals, right, as you're taking on even more parts of the organization and I guess on that note, the CRM and broader front office push has been exciting to watch. I know, I think combined CRM and CPQ are over $1 billion, but where are you sort of seeing the biggest opportunity in that broad front office category? And are most of these conversations you're having at the highest level involving some element of that?

Question: Tyler Radke - Citi - Analyst : Right. And when you say CRM, is that like replacements of System of record CRM or is this kind of more, the service element or adjacencies to that system of record?

Question: Tyler Radke - Citi - Analyst : Got it. So there's been a lot of discussion about the larger deals, the biggest, customers out there, which obviously are super important, but I'd love to ask you about the commercial business and down market because I know that has been a big focus both relying on the partner channel as well as some of the hires that you've made there. So can you just frame for us kind of that opportunity, what you're seeing competitively on that front. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 03, 2025 / 4:50PM, NOW.N - ServiceNow Inc at Citi TMT Conference

Question: Tyler Radke - Citi - Analyst : Right. One of the disclosures that you had at Analyst Day and I know we've had this in years past, just the net retention rate, for ServiceNow, which is remarkable how high it is for a business of your scale, close to 120%. Couple of questions there, I mean, how do you think about A, the durability of that because on one hand you do have this huge, expansion opportunity very under penetrated? But on the other, right, I mean, there have been, you are a large ticket item in some of these large companies where cost concerns run high. So how do you kind of think about the ability to continue to drive 20% ACV growth for existing customers over the long run?

Question: Tyler Radke - Citi - Analyst : Yeah. So I did want to make sure we hit on one of your favorite topics, which is margins, and given, we only have a few minutes left, but first high level, like, how are you using AI internally with ServiceNow? How do you think about the quantifiable savings or ROI that that you've achieved thus far? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 03, 2025 / 4:50PM, NOW.N - ServiceNow Inc at Citi TMT Conference

Question: Tyler Radke - Citi - Analyst : Right. And so that $100 million, that's an annualized number or --

Question: Tyler Radke - Citi - Analyst : Of savings, which is pretty remarkable. And when you say reinvesting, is that primarily -- is it cost savings and overhead, call it G&A or maybe marketing or something and then reallocating a portion of that back to R&D is that kind of how to think about it?

Question: Tyler Radke - Citi - Analyst : Got you. Okay. And as you think about, this business as it scales to $20 billion and beyond, what are the biggest kind of incremental sources of operating leverage? I know, you talked about some of those, but as you look longer term, are there. Additional things we should be thinking about and how to sort of think about that pace of margin expansion.

Question: Tyler Radke - Citi - Analyst : Right. Got it. Okay, well, we have a couple minutes left, and I did want to leave it to you to just kind of, close for the audience what kind of you think the key takeaways out there related to ServiceNow should be obviously the application software market has been under a lot of pressure this year. And a lot of debates around, seats and SaaS, but just anything you want to leave the audience with and what the company's focused on for FY25?

Question: Tyler Radke - Citi - Analyst : Right. Well, I think that's perfect then. We're right at time. Gina, thank you so much for coming. Thanks for the audience for making this a packed session.