ServiceNow Inc at Wells Fargo TMT Summit Transcript

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

Question: Michael Turrin - Wells Fargo Securities - Analyst : So there's a lot to talk about given the time of the year and just the strong position of ServiceNow. But before we get into some of the more specific questions, maybe we can just speak to the most recent earnings report, 3Q, another set of consistent results for ServiceNow. We appreciate it has not been the easiest environment that the company has managed to present this just stable execution pattern for some time. How would you characterize Q3? What are the conversations like coming out of that? And maybe we can use that as a jumping off point?

Question: Michael Turrin - Wells Fargo Securities - Analyst : Yes. We've observed -- I mean ServiceNow has definitely become more of a bellwether for enterprise software spend. You're having high C-level discussions. We've got the observation. Maybe you have two that's -- it's -- I don't want to say it's been a disadvantage, but you report early in the earnings cycle and software investors often aren't sure what's to come. And so you've spoiled us and then we see some subsequent results and everyone kind of looks back and says, wow, ServiceNow print was actually really good in the context of what's happening here. I'd just love to get a sense of how you would frame the conversations you're having with customers around their budget plans for next year? How they're approaching? What they're prioritizing and if there's any sense of optimism or if it's still similar to what you would have said a year ago on that point?

Question: Michael Turrin - Wells Fargo Securities - Analyst : That's great. Very encouraging on many fronts. I want to ask one more high level and then I definitely want to get more into the AI discussion. But there's been -- this is a conversation we've been having throughout the week. I think over the past couple of weeks, we've been asking companies how they're thinking about a new administration who seems to be focused on efficiency, first and foremost, right? And so we look at that from a few different ways. There's a world where that could mean when the budgets come down, and it's tougher to get things done or it could mean that vendors who are able to enable efficiencies or productivities could kind of move up the pecking order. I know it's early and I doubt you're too far along, but do you have kind of an initial sketch of different scenarios that you think could happen based on that with what ServiceNow enables.

Question: Michael Turrin - Wells Fargo Securities - Analyst : Okay. It's another one. I'm sure we'll hit like five of these great opportunities that you're going after. In the AI discussion, so this -- obviously, this has probably dominated a lot of the conversations you've been having. Certainly, we've been having as well. Can you help level set a couple of things, just what is available from a generative or AI-related perspective within your product portfolio currently and what was in that has enabled you to kind of reach the forefront of giving us a monetization metric, something in software that investors are asking about, but many companies are saying, it's just going to take some time. You've been, I think, more forthcoming with progress in your point, it's early in the adoption curve, but the science seem quite encouraging.

Question: Michael Turrin - Wells Fargo Securities - Analyst : Yeah, it does. It's actually really interesting. So you mentioned, we're seeing agentic solution show up in different places. And I think everyone's trying to figure out the best use case, who has kind of priority position to implement those technologies quicker. What would you have the service now's advantages. It seems like the orchestration, the workflow, the things that your core system already enables could map really well to agentic solutions. Is that --?

Question: Michael Turrin - Wells Fargo Securities - Analyst : I want to just stick with the customer service piece for a moment. What I'm wondering is -- you've started to highlight this opportunity more as something that we pick up in our conversations as well. The workflow for customer service is quite similar to the workflow for IT service, right? Bill has talked about that as one of the most significant opportunities that he sees in the future for ServiceNow. I'm wondering, is this agentic conversation, the fact that agents seem very well-suited for customer service really use cases, do you think that's opening up take a broader discussion that you can lean into around just repurposing systems or just modernizing whatever is in place with customers.

Question: Michael Turrin - Wells Fargo Securities - Analyst : Okay. Very helpful. Just, I guess, one more on this topic. The pricing uplift, your ability to capture that within what was expected. There was what felt like a little bit of a misguided bear case at one point that seats would come down and that might impact your ability to monetize and you kind of hit that directly when that conversation first picked up. But since then, you found like tangible proof points around that 30% uplift being kind of the right shape and size. What has enabled that? What are customers telling you that has helped make that the right sort of metric, the right uplift level for the new product?

Question: Michael Turrin - Wells Fargo Securities - Analyst : How should we think about just where you are from a seasonal perspective with where Pro Plus is from a product and conversational perspective. Meaning we're in December, you're a very seasonally heavy business. Is that -- like how much is that a potential catalyst? How much is that a part of the conversation with customers? And does it, in some ways, can elongate deal conversations? Or is it, hey, some of the AI capabilities, actually, that's what we're looking for, so it can kind of catalyze that discussion?

Question: Michael Turrin - Wells Fargo Securities - Analyst : One other discussion point that's come up for us more frequently and perhaps for you as well is Raptor. You made some changes to the underlying technology. Can you speak to the value proposition of Raptor. And then also, if there's a way to couple that with what we're hearing quite often from enterprise software vendors is there's a little bit of an obstacle in terms of data, right? Meaning data can often be tough to surface, not as well-organized as is ideal for use of generative applications. Is that an area where ServiceNow can also play a role? Or how are you kind of working through that obstacle?

Question: Michael Turrin - Wells Fargo Securities - Analyst : It just -- it seems like you continue to find ways that the platform can extend its position. Can you talk about that in the context of M&A, right? Like many software companies when they get to the scale, have had to look to M&A to get into an adjacent category to kind of accelerate something that may take a longer period of time. You seem like you've been able to innovate, tuck certain technologies in and continue. What makes that the right framework? And how are you finding success at this scale still using that type of framework?

Question: Michael Turrin - Wells Fargo Securities - Analyst : Any initial impressions you can give us around Amit. I know that ServiceNow, obviously, you have a deep team. We've always been impressed whenever someone is presented to us from the outside, but there's been a very tight culture of talent. I mean it seems to us it's been a competitive culture for a long time, but in the right way. What are the attributes that you've gathered around Amit thus far? And how would you kind of present his profile for investors who are just trying to figure out where that fit with the innovation layer.

Question: Michael Turrin - Wells Fargo Securities - Analyst : That's great. Yes. I mean most of our conversation is focused on growth, and it makes sense because you have all of these incremental growth opportunities. But ServiceNow has also always had a very balanced financial model, and you've been able to deliver margin expansion. What is enabling that still? And I'm wondering if in any way, there are internal gains you're seeing from either things like the shift of the Raptor architecture or internal efforts around AI that give you, I don't know if it's more optimism because you already have good margin, a better sense of what can enable margin expansion.

Question: Michael Turrin - Wells Fargo Securities - Analyst : That's great. So you're definitely right. We're not going to make it through all of the questions. It's time for one more. And so I want to turn it over to you for kind of closing thoughts and framing both the importance of the rest of the year for ServiceNow. And then the signals you're watching that will inform your priorities -- prioritization, willingness to spend in '25 and beyond. Investors are much more focused on, I think, 2025 at this point. So maybe help frame the out-year and just where the big points of focus are?

Question: Michael Turrin - Wells Fargo Securities - Analyst : No. That's perfect. Great note to close on, Gina. Really appreciate you making time.