ServiceNow Inc at UBS Global TMT Conference (Virtual) Transcript

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

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : I appreciate it. So Lara, maybe we start with you in your new role. I know you've been at ServiceNow for a little bit in a prior role, but you just moved into the Chief Customer Service and Partner role in July at around the same time that your colleague, Kevin, was tagged to lead the sales effort. So maybe it would be worthwhile to put your move and Kevin's into context. What prompted Bill to make these customer-facing leadership changes now? And in broad strokes, what are the key initiatives that you, in particular, are focused on in your role?

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Got it. Ambitious goals. I like it. And I'd love to ask you, Lara, how has COVID complicated the delivery of this world-class customer support and customer experience to ServiceNow customers? I presume much of the deployment is now being done virtually. That's got to make life a little tougher. So it's intriguing to me that you were able to or hope to drive down the implementation time frames despite those challenges. So can you talk a little bit about how your life has become a little bit complicated post COVID?

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Yes. And I'd love to hear maybe, Lara, a little bit more about how you and Bill, who's obviously got a long history dealing with some of the larger services partners, plan to execute on making those partners that force multiplier you talked about. So maybe you could make that a little bit more tangible. How do you do that? How do you incent KPMG and DXC and Deloitte to scale their ServiceNow practices? And then you have a long tail of smaller boutique services firms that you need to keep engaged as well. So what -- how do you show them love to motivate them to scale their businesses? Do you toggle with the economics with the partners? Maybe you could add sort of 1 or 2 ways that you're trying to pull that off.

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : That makes sense. And...

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Yes, go ahead.

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : That makes sense. And Lara, if we think about your prior role when you were a Chief Strategy Officer, I'm guessing that, that may have included a responsibility to advise the leadership and the Board around M&A. I'd love to ask you about that because one of the interesting things about ServiceNow that's very different from most notably Salesforce, as we've all seen, is the absence of M&A over the years. So it's pretty unusual for a software firm your size. And I'd love to ask you, I actually, if you were listening, asked Bill on the broader earnings call question on the 3Q call. But from your perspective, why is that? And wouldn't it make sense actually for ServiceNow to acquire into some of the adjacent workflow automation areas that might help you get there faster?

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Got it. Okay. That's very helpful. And Lara, another strategic question that I sometimes think about is just ServiceNow got its roots in the IT side as an ITSM provider and diversified into IT ops. But still, the workflow automation in the IT department still represents a very big part of ServiceNow. But at least when we talk to customers about where they would like to automate next and drive efficiencies, they often talk about extending ServiceNow outside the IT department or in some cases where you don't service that area using another automation vendor. So I think it would be fascinating to hear from you about ServiceNow's ambitions to accelerate the move outside of IT. Do you agree that that's a giant opportunity? And what's the strategy to expand perhaps faster beyond IT? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 07, 2020 / 8:45PM, NOW.N - ServiceNow Inc at UBS Global TMT Conference (Virtual)

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : That makes sense. Let's talk about a couple of those new areas. Maybe, Lara, the obvious one, given your role at the firm, is the CSM module. I suspect you know a thing or 2 about that one. It doesn't seem that ServiceNow's, in that CSM arena, bumping up against Salesforce yet. Gina told us after the last call that in CSM, almost all, if not all of the top deals for CSM, none were Salesforce displacements. There were displacements of legacy customer service technology. When do you think that might change such that ServiceNow will have to start displacing some of the cloud customer support service vendors? Or do you think the runway to displace the on-prem incumbents is so large that you don't really need to be bumping in the Salesforce in order for your CSM module to be showing terrific growth?

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Got it. That's encouraging. And Lara, I'd love to also ask you about the platform or app engine business of ServiceNow. How is that doing? And how is that contributing to ServiceNow's growth?

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Got it. And Lara, if we could flip over to the core ITSM portion of ServiceNow, which I think is still the majority of your revenues. One of the amazing things here is that we and frankly, others have been worried over the years that at some point in time, you're just going to run out of BMC and HP, ITSM displacements. And yet, ServiceNow keeps putting up strong ITSM results in terms of your net new ACV. So I'd love to ask you about that runway left in your core business. When will it run out of displacements? Or does it look pretty open from here still?

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : I'm sure.

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : I remember.

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Got it. And Lara, I'm sure one of the other focus areas for you in your former strategy role was helping the leadership think through the pricing model. I think we and investors remember under the formal leadership under John at one of the Analyst Days, he talked about ServiceNow's desire to take a fresh look at the pricing structure, did it make sense in a world of increasing AI. Bill hasn't talked about that so much. I'm wondering if you could give us an update on where that stands. Were those changes sort of put on the back burner while you work through the leadership changes, COVID and this amazing demand you've experienced? Or is that still under some consideration?

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Got it. That's very thorough. I didn't realize so much was going on behind the scenes. So that's super encouraging to take away that friction. A couple more for me, Lara. We talked a little bit about partnerships, but it was in the context of your SI partnerships with the likes of Accenture and Deloitte. What about on the technology partnerships that you've got responsibility for now? And in particular, maybe there's a broader range of technology partners, but the ones that I think intrigue us and a lot of investors, only because they're also chasing the workflow automation opportunity, are the RPA vendors like UiPath and Automation Anywhere. And I still think there's some lingering confusion as to whether you're rivals in the sense that you're alternative ways to get to that workflow automation or whether you truly are technology partners and not encroaching on each other's turf. So maybe I could ask you broadly about the key technology partners and then maybe the RPA vendors in particular.

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : That makes sense, Lara. And maybe I'll finish, given that we're -- we only have a few more minutes to go. Kind of an interesting question just around your views as a former Strategy Officer leader at ServiceNow, what a post-vaccine recovery scenario looks like. Most investors are now thinking about that, trying to position their stock portfolios for that. And I'm just curious whether there are certain ServiceNow applications or a certain type of sales marketing support motion that you think you'll have to pivot back to with customers back in their offices, sales reps back on flights, support reps back in call centers. So in general, how will ServiceNow look any different in a post-recovery world, if at all.

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : That makes sense. Well, you, Lara, and your team have had amazing success helping ServiceNow power through this crisis well. Congratulations on that incredible effort. And Darren, quick thanks to you for making our TMT conference even stronger by having ServiceNow and Lara present and meeting our investor clients. So thank you both for spending time with us.

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Okay. You got it. Bye-bye.