Welcome everyone. We have a great day planned. A few housekeeping notes. Please refer to the safe harbor information on the screens and the slide presentation for non-GAAP reconciliations, which will be posted on our investor relations website following this event.
Look around. There are people and technology working to solve our greatest problems. Who helps them do it? Who makes the work they have to do better, faster, and more intuitive so they can get on with the work they wanna do? Who? When innovation works, the world works. When collaboration works, the world works. When creativity works, the world works. The world works with ServiceNow.
Please welcome ServiceNow's Chief Executive Officer, Bill McDermott, and Chief Strategy Officer, Nick Tzitzon.
Thanks for coming. Nice to be back in person. Any words of welcome you wanna offer to this crowd before we get this party going?
I warmly welcome you to Las Vegas. Thank you for your interest in ServiceNow. We couldn't be more excited or more positive on where this company is going. Let's get it on.
You know, there's a surplus of masks now that they're not required on flights. I think they should give them out when you walk into a Las Vegas casino because they actually could be quite useful. Have you walked the halls at all?
I tried to avoid it. I got in last night and–
It's been–
I missed the casinos, Nick.
It's been two years, and I think it was a fairly fast reminder of Las Vegas and all that it represents, so good to see you back live and in person.
Thank you.
We're gonna do some Q&A, obviously at the end of the presentations. Really looking forward to engaging with you. We thought we'd simulate a little bit of that with Bill just to get things going. Bill, I think we would be remiss not to start with the macro. I mean, one thing that I've taken away from every earnings call is that, you know, the market is really waiting for ServiceNow and for you personally to size up what's going on in the world. You know, if you look at this slide, you know, you look at all the things that are happening that might call into question the viability of a business, what's your reaction to what you're seeing?
I think the most important thing is ServiceNow has established itself as an enduring platform that is solving the problems that exist in this 21st century economy and capitalizing on the opportunities. The slide says it all. We're at a crossroad in the case of ServiceNow, where the secular tailwinds for digital transformation are perfectly intersecting with the macro crosswinds. When those two forces come together at once, we will not be denied. The growth tailwinds that we have promised the capital markets are actually accelerating, Nick. What's going on out there?
Mm-hmm.
I just got done with two and a half weeks in Europe. Digital transformation, let's level set this market, according to IDC, is a $10.7 trillion market by 2025. I'm unaware of another market that's ever been this significant. Our market, our TAM, is $200 billion in our core business, so we're just getting started if you look at the big picture. Digital transformation and this idea of the smartphone ruling the world is undeniable, and it's uncontrollable, and the power is in the hands of the people, and that is what businesses have to accommodate as they rethink their business models and transform. They're clearly seeing the old way of upgrading the 20th-century technologies is not getting them there, and that's why they have to technologically accelerate in the technologies that are making the difference. It was a big debate two years ago.
I remember having it. Is AI gonna take jobs away? What about AI? It's not a matter of taking jobs away. It's a matter of enriching the jobs that exist and increasing productivity and closing the gap because digital skills are at such a global shortage. This talent war is absolutely on in every corner of the global economy. You've gotta get great people into the business. Nick, I can tell you right now, companies that give a great employee experience won't be looking at all the red ink in the boardrooms, and companies that fail to take advantage of the experience they're giving their employees or their customers are going to really regret not investing now. Finally, I wanna close out on this 'cause no one's covering it.
There's gonna be 750 million net new applications built in the enterprise in the next three years. Think about this for a second. That's more applications than have been developed in the world in the last half-century, okay? So if you've got a low-code platform that's a standard, you're gonna do pretty well. Finally, look at the ESG situation.
Mm-hmm.
Everybody wants net zero. Everybody wants diversity, equity, and inclusion. Everybody wants a company that has global risk and compliance under control, and every board demands that. There is only one platform out there, though. That ties together all of these disparate systems and gives you one common view of the enterprise so you can run a great business. That's what's going on out there and it's accelerating, not decelerating, no matter the headlines.
Let me ask you a quick follow-up. Again, just from the perspective of our audience today. People will say, "Hey, it's a high inflation environment. There's massive supply chain disruption." You have said repeatedly that enterprise software is a unique business and a unique business model. You say it's an all-weather business. Put a little bit meat on that bone.
Well, let's go for inflation. I'll give you example. I'm with one very large CPG customer in Europe. They're dealing with the Ukrainian war. They have employees in Russia and Ukraine. They're paying employees in Russia through the end of the year, even though they're not getting any revenue there. Obviously, the people that are in Ukraine are doing their job out of bunkers. They're having a difficult time in China because China is closed down, plus it's turning its back on the West. Now they've got all kinds of inflation and pricing problems. How are they gonna get out of that? Well, in certain markets you can pass on a higher price. The U.S. is one example, but you can't do it in Europe, and you're probably not gonna get away with it in South America.
Their answer is, how do I digitally transform and get much more productivity per employee? 'Cause I can't get too many more employees, 'cause I'm dealing with inflation, digital transformation. Let's go supply chain. We had global supply chains, now we're going regional supply chains, in some cases, local supply chains. Do you really think these businesses have the time to rip and replace supply chain and ERP systems to accommodate an environment that's changed on them so rapidly? Of course not. They need change and they need it fast. BMW how do I deal with 4,000 different suppliers and have a control tower for digital transformation to accommodate this move to regional and local so I can meet my customer requirements? The global labor shortage. Think of it this way.
Europe in the next 30 years will be 50 million digital skills short in the European marketplace. How do you accommodate that? You have to digitally transform the way work itself is done. Cybersecurity, if you look at the top issue on every CEO's mind, it is clearly cybersecurity. The problem is not a shortage of investing for cybersecurity. Everyone continues to do that. They need one dashboard where they can see the operations in their entirety. They can have the dashboards, they can look at the threats, and they know how to deal with it, and that's where we come in so strong, and the team will tell you a lot about that today. Look, I'm very proud of the management team of ServiceNow. I want to get that out there today.
You'll see a team that I'm incredibly proud of when you think about the engineering success of this company and what CJ Desai has done, Gina as CFO, great engineers like Pablo and Amy giving user experience and security ops and reinventing the way companies observe their business. You're gonna get to see that in living color today. We're building a great team. That's why we leaned into COVID, and we did it in record time. First, it was emergency response, then it was bringing people back safely, and now it is, we'll deal with anything, including this new mapping exercise, because everybody wants to give their employees a chance to map their own life in this hybrid workforce, and they wanna be able to do that very easily. I book a conference room; I know exactly what I can do.
I got my workspace carved out, and I know that I'm in a safe environment because ServiceNow enables that. All of these things are happening at once. Maybe it was great invention by Fred, Fred Luddy, when he put ServiceNow on the map. Maybe it's continued excellence in engineering, but I know one thing. Every single employee at ServiceNow is focused on being the defining enterprise software company of the 21st century, building great software and executing on behalf of our customers, and we don't get swayed by the headlines. We're into business execution.
In the universe of things you're gonna cover today, I want this one to be a brief question because I do think part of this is reiterating what makes ServiceNow unique in your view.
Yes.
There's any number of different ways you could interpret some of these results. What do you think is most important to call out?
Well, I think this. You've got important decisions to make, important portfolios to run, and you're gonna be highly selective in terms of where you place your bets. I just wanna call out the fact that I'm unaware of another enterprise software company operating at the Rule of 60, where you have 30% revenue growth, 32% free cash flow margin growth, and you've done amazing for the annual shareholder returns over a steady period of time. I think about the customer and the market momentum, including the ecosystem, and I say to myself, this company, given any quarter, we either renew at 98 or 99%. Okay? When we land, we expand. That's why 125% is the net expansion rate. We normally don't disclose that, but I wanted to give you some information today so you can operate with it.
We got 1,500 partners, and everybody wants to partner with ServiceNow. We've penetrated 80% of the Fortune 500. Next year it'll be 90%, and the next year after that it'll be 97%. Right now, we have nearly 1,350 customers that are spending $1 million or more with ServiceNow, and Gina's gonna tell you how we're just getting warmed up with deals at $5 million and $10 million +. CJ will tell you with great confidence big mega deals that we're working with customers all over the world because they wanna transform their business. Here's the part that I wanna focus on. I want to focus on culture because the magic of ServiceNow is in the culture and the people and the commitment to excellence. You know, we have 18,000+ people right now in the company.
That is about 10,000 net adds, and just before the pandemic hit, and now it's 10,000 net add employees. Keep in mind, we're only hiring 1% of the applicants, which is about Stanford University's rate of bringing students into the school. We're hiring nines and 10s. You say, "How can this continue? I heard there's a global labor shortage." Yeah. One of the great phone calls I got was from a tech company board member saying, "There's no boomerang with ServiceNow, Bill." I said, "What do you mean?" He said, "Yeah, you get them in your company, but we can never get them out because they're so happy there. What are you guys doing?" It's called culture. It's called passion. It's called commitment. This place has it, and that's why it's one of the great companies to work for.
It's an admired company. We're proud of the accolades, but I want to go on record as saying this, complacency is not in the choice. When you come to ServiceNow, it's about performance, it's about your absolute best, and we create an environment that enables that. We don't get swayed by the accolades. We're doing well, but we know we can even do better, and that's where we're going.
I feel like you're just starting to get warmed up, so let's just amp this up to the next level. We're making some news today. I mean, just last year, really for the first time, we put out the timeline around $10 billion+ by 2024 and $15 billion+ by 2026.
Mm-hmm.
Today we're making an adjustment. What do you wanna say about it?
I wanna first of all say, keep in mind, ServiceNow was the first company in the enterprise software space that went to $5 billion organically, and that's cloud revenue, purely organically. We told you last year that we would do $10 billion by 2024, and then we bolted on $15 billion by 2026. We had never disclosed that. I said, "Why do we have secrets? Let's tell it like it is." Today we unveil yet another commitment to the world and the capital markets that we're increasing our midterm guidance by an extra $1 billion in revenue by 2024. Now it's $11 billion by 2024. I do want to accentuate the plus sign, okay? Because the plus sign is there not by accident. We didn't make a mistake on the slide.
It's there for a reason, and the reason is we expect fully to do this, and we also expect fully to do better than that. That is our expectation. I want to give you something you can count on. That's $16 billion + by 2026. Yes, we'll get it right out in front of all the questions. How are you gonna get there? I'll tell you how we're gonna get there. Organic innovation. You're like, "Well, no one's ever done it before." Yeah, that's exactly why the market's ready for someone to do it, because somebody has to clean up the mess that's been created in the last half century, and this platform is perfectly tailored to doing just that. Consider this the commitment, $16 billion by 2026, and yes, there's a plus sign on it.
$16 billion+. We don't mean this as a competitive slide, but just to build on what you're talking about. In a recent Gartner note, there was talk about who is really emerging as the key platforms and who are the tool companies.
Yeah.
Platforms versus tools. That's the–
Well, first of all, if you make it to this slide, you're running a fantastic company. These are great brands. We deeply admire them all. I think underneath those brands you have a lot of legacy infrastructure and legacy software providers that didn't make the slide. We only chose the best for the slide. The point on the slide is to basically say that no company has ever hit these revenue thresholds in the timeframe that we are committing them, and certainly some of the companies only got there slightly under us through a lot of M&A. Now, there's nothing wrong with M&A, but the big question I give to you now is can that platform be agile enough? Can it be fast enough?
Do the engineers, and considering they're very hard to hire and they're very smart people, do they want to consolidate the past or do they want to innovate the future? I'm betting that they want to innovate the future because I've seen both sides of that equation. When really good company there, they're wonderful corporations. We integrate with all of them. I think you've got legacy, you've got the in-betweeners, and then you've got the hyperscaler clouds like Azure, GCP, AWS, ServiceNow, and if you want to add another one, you'd add Salesforce. That's basically the cloud companies that are the standard bearers of platforms that companies are investing in in the global economy. I have confirmed this with every customer visit I've made, and I visited a lot of CEOs.
Let's change gears a little bit. There is talk about, you know, on the question of how, and obviously CJ is gonna cover a lot of the how. Paul's gonna be up here talking to some customers. Gina's gonna cover a lot of the how. When you look at this, and I've heard you say these exact words, we are not opportunity constrained. What do you want the audience to know here about these strategic priorities for the business?
We're a platform company, and we intend to expand as a platform company. We're making a bold move into industries. You'll see how we have built on our financial services, our public sector, our telco, it's amazing, media, entertainment, manufacturing. CJ is gonna talk about this. You'll see that we've made a bold move into ERP workflows. We started with procurement. It's going so well, we're gonna have to expand beyond that. We're now in supply chain and manufacturing and shop floor conversations. By the way, the last time I thought about the ERP industry, it was a $400 billion TAM. So assuming we penetrate that and help that industry, you could just see the perimeter expanding at ServiceNow in unique and profound ways. Lightstep.
Lightstep, you're gonna see an announcement from Pablo on what we've done with security operations, what we've done with AI on a direct-to-consumer level, and how observability with a great UX that spans the entire enterprise is ServiceNow's. We're the only one that's doing it the way we're doing it. We got a great chance to take that marketplace. Accelerate customer adoption. I chose these two brands for a very specific reason. I met with BT last week, Harmeen, terrific digital officer, Philip, great CEO. They're joined at the hip in digital transformation, but they don't wanna do it the old way. They realize that they've already made those capital investments in the heavy solutions of the 20th century. They wanna automate above them and digitally transform. They're increasing their speed with ServiceNow by 20x.
They've consolidated a number of platforms into ServiceNow, and they're saving multiples of millions. It's in the press releases they put out if you wanna read it. JPMorgan Chase had a great shareholder day yesterday. Congratulations to Jamie, great CEO, and Lori Beer, great digital leader. They too are joined at the hip. They are consolidating multiple applications onto ServiceNow, saving multiples of millions and proudly announcing it. You're seeing a theme here. The theme is great CEOs that understand digital transformation is the only way forward are tightly coupling their strategy with terrific digital officers that really do help them drive the companies forward. These are companies that are investing 'cause they know, and this was a great quote that I shared in earnings.
CEO said, "If I fail to invest in the short term, I'll slip back in the midterm, and I won't be around for the long term." That's the playbook. You know Disney yesterday. I gotta throw one out there to Disney. What a great brand. What a great company. Think about a company, no theme parks, no cinemas in the heart of COVID. They drive Disney+. Now it's a sensation. They're gaining tremendous market share. We're honored to help them with that. Also yesterday, they consolidated all of these 12 complex employee portals to one ServiceNow. One of the employees who was there 31 years said, "This is my favorite employee portal I've ever used." When you hear Amy Lokey talk about the UX and our San Diego release, you'll feel it.
It's palpable how passionate we are about design and the UX. Now we're gonna broaden the market presence, okay? GDP, Japan, third largest, we're a startup. We got a lot of work to do in ANZ, and India is a giant development center for our company with some of the biggest partners in the world. These are areas we're gonna go for, okay? Germany is a marketplace that is a bellwether in Europe. The customers that work with us in Germany absolutely love us. BASF was one of the great meetings that I had there, but it certainly wasn't limited to just that. I mean, I think about Lufthansa completely rethinking their business on the ServiceNow platform. It's pretty amazing. Germany, we're going for Germany in a big way. Federal and the whole focus on government running like a best-run business. It's a sensation here.
We have our great executive, Kevin Haverty, really putting attention on that with Paul Smith. You'll get to see Paul interview some customers later. He's hitting the ground running on solutions and scale. Obviously, the U.K. and Canada and, you know, needless to say, Nick, I don't wanna limit it to this because I could go Middle East and other places, but these are core markets where we're investing, expanding the perimeter with partners, and we're gonna grow fast. Now, in terms of the partner ecosystem, we have a great relationship with Microsoft. I tip my hat to Satya and all the things we've done with Azure. Our security clearance is top shelf in the United States, and that'll help us in government. It'll also help Azure.
If you look at all these great partners from KPMG, EY, Deloitte, and Accenture, all of them have either a billion or multiples of billions planned for their ServiceNow business globally. Out of the top 10 partners globally, seven already have billion plans, and the other three will by next year. This is like scale, spreading out the perimeter, going for new geographies, accelerating customers and their value journey, and of course, letting the platform do the work with great innovators that are passionate about what they do for a living. I am excited 'cause we are not short on opportunities.
We are just short of making sure we communicate, and we get the word out there in the marketplace that there is a whole new way to digitally transform your company. The people that are least likely to want the customer to know that are the people that benefited the most from the 20th century business models.
Oh.
It's time for change.
Almost like we planned it. I don't want you to unpack this entire slide because we don't have time for that, and we're gonna cover a lot of it.
Yeah.
When you came to ServiceNow, there were questions like, what do you see here?
Yeah
That the market doesn't understand? This was, you and CJ partnered up on this. What jumps out at you in terms of the architecture of ServiceNow? What makes it different? What makes it so poised for growth?
This is the platform for digital business. The platform for digital business. What's happening now is companies have made extensive investments in their 20th century technologies. We have to make them work. We have to improve the UX. We have to improve people's ability to automate what they thought they already automated, but they realized the world changed. That's one aspect of it. When I think about customer workflows, and Harmeen, for example, over at BT, she sees a direct connection to her consumer and the ServiceNow platform without anything else in the way, where you can be highly predictive, incredibly driven for customer satisfaction, not only in the front office engagement, but in the mid office operations and the back office because the IT content that's in the ServiceNow platform can deliver the promise.
Think about modernizing call centers and turning people over at a single- digit rate instead of 40% and 50% as an example. Customer direct to consumer, predictive, very out in front of customer satisfaction and loyalty. Employee workflows, I wanna make a comment here. This is amazing. You actually can't make this stuff up. If you look at the retention issues that companies have had in the last couple of years, it might be important to recognize since you never met 'em when you hired 'em, onboarding them properly is probably a good idea. The systems of record that is sunk in the cement of these companies don't do that. Do I have my phone? Do I have my computer? Do I know where I'm going? Are you training me? Are you managing my cases?
Can I have a frictionless environment here where I could do everything on my iPhone instead of calling up somebody in the HR department and waiting on hold for an hour? By the way, another thing that's pretty interesting, I actually had a conversation with a CEO in Europe that said, "Bill, I gotta start off-boarding these employees properly. I still have the old employees that already left the company mixed up in my database and in my data. Is that a risk?" Probably a little bit of a risk. We can help you with that. Then technology workflows. We're super excited about Ben and Lightstep. I wanna acknowledge that. This is gonna come quick.
The technology workflows, you're gonna get a big dose of that today, on an end-to-end usability and execution level from what I would call the engineering floor to the cash register and everything in between. Creator. I mean, it's amazing. I'm getting the word out there. The management team's getting the word out there. People are building innovation onto the Now Platform that's transforming their companies, and they're doing it at a record clip. That to me is such a sensation. When you can tell a CEO, "You got an idea?" It pops in the boardroom, and 24 hours later, somebody who's a business analyst, not even an engineer, writes the workflow for you and get it out, and you execute. Fantastic.
Think about this one architecture, this one data model that does all foundation configuration and intelligence, and incidentally, cross-functionally works with all the other market participants. What's not to like? I think there's one call-out that I'd also like to give you. It's called the idea that our great engineering team has built RPA, has built process mining, has built AI operations, and all of that is in that platform right now. We've done some other things outside the platform that will lead to future growth. Inside the platform, ready for business, it's all there today.
Before we bring CJ up, just, you know, one last thought. You know, I think the market has noticed a distinctly different feel in terms of how ServiceNow articulates its story. You've said defining enterprise software company of the 21st century. Before we continue with the program, what's the important red thread for them to keep in mind as they hear all of the information we're presenting today?
The world works with ServiceNow is absolutely the vision we have for this brand. I think that it's not an easy thing to do for an enterprise company to be brand led, but we are. We also recognize great companies build great products, and we're building the innovation into the platform to be a generational winner. Great companies also provide a great service. One of the things you'll hear about is ServiceNow Impact, where on the Now Platform, all the conversations from chat to text to email, all the conversations between our customer, our partners, and the ServiceNow colleagues takes place on ServiceNow. We've digitized the whole experience in the pre-sale to the post-sale, where you can actually see the value delivery as a CEO or chief digital officer on your phone. That's game changer. I don't know of any other company that's done that.
Now, we also have to build a great team. I'm so proud of this team. That is what really gets me excited every single day, to see the ServiceNow team and the culture expanding. Finally, great companies draw ecosystem partners to the party. We're open for business and our partners know our word is our bond. If we say something, we do it. If we make a mistake, we fix it. We are good for it. Our word is good for it, and the customers know it, and the partners know it. That's why when I came here, I came here with a dream, and the dream was real clear. I had the opportunity to present our great board member, Sue Bostrom's here today, chair of the nominating governance committee, so I know she can hold me to account.
We had a simple five-point plan built on one dream, and that dream was to be the defining enterprise software company of the 21st century, and we will be the defining enterprise software company of the twenty-first century. I guarantee it.
Well, Bill, why don't we bring out our Chief Operating Officer, CJ Desai? I thought it might be a nice way for him to owe me one if in introducing him you said something nice about him. CJ, why don't you come up here and take this over so we can continue with the program and make up the time I lost by letting it go long. Bill, what do you want the crowd to know about our COO here?
Come on, CJ. I want you to know that the man runs a great product innovation and development organization that will come out in living color with the examples you see today. The man also understands our customer and deeply cares about our customer. What's happening on Main Street is clear to him and what we need to do to develop the next generation products and solutions, because he's personally engaged in the process. Now with his expanded role as Chief Operating Officer, the build-out of industry is a huge future frontier for the company. All that just says you're a great guy.
Thank you.
You're doing a great job.
Thank you.
I wanna thank you.
Thank you.
Give it up for CJ Desai.
All right. Thank you.
Go get 'em, brother.
All right. With that introduction, let me first start, you know, I always say this when I joined this company in 2016 and even today, we are a platform company. Why do I say that all the time? The reason is very simple. A lot of our customers, including some of our investors and partners, think that we are an ITSM company that is expanding in other areas. Well, that's just not true. If you talk to Fred will say, we are a platform company. He wanted to create a platform that provides all the building blocks so you can create amazing purpose-built applications for any use case. The work that gets done on this platform can be in a department, in the company, in the region, or cuts across continents. That was the idea.
For me, even five years ago, and I'll say today, I get so excited on what this platform can do and how many applications we can create for our customers where the pain points exist. That's really, really cool about this platform. This platform specifically can be a system of record, system of action, or system of intelligence. That's how flexible, extensible, and scalable this platform is. In terms of ServiceNow's relevance, you know, spending time with customers, it is extremely clear that we are very focused on C-suite agenda. I do a lot of calls, my team does a lot of calls. Bill and everyone, Paul Smith and others do these calls. I'll just give you an example. Yesterday with one of the large telcos, telco is an industry we are focused on. We have a great team focused on telco as an industry.
I'm with the CTO and his team, and he puts this big diagram of usage of ServiceNow. He says, "CJ, we are using you for IT, of course, but now we are using you on the network side, and that matters a lot because you are now in our core business. You know what I'm solving for?" I said, "What are you solving for?" He says, "What I'm solving for is best-in-class experience for our business customers and direct-to-consumer customers. That's what we are solving for." ServiceNow will be the platform across the enterprise on the technology side and the network side, which is their core business.
One of his direct report, very senior, super smart member of the team, puts up this other diagram where they have these other building blocks of ServiceNow being used for HR, for asset management, for specific things around field service, and what the potential exist for ServiceNow in that particular corporation, which is a very large corporation. ServiceNow being the platform at the highest level in the C-suite across the department and just expanding the perimeter of the platform constantly is really, really rewarding. Now, I'll also tell you that the reason customers choose ServiceNow is that it is a one platform and single architecture, single data model, process mining, Bill just touched on it, is built in. Machine learning, built in. RPA, built in. These are not islands of platform. This is the platform. Here is what happens, okay?
Large healthcare organization, they switched from a particular point solution which focuses on teams. They have many islands of those teams, and they said, "We need a platform. We need a platform for tracking our software development cycle, for our agile planning, and everything else." This is where we really shine. In a pharmaceutical industry, last year, our employee workflow at one of the largest pharmaceutical companies, they implemented ServiceNow in four months, and the CTO said that is the fastest implementation of any enterprise software done at that particular in company. Why is that? Because what you see on the right side. When you have single platform, higher speed to value, minimal complexity, minimal integration efforts, yes, you have to integrate with existing systems and so on, and lower total cost of ownership.
These are the outcomes that we are striving for, whether it's operational excellence to really, really bring our productivity. Technology excellence, of course, we do that. Services are secure, digital, reliable, performant. That's our job. That's our core of the core. But also delivering great employee experience and for our customers, delivering great customer experience. You know, Bill talked about this. This just made my day yesterday when at JP Morgan Investor Day, Lori Beer, phenomenal CTO for Jamie, talking about the systems where they are getting the value. She could have, with her budget, picked any platform, and we didn't even know about this, and she picked ServiceNow. And you see here system consolidation, employee experience, cost. In this environment, who doesn't want that? Who doesn't want to improve their profitability while improving great experience? This was in their Investor Day yesterday afternoon.
I'm very fortunate that I have an amazing team, domain experts, great engineers, great designers, great industry folks who really understand their area of expertise and build on ServiceNow platform. When you look at this chart, look at the bottom, which is the platform. As Bill said, we'll continue to innovate on the platform. The unit economics, when we try to innovate here, are just phenomenal. Sometimes we can create an app in just a matter of few weeks. Sometimes a version 1.0 for a brand-new thing could be just two Scrum teams, somewhere between eight to 16 people, and can create an app where we decide that we want to go after that particular use case.
This innovation velocity on the platform and on our products that we sell, which is on the top, for our horizontal and vertical product, is unprecedented, and that is because of the platform and a great team that we have at ServiceNow. This level of innovation, when we show this to our customers, they look at it like, "Wow, CJ, I didn't even know that you have a purpose-built application for area X or area Y, or you did process mining in the platform for ServiceNow data." This just makes me so proud of ServiceNow team and what they have done here and continue to accelerate on a rapid basis as we have gone through the pandemic. Bill talked about $200 billion TAM. I was here last year when we said it's $175 billion by 2024. Why did we increase the TAM?
Simple reasons. We have, based on the previous chart, new growth vectors. Pre-built solution for telco, healthcare, manufacturing, media, technology, banking, insurance, pre-built solution. This is not a veneer that we just put on the side and, "Okay, now you have an industry solution." It's an actual purpose-built solution. Enterprise Asset Management, Pablo will talk about it. Observability, Bill touched on. These new growth vectors is the reason that we are increasing our TAM for 2024. Now, our workflows have continued to expand at an enterprise level, just not the IT department. We group our products by these workflows based on the key stakeholders they are serving. So if they're serving technology teams, it's technology workflow. If the workflow is serving employee team, it's employee workflow products. Customer, and you get the idea. If they are creators or developers, it's creator workflow.
This is so powerful when you actually look at the persona that we serve. You look at these personas here, and these are just top two or three. I haven't put, like, specifically a particular team in a department of a company that we also serve when you look at our product portfolio. These personas are so critical. Yes, we are expanding beyond IT, and you'll hear from Pablo on that on technology workflows. Customer service, field service, customer operations by industry. In employee, we are now doing HR, legal, so general counsel, and facilities, which could report into the CFO. Then for creator, could be the IT developers or citizen developers, doesn't matter, or process owners who want to digitize something. Now, I'm gonna go through three workflows here, and Pablo is gonna cover technology workflow in details. This is a massive TAM.
This particular segment of the market continues to grow. The bar on customer experience continues to rise, and it is no longer about customer engagement. You have you tried to change an address with a financial services corporation? You know what happens? There are 32 systems behind the scenes that your address needs to be updated. I guarantee you, some of your statements, tax statements will still go to your old address because it is no longer about the engagement layer. You have to actually carry through the work across all the systems from a customer workflow standpoint. Number of digital products that get created. Disney+ did not exist in 2017. I mean, think about it, right? Then you have digital front end to physical products, routers, this, that, what you use at home that are also getting created. Massive TAM.
We are very focused on delivering good, great customer experience as digitization grows on the physical assets or new digital assets that our customers create. We have many, many examples across many industries on what we are doing on customer workflows. Employee workflows. I'll tell you this. Pre-pandemic, every CEO talked about earnings per share, talked about customer Net Promoter Score. Very few talked about employee Net Promoter Score. Employees are top of mind. They were top of mind during the pandemic, and they are top of mind even now. With the war on talent, skill shortage and others, we focus on hybrid workforce, pre-boarding, onboarding, employee engagement, employee communication. When an employee tries to transfer or the moments that matter or a paternity leave, the number of departments and workflows that have to come together is just exponential. ServiceNow workflows.
We work with all the HCM systems. You know, customers ask me, "CJ, how do you think about all these systems of record?" Hey, that's great. But those are systems of record, not system of action. They don't have the platform created for workflows, and that's what we do. It's very easy conversation for us when we speak to the CHRO or sometimes CIO. Workplace Service Delivery is one of our fastest-growing products, even post-pandemic, because of the work that we are doing in that area that Bill touched on, quickly. Creator Workflows. Here is what I would say. Tech companies are struggling to hire engineers. If tech companies are struggling to hire engineers, whereas every company is trying to digitize their own products or services or create new products, there are just not enough engineers in the world.
How can we make it easy for our customers to have a platform where not only they can build something easily, but also integrate with other systems easily? If those systems don't have APIs, they can use RPA. If they want to use machine learning for a task that gets repeated many times, they can use that. Oh, by the way, if they want to do constant process improvement, they can look at process mining. We are the only platform for automation where you have all these technologies built into a single platform. I can tell you know, when I see the competitive landscape, I tell my team it's like 31 flavors of Baskin-Robbins. Everybody says they are low-code, no-code, et cetera. When you look at, hey, I can create an app, I can integrate with systems.
Oh, by the way, I have all these technologies at my disposal to be able to truly automate a business process. That's what Creator Workflows does for our customers. Bill talked about this one code base, one architecture, one platform. We do want to announce a couple of things, which he already did, but I'm going to go in a little bit more details. First of all, we are introducing new ERP workflows. We are not sure exactly from category perspective where we would fit in because right now we report on the four workflows. Our first product that went GA was in March in our San Diego release around Procurement Service Management. Indirect procurement, people calling in into procurement department, employees calling in on where things stand. There is a big mess in procurement department.
Chief procurement officer will tell you there are still a lot of pain points. You have mailboxes, you have spreadsheets, you have just manual texting, "Hey, where does this particular purchase rec sit?" This is what we are going to streamline with our Procurement Service Management offering. It's already out. When I look at the pipeline that is building for this year, gives me very encouraging conviction that this is something that the pain points exist and we can solve that. We'll work with SAP and all other ERP vendors in this space. The next product, supplier onboarding, managing suppliers, collaboration of suppliers. Then when you have an issue with supplier, how do you do case management around supplier? This is what we were born to do. We will have a product for supplier lifecycle management coming out in Q3, as in this year.
That's a brand-new product that we are gonna launch. We have things in process around accounts payable. Super excited about this brand-new category. This is a buying center we are clearly not familiar with in the past. Our customers have led us to here. They have used ServiceNow for procurement case management or supplier case management. We are gonna productize this. We'll make the integration super simple and really pumped up about this particular new category of products that you'll see from ServiceNow as we make progress in individual areas. Bill talked about Impact. This was also built on our platform. We care about our customers' success. Most people say it, we truly care, and we want them to get value out of ServiceNow.
How can we have them accelerate the value by providing expert services, best practices, peer benchmark, higher level of technical support? These are the things that we have bundled in a very elegant way for our Impact offering. This offering came out this year, and so far it has been received extremely well by our customer base. Two new things, even though I said one new thing, ERP workflows, which has multiple things underneath it, and Impact. Now, it took us a while to put all of this on single piece of paper, and there is a lot of work that went behind this slide. Let me just touch on it.
Number one, you know, I would have some of you ask me, "CJ, how much your workflows are penetrated by what account?" I said, "First of all, that's the wrong way to look at that, and it's a wrong question to ask." Why? Each workflow have multiple products. Each product has good, better, best. When you think of a combination, it's 4 x 20 x 3, and then you look at it and say, "Okay, for that particular customer, where do we really stand?" When we land into an account, our opportunities to expand still massive time out there. Of course, our products have to be awesome. They have to deliver value. When I think about expansion, it just gives me so much excitement when I look at this particular 4 x 20 x 3.
These are 20 big product categories, like an ITSM Standard, Pro, Enterprise. Number 2, industries. I touched on industries. Financial services is a broad category. Banking, insurance, my team tells me banking, insurance, wealth management. We are horizontally penetrated in some, but not really when you look at the entire IT workflow portfolio or technology workflow. Similarly, employee workflow, and then the entire line of business. For banking, what can we do around payments? For insurance company, what can we do around claims? They may have their systems of record, but ServiceNow has a role to play. Same thing with telco, same thing with media, same thing with technology. Healthcare and life sciences, broad category, pharmaceuticals, payers, providers. Manufacturing, massive category, right? We are creating purpose-built products.
Even public sector, we just launched a product that can be applicable for citizen services to cities, states, municipalities, state, provinces, countries, or multiple countries or regions. These are the areas that we are going to focus our innovation on when it comes to our vertical products. Again, I made many mistakes in past life when it comes to our vertical products. These are still built on the platform. You can upgrade them, and we are not customizing it too much so that our customers can leverage it. Our growth geographies, of course, these are the five big growth geographies as we look at our future expansion to $11 billion+ or $16 billion+. Last but not the least is some of you ask me always new customer acquisition.
When we look at our target segment, the number is around 15% we are penetrated. The corporations or based on the revenue size or number of employee size where ServiceNow can be a platform play, we are currently 15% penetrated. You look at the new logos here, you look at the geographies, and of course, they are not mutually exclusive. You look at the workflow expansion, and you look at target industries, the possibilities are endless. This cloud footprint, I had used this few years ago. As we continue to expand for not only our new logos, but with the regulations that's coming in every single region, such as the EU or maybe specific to India, our team have done incredible job going from San Diego to Switzerland to Singapore to Sydney, and everything in between.
This is just phenomenal as we continue to expand. You look at the new logo slide, and we are penetrating 15%. This is absolutely necessary for our great sales team to expand ServiceNow's footprint as we move forward. Our ecosystem, you know, Bill touched on it. This is very, very important. I'm gonna start from the left and go to the right. Public sector, big area of focus for us. We have new offerings, you know, very strong presence in U.S. federal across DOD, intelligence community, as well as federal civilian. I was with a large DOD agency a couple of weeks ago, and ServiceNow is the platform. They said, "We are barely using you.
We currently only use you for ITSM and ITOM, and we haven't even turned on ITSM Pro. That's what they want to consider now from an expansion standpoint. "But CJ, we need asset management, we need security, cybersecurity. In this current environment, there's even a higher risk, and how can ServiceNow help?" Public sector, super important to ServiceNow's future. Even though we are doing well in U.S. federal, the expansion possibilities are endless. We did Australia IRAP, and we are just launching or launched this week ServiceNow Protected Platform for European Union based on their data privacy requirements. Integrations, you know, Pablo will touch on this. When I started with ServiceNow. People ask me, "Okay, CJ, we are moving our workloads to Azure, GCP, as well as AWS. Do you still have a role to play?" Absolutely.
Who cares whether your workload was in your data center or Azure? When we look at your assets, they could be in Azure, you still need security posture for your asset in Azure or AWS. You still need to know where your assets exist that you are responsible for, including your application portfolio, including your cost. We have 1,200 customers who use us for public cloud footprint from a visibility standpoint and just understanding the real estate, and that data sits in our CMDB. 1,200, and it's a good mix between AWS, Azure and GCP, and all of those are growing. We have a role to play. It's basically visibility and orchestration. Similarly, on partnership, one of the best partnerships we have done from a technology standpoint is with Microsoft Teams.
Microsoft Teams, wherever our customers want to use it as a front end to ServiceNow, great. Use it as a front end, whether you want it for your IT agents or your employees to get things done, and that's a best-in-class partnership we have with Microsoft, which Satya even highlights in his keynotes. Then, of course, our system integrators, many of them are here, or all of them are here. Then our store is an area where we release pretty frequently our applications. We have two major releases, alphabetically, but we do store releases pretty much every month, every quarter, depending on the product's maturity and demand from the market. 90%+ of our customers have downloaded something from our store and actually used it. They know that it exists there, and this is the innovation that moves pretty fast.
I can tell you that, first of all, really proud of the team on how they have executed on innovation, adding fundamental building blocks in the platform itself, whether it's process mining or whether it's machine learning, or whether it's RPA, and continue to innovate on our platform. In terms of products, just unbelievable set of products which give you very faster time to value. This one large pharmaceutical chain for the vaccine requirements last year rolled out the entire product for one site in week and a half. Okay? ServiceNow purpose-built products do deliver value, and our portfolio continues to expand.
When I look at geography, when I look at the expansion opportunities in existing accounts between our products, workflows and the packages, and when I look at how customers continue to get value out of our platform, it just makes me really excited to be at this company. With that, I'm going to announce an amazing leader who runs our core of the core technology workflow. He's an engineer by profession. Please welcome Pablo Stern to tell you more about technology workflows.
Thank you. Hi, everybody. I'm really excited to be here on behalf of the engineers, the product managers, the designers, and the ServiceNow team that's building a lot of the innovation that I'm gonna talk about today. It really excites me because not only are they building a lot of innovation, but that innovation's translating to customer value, and it's customer-led innovation. Our customers are leading us in this direction. Now, what you'll see is we're gonna start referring to this portfolio as technology workflows, and that's a deliberate change. Many of you who've been with ServiceNow for some time are familiar with IT workflows. As you heard CJ said earlier, customers have started taking the IT workflow portfolio that was in the back office and serving front office use cases like that telecom example that he gave.
This is coming up repeatedly with our customers, whether it's the infrastructure from a technology perspective or as we're serving customer-facing, revenue-generating opportunities with Lightstep and some of the observability solutions that we have. Now, in the conversation today, I want you to walk away with three things. First is the opportunity that we have within the core of IT as companies continue to invest and grow in trying to drive that digital transformation. Second is, as companies are evolving their technology landscape, they're pulling ServiceNow into use cases that are no longer just in the back office, but also into the front office.
Thirdly, if you look at operating teams and lines of business, they're starting to pull our solutions in as they look across the aisle to their peers on the IT and technology side for which solutions can help them digitally transform the way that IT has in the past. So today, I'm gonna start in the core of IT and talk really about where that opportunity lies, both in the existing accounts, where we have a tremendous opportunity to drive that good, better, best that CJ talked about with our existing portfolio, and then also to participate in the growth as companies are investing more dollars in digital transformation initiatives. Then on the technology side. Go back a slide. Can we go back a slide? There we go.
On the technology side. More and more of that opportunity really is presented as customers are trying to drive workflows for technologists that span across the enterprise, and they're looking to some of the technology that was really born out of the IT organization. We've seen a lot of success as we've gone into the operating teams. We saw that with our risk business as they went from IT into enterprise, and I'll talk a little bit about that. There's a lot of future opportunity there for the rest of this portfolio. Now, if I start in the core, for those of you that will be here tomorrow, what you're gonna hear us talk about is this concept of service operations. Service operations brings together the two largest products in our portfolio, IT Service Management and IT Operations Management.
IT service management is where an employee is looking to IT to help with a problem. They've got to reset a password. A service is down, and they're trying to understand when it's gonna come back up. The operations management side is a command center that looks at the entire state, all the systems and services, and understands by visibility and health where those services are and where they need to drive remediation around those. If you look at the ServiceNow portfolio from two decades ago, we started with a combined data model, a combined system of record, and a combined workflow for both of these layers. What we announced in San Diego in our March release was the third leg of that stool.
We announced unification of the experience layer so that now if you're an agent, you can collaborate with your IT operations team or your site reliability engineering team all from one pane of glass, and you have all that information that those teams have right at your fingertip. No need to swivel chair, no need to bring up another Chrome tab. Everything's right there, and our automation platform and the ML behind it is helping guide you along that. We're really excited about this because as those teams are collaborating together, the world of people and machines coming together is how companies truly digitally transform. In this portfolio, what really excites me is we've brought in a tremendous amount of innovation in the past five years, capabilities like machine learning, chatbot experiences, and AIOps.
If you look at the ITOM portfolio, Gartner just put out a report where two years ago, when we first came out with our AIOps solution, we were 24th in that market. Today, we're number one by market share, by more than double the next largest player. The innovation is increasing and accelerating, and customers are responding to that. Now, in the past, we've also talked to you about our emerging businesses. For an IT organization, you need to drive planning. You need to understand the assets that you have. You wanna have a view of your security posture and drive security remediation and more proactive security. Or you're driving IT risk. We're on the cusp of having four $200 million businesses that are growing incredibly rapidly and have exceeded all my expectations in the time I've been here as year-over-year, we continue to accelerate that growth.
Now, part of that is also because if you look at this portfolio, we are investing, and the innovation is continuing to increase. Over the last few years, we've added more and more capabilities across this portfolio, which our customers are responding to positively. Now, I talked about service operations, and what I wanted to do was show you a little bit of that experience as an agent using the San Diego platform. If you're an agent, you will quickly be able to, when you start your day, understand which incidents you have, any learnings that are in front of you that you need, that it's gonna help you do your job better, quickly get to where are the problems for you or your team, pinpoint them. This is the thing that's really, really cool.
As the agent drills into that issue, they can, from that single pane of glass, quickly collaborate, get assistance from machine learning, bring in another team member or an IT operator to work through an issue together and drive that resolution for the customer, driving higher value work, driving more automation, and ultimately helping the employee get their answer and get on with their day. Now, at the lunch session today, I had a question around customers and shift to cloud, and CJ mentioned that a little bit earlier. One of the things, if you look at our portfolio, we are seeing that cloud acceleration, that transition into cloud.
In the last four years, we've brought a lot of capabilities to bear for cloud, integrating into the public cloud platforms, understanding in real time the systems and services you have, the health of those services, where the cost for those services are, governance and risk around your cloud environment, and our customers are responding. In the enterprise, we now have 1,200 customers that are using us for public cloud use cases. That's not just for virtual servers. That includes PaaS devices, microservices, and Kubernetes infrastructure that is being run in the cloud. What's really cool about this number is that number has doubled in the last 18 months. What we're seeing is we're seeing our customers accelerate.
Because as CJ mentioned earlier. The use cases of understanding what you have of the visibility of the health of those services, it doesn't matter if you're in a physical data center or if you're in the cloud. It matters in both. Many of you probably heard many years of, "I don't know as I move into the cloud if I actually need to understand what I have." Our customers are showing us that they do, and we're seeing that in the growth of these workloads. The other conversation that I have with customers often centers around the shift as they're trying to adopt agile DevOps practices, and they have their developer pipelines, and they're trying to move fast, but they wanna innovate with confidence.
With ServiceNow, we brought together in our portfolio DevOps capabilities that integrate into these platforms so that as development teams working in their terminal, in their environments are working on driving that quick innovation for either employee-facing or customer-facing applications, we can make sure that the right level of governance and visibility for the executives for those programs is there, and that the definition of done is being adhered to. Any information security policies are being run in automated fashion, and all that happens as part of those pipelines. We're seeing a tremendous response from our customers as they're trying to make these transitions into cloud and DevOps to adopt these technologies and use them integrated into the ServiceNow platform.
Last thing I'll say that I'm really excited about as we look at this portfolio is, as more and more companies are driving more digital products out into the cloud, they need to understand in these cloud-native environments from a full stack perspective, all the way from metrics, all the way to the trace view, what's happening in those environments and get that in a unified view, which is incredibly hard as you continue to scale out your applications and you're running massively distributed systems in the cloud. We're almost on the cusp of the one-year anniversary since Lightstep joined ServiceNow in driving that observability and has done so, again, from a platform perspective, a single place and a single model for all the data, and they just announced in March the ability to drive that from a unified experience perspective.
That act of observing needs to be followed by action, and that's where the ServiceNow platform comes in. That's where the strength of our workflow is. Also in March, we announced Lightstep Incident Response, the workflow engine that will take what you observe and bring a team together to swarm to be able to drive actions around those issues to drive quick remediation. We still have a lot of opportunity to grow as we extend broadly across technology, and this has really driven a lot of the shift from what we used to refer to in IT workflows to really expansively look at all technologies that we're serving at the enterprise.
If you look at the Lightstep experience, what has traditionally been a siloed experience with multiple views as you're looking across dashboards and different backend systems, the Lightstep team has really brought this together from a unified perspective and is unique in doing so at the scale that a true cloud customer needs in a microservice distributed environment. Now, the last thing that I wanted to spend some time on is extending outside of your traditional technologist. As you look at operating teams, as you look at lines of business, they have a lot of the same needs that technologists have had for some time.
If you look at our IT risk portfolio, which we've had in market for almost a decade, one of the things that we had our customers pull us into was enterprise risk, moving from the IT and the CISO organization to the chief risk officer. Over the last couple of years, we've really broadened out that portfolio, bringing enterprise risk capabilities such as business continuity and privacy, and also really brought a consumerized experience for non-technologists. What we see today is that 3/4 of our million-dollar-plus deals customers within the risk portfolio are enterprise risk customers. They're using us across the enterprise for enterprise use cases.
That conversation was a conversation that I had with some of our customers who are using our IT Business Management portfolio, our planning solution for the program management teams in IT, and took that solution and brought it into the enterprise and were using it for a strategic program management office or an enterprise team to run their planning. What those teams would tell me is, "We love the product. It works really well, but we're not IT. Why are you calling this IT Business Management?" Last quarter, we rebranded after a couple years of deliberate thought and evolving that portfolio and bringing new experiences into that portfolio to Strategic Portfolio Management in recognition of the fact that we are serving not only IT teams as they drive planning, but the entire enterprise as they're trying to plan.
In that portfolio, we're gonna continue to drive innovation such as goals and OKRs for some of those non-technology teams. The third area that, again, is a simple play as we think about where we served IT, and we're now able to extend to other use cases, is our IT asset management platform. We've had tremendous success as we've driven software asset management and hardware asset management within our customer base, using our workflows and the understanding of those devices to understand what you have, what you're using, where your entitlements are, and the full lifecycle of your IT assets. Our customers have asked us, "Well, I have different device types." Say you're plant operations and you're running a manufacturing floor, and you wanna understand what is my exposure for vulnerabilities for some of those devices.
That seems like a pretty analogous case to what an IT operations team is doing from a hardware asset perspective, and it truly is. If you're a hospital and you've got medical devices and you wanna understand the inventory of those assets and the life cycle and depreciation around those assets, that's really another device use case. Later this year, we'll be bringing out our Enterprise Asset Management capabilities to help some of the teams outside of IT as they're trying to manage some of those assets. As an example, CJ mentioned Field Service Management.
That field service team that may be out on site helping a customer with a piece of hardware that needs to be returned can check back not only in their personal stock room, but back in the warehouse to see which assets are there to see if they can help solve and help that customer solve their problems. Again, core use cases that we've built out and serve within IT that are clearly transitive to other use cases across the enterprise. The fourth emerging product where, again, we started in IT, was around security. We help from a security perspective understand for the devices you have, vulnerabilities and what the perimeter and exposure that you have around the security of that estate. Customers are asking for us to take these capabilities and bring them onto the manufacturing floor, bring them to their OT devices.
At the end of last year, we brought out some of those capabilities, and we're seeing a strong response from the market as we're looking to take a lot of those same use cases out to the manufacturing floor or to other places where they have non-IT devices. I hope you see that the expansion really from an adjacency perspective, where we started from an IT has given us this opportunity to really grow towards other technology use cases. As companies are digitally transforming, takes us into some of the operating functions which historically have not been where we've served. One of the key things in that has been driving a new experience for those personas.
Because as an IT knowledge worker, you may be okay working with an experience that is very technology-centric, but that does not parlay to the teams that are outside of IT. As you can see here, if you're a risk team and you're looking at your exposures from a document perspective and on the legal side, and maybe you're going into your retail shop and you wanna understand what the risks are for things such as an earthquake, you can quickly get that right from a more consumerized experience than we've had in the past. That's been one of the big pulls that is allowing us to extend these capabilities broadly into the enterprise. The really, really cool thing for me in all this is it's customer led. Planning.
I talked about how our customers took us from IT into the enterprise, and that led the innovation, some of the new capabilities that we're bringing out. From a Lightstep perspective, as we look at some of our customers that are using us for their entire customer-facing, revenue-generating applications like Zalando, so they can stay up and stay running through Black Friday and some of the big commerce events, they can do that all from this unified platform. As you'll hear about tomorrow, companies like Microsoft that are using our service operations platform to drive self-service to over 180,000 employees because they can drive both the automation and leverage machine learning to take actions for those employees so that their teams are spending time on higher value work, and those employees are getting what they need and getting on with their day.
With that, I'm very proud to bring on stage my friend and the head of our product experience, Amy Lokey.
Thank you, Pablo. That was so exciting to see. Thank you. Hi, everyone. I'm thrilled to be with you here today, and we have so many exciting product innovations happening. We saw a peak with Pablo's presentation. I feel like I am the luckiest person here because I get to share with you a lot more of what's happening with our product experience, and I'm so proud to represent an incredibly talented team of designers, researchers, and more, who contribute to these incredible innovations in our product. What's really exciting to me to be here today is that I get to share with you how product design and experience drives material business outcomes. I think you all understand this, but at a very basic level, people use ServiceNow to get work done. Great experience design makes sure that that happens effectively, efficiently, and gracefully.
That means we're unlocking the power of this incredible platform, and we're unleashing the full potential of the people who are using it. Here's how that translates into real business value. High-end consumer-grade design drives affinity. It drives net promotion and the enthusiasm that helps us acquire new customers. Improved efficiency and productivity, it drives revenue, retention, renewal. ML, AI, and our low-code tools drive innovation, auto-automation, and then also expansion throughout the enterprise. To put it very simply, we help businesses and people be much more productive. When that happens, everybody wins. In the San Diego release, we were so excited to launch a massive modernization of the platform user experience, and we call that the Next Experience. We rebuilt the platform from the ground up, we streamlined navigation, we modernized the visual aesthetics, and we created countless productivity-boosting experiences.
Here's an example of the old home screen that people landed on when they logged into our platform, and then this is the new one. It improved our customers' ability to realize value from the platform through increased productivity for their teams and then more engaging and delightful experiences for their employees and customers. We modernized our entire ecosystem, and our customers love it. These are real quotes. They clearly indicate a level of enthusiasm that fuels brand loyalty and the longevity of these customer relationships. Since we built all of these upgrades in at the platform level, that means every product, every business, every experience lifts. We're lifting every product and the people who use them. Let's look at a few of our recent experiences and the innovations that we're launching in our key business areas.
Technology workflows, which Pablo was just talking about. We know they benefit multiple end users across the company. They improve efficiency, and they improve the effectiveness of the internal support teams, and they improve the everyday work experience and effectiveness of all the employees. At scale, these efficiencies save millions of dollars for our customers, and they contribute to employee satisfaction, morale, and retention. Pablo showed you the Service Operations Workspace, which we're really excited about. I'm gonna take you through the employee perspective of what these experiences look like. We've probably all been through this, where you order a new laptop, and it's a very complicated workflow that goes throughout a large enterprise. It involves many different touch points and processes in the enterprise.
Well, with our investments in NLU technology and chat experiences, even a very vague input like dev laptop, it delivers an accurate and an actionable result. We've designed these chatbot flows to feel very personal for the employee. It's very targeted. We know the equipment they already have. We can get them right to what they need. It reduces the overhead for the support teams because this is automated. Once the laptop is ordered, the bot even stays engaged and helps the employee with additional tasks they might need to do, like updating an email distribution list. Most chatbots that we see out there are primarily informational. They might take you to a help page. What's differentiated about this is it's executional. You can complete an end-to-end task, get your work done right here in a conversational experience.
Let's go deeper on employee experience, looking at our employee workflows. We know that enterprise software is no longer just about enabling business processes, although we do that quite well. It's also about creating value for the people who consume what that process delivers. Those are customers, they're employees, they're vendors, they're leaders. Our newly upgraded Employee Center, which we touched on earlier, is that one-stop shop that delivers any kind of service or resource or assistance that an employee might need. These are like those Disney+ employees or the Disney customers using that one-stop shop. It doesn't just look good. We make it incredibly simple to support the more modern way of working. Things like reserving an office space like a hot desk. We make it incredibly easy, whether you're on mobile or desktop, to do a consumer-grade reservation.
Then we've also got augmented experiences that help people find their way to a location that might feel unfamiliar in their office space. There are very tangible benefits here in terms of time and resources and efficiency, but there's also these intangibles that lead to bigger wins. Employee satisfaction and sentiment about their work and their affinity for the products and the experiences they get to use while they work. Let's look a little bit more about what we're developing for customer workflows. We know that customer operations and customer service, it can be a tough job. As a customer service agent, you have to process a huge volume of issues. You're usually measured on how fast you complete these, issues or tickets. Then you're also required to present an incredible brand experience for those customers on the other side.
We wanna build their loyalty. We wanna make sure that they continue to use these products. On top of that, of all that, for many industries, especially finance industry, customer service is also the frontline for stopping losses due to fraud or theft. Here's an example of a smart and efficient customer-focused workflow. Using our Document Intelligence, we can take any document, any image, any attachment or PDF, and we can automatically scan and summarize it and extract the most relevant data right here in the case record. This enables a really fast analysis of the transaction in question, and without any manual data entry, it enables the agent to get all the information that they need to help process or create a decision. This saves time and money, and it builds trust and loyalty with the cardholder.
Behind the scenes of this customer workflow, as I think we mentioned, CJ mentioned earlier, is our process optimization. This ensures that the process is maximized for efficiency. Using this kind of data visualization, we can help people quickly see the bottlenecks, understand where things might be an opportunity to speed up, and our customers basically can turn on the gas if they see a process that needs to move faster in their business. Last but certainly not least, our Creator Workflows. As CJ was talking about earlier, we have built a lot of great workflow experiences on our platform, and we deliver those in an out-of-the-box fashion to our customers. We also let our customers create their own in our App Engine Studio.
When I open up an app in our low-code environment called App Engine Studio, I can use a product called Flow Designer. It pre-presents a really visual, intuitive layout of exactly what the process is. I can see right where I need to go to potentially build on a process or modify it and do things now like adding an RPA bot, which will help automate really tedious work for my employees. I can build an end-to-end solution here that solves every possible business need. Next Experience is all about elevating our technology and making sure it's paying dividends for the people that use these solutions and the businesses that buy them. The payoff for our customers is that higher productivity from their teams, rewarding employee experiences, technology services that are reliable, stable and efficient, and customer service that is real-time and builds loyalty to their brand.
These experiences are what drive the top and bottom line and make our customers wanna use ServiceNow to run their business. The last thing I'll leave you with is enterprise design no longer has to feel stodgy or stuffy. It can also be beautiful and delightful to use, and we're really proud of experiences like our dark theme, which help people use our product in a mode that they enjoy most. It looks stunning. We're really proud of this. CJ, Pablo, and I, we're thrilled to be here with you today to share these experiences and everything that's still ahead on our roadmap. We hope you're feeling some of that excitement too. With that, I wanna thank you for your attention. We're gonna give you all a short break for 15 minutes.
Thank you for hearing about how beautiful and powerful enterprise software can also create huge business impact. Thank you very much, and then we'll see you back here in about 15 minutes. Thank you.
Please take your seats. The program will resume in five minutes.
Please take your seats. The program is about to begin.
Ladies and gentlemen, please welcome Chief Commercial Officer for ServiceNow, Paul Smith.
Welcome back. It is fantastic to have this opportunity to spend some time with all of you this afternoon, and also to share some insight from how our customers are using and innovating on the ServiceNow platform. Now, I joined ServiceNow a little under two years ago, initially as the president of our Europe, Middle East, and Africa business, and then at the end of January, taking responsibility for the global sales organization. Prior to that, I spent the better part of nine years at Salesforce going through a lot of the changes that happened to that organization in that time period. Here's what attracted me to ServiceNow, and it was primarily two things, right? Bill earlier mentioned the incredible culture, truly collaborative, win as a team, and a very human business.
The piece as well that was very specific to me when I came here was the whole platform and architecture piece that we covered earlier on. I spent a lot of time before I joined ServiceNow speaking to customers and trying to get some insight from them myself, and two things came across. First is, they were all very happy, so that's good. The second, that thread around one platform, one architecture, one data model, that came across just incredibly clearly around how these organizations were using ServiceNow to very quickly solve critical business problems and very quickly get to value.
That is why I'm really excited about this session and the opportunity to hear directly from some of our customers and unpack some of what Bill, CJ, Pablo, and Amy were talking about and see how that's coming together in a real-life scenario. I am very grateful to be joined by two phenomenal executives from a couple of organizations that you know very well indeed, KPMG, UC Irvine, Aaron Purcell, Head of Enterprise Architecture, and then Stephen Whelan, Executive Director of People Services. These two are driving true transformation in their organizations. Very fortunate to have them with us today, so please give them a very warm welcome. Aaron and Stephen, please come and join me.
Thank you.
Thank you. Well, firstly, thank you very, very much for joining, for being here, for actually being at the whole Knowledge 2022 event here in Las Vegas and spending the two days with us, and also for joining us with our financial analyst day here. Welcome.
Absolutely. Thanks for having us.
Oh, very good.
Thank you. Looking forward to it. Thank you.
Okay. Look, I think most people know your organizations very, very well, but it would be great if you could share some insight in terms of, you know, your specific role in the organization, a little bit about what you're doing. Perhaps Aaron, if we can kick off with you, that would be fantastic.
Sure. Today we represent the U.S. member firm, it's about 30,000 plus folks. Ultimately, the U.S. is kinda leading the way for global. What we're doing with KPMG is we're on that ITSM to enterprise service management journey. It's really helped us in accelerating our digital transformation. This one platform has allowed us to be able to centralize a lot of what we call single point solutions on a singular platform. We're about 18 months in. We think overall this will lead us to about a two-year, three-year journey.
Yeah
For us to ultimately achieve the objectives we're after to really try to drive the utilization we're targeting for ServiceNow.
Awesome. Thank you, Aaron. Stephen, perhaps if I can get you to do the same.
Happy to. Hello. Good afternoon, everyone. My name is Stephen Whelan, Executive Director of People Services at the University of California, Irvine. Really, that's a shared service center team that supports our tier zero, tier one, tier two, benefits, HRS, and analytics and reporting. What we're most proud of is bringing in ServiceNow in January of 2020. We actually centralized our entire enterprise, which includes a medical center, health sciences, and a campus. We created our first and the first of its kind in our environment, in our area at UC, of a centralized phone number, email address, and platform for our 24,000 employees to interact with.
Amazing. Thank you. Look, let's dive in. I'm keeping one eye on the time there. I'm actually gonna go to you first, Stephen, because you started your journey with ServiceNow in January 2020. You just kinda got everything lined up, ready to go, and then obviously COVID, the pandemic came along. You had to make a very, very fast pivot to how you were gonna use the Now Platform. Tell me, how did that look like? And you know, what did you trust the Now Platform to do in that kinda scenario?
Yeah, I think it's a great question. Obviously, when we first implemented ServiceNow, myself and my colleagues pitched this as the most scalable solution at our fingertips. Then two months after go-live, we were really tested. Even in, you know, the January, February of our go-live, we were learning more and more. You know, it was a huge, massive project for University of California, Irvine. Then the pandemic hit, and we had this platform, and really it was a logical transition. Even though we were so new on our feet in managing this new environment of 24,000 employees in one place, we said, "Well, let's expand it quickly," and almost in real time. Certain services we turned on in 24 hours.
That happened March in 2020. Really, oftentimes we had to leverage the team and the platform just to be an intake because there were so many things that were undecided at the time, at the university, in the state, in the country, in the world. We wanted to create an avenue where people, and we actually included parents and students and faculty, where we collect their concerns and address these unknowns. As our strategic communications committee and our chancellor, who oversees all of UCI, these decisions we made as we learned more, and we worked with the CDC, we could then have an avenue to get back to those, you know, customers, employees, parents, students, and really give them the information in as near real time as possible.
That began in March and still continues to this day. We still have a COVID response team, and their services keep growing. In fact, we're the leading point of contact for information regarding the pandemic in our university.
What I love about that is you kind of made the business case in January. You know, you had to kind of stand behind the platform anyway.
Yeah.
All of a sudden, you've now really got to stand behind the platform, right.
Yeah.
Yeah.
There was a bit I was right. I was a little concerned. Ultimately, you know, what we knew of ServiceNow and what we saw in the presentations, I had a strong feeling this was gonna be scalable–
Yeah
... for our needs. It was such a sigh of relief that we went live with ServiceNow before the pandemic, and then also–
Yeah
... it's as scalable as we thought, and we leveraged it to our capacity anyway.
Awesome. Thank you. Aaron, very similar, right? You've used ServiceNow to streamline a lot of business processes. When we were speaking earlier, you were saying you're using ServiceNow for true experience transformation.
Yeah
Not just a technology program or a technology transformation. Tell me what do you mean by that?
Yeah. As part of our digital transformation strategy, we really didn't wanna have a technology transformation. We wanted to have a true digital transformation, transforming processes, experience, et cetera. We really looked at it from kind of a three-layered approach. We started with thinking of a systems of experience, then systems of action, systems of record. When we looked at systems of experience, we wanted to unify the experience. We represent professionals who need to be working with our customers. We want them to spend as little time as possible with our enterprise system, so they can get back out and service our customers. We wanted to simplify that experience. We also wanted to bring system of action to the experience.
Today, if you think about a lot of the portals and different experiences inside of an organization, a lot of it's content, a lot of it's campaign management, et cetera. What we really wanted to do was drive action to the employee, so they could take action on things that were worthy of their time, and then quickly, again, get on to servicing our customers.
Yeah.
The other piece for us is that we really wanted to centralize the system of action into a singular workflow, so that we could get scale, we could get reusability. We could really make it where we have fewer integrations. All we have to really worry about is the system of experience, taking all the right actions, and then making sure the systems of record are current. That's really what we were trying to do with ServiceNow, and have quite frankly, been successful so far in our journey.
Yeah. Doing it at massive scale, right?
Correct. Correct.
Massive scale. I've got to ask this question, because everyone in the audience is always interested in competition.
Mm-hmm.
I'm gonna stick with you, Aaron. You know, talk me through it first, in terms of what you were trying to accomplish there. You could have done and made some different technology choices, but ultimately you chose ServiceNow.
Mm-hmm.
What led you to make that choice?
You know, there's really three things. We did, to your point, look at a variety of different low-code application platforms, a variety of different BPM or process flow solutions. ServiceNow stuck out to us for a couple of reasons. Number one, the pre-built nature. We've already seen return on that. We just recently went live with Legal Service Delivery. What that allowed us-
LSD.
LSD.
Really important.
Exactly.
Yeah.
You can't make that up.
Yeah.
Anyway, we went live with that and we went live about two months ago. The key for us there with this pre-built nature is it allows us to adopt best practices out of the box utilization. Ultimately we spent time with our legal counsel organizations who had responsibility for developing those processes. We came to a point where they leveraged those out of the box practices. It allowed us to achieve realization of our vision faster.
Mm.
We didn't spend a lot of time going through process transformation conversations. Ultimately, we really find that pre-built nature of ServiceNow is critical for us. The other key piece for us is that we really saw ServiceNow as that journey from IT service management to enterprise service management. We already had a pretty strong IT service management base, so we were looking to leverage that expertise and skill sets to be able to extend it and scale it out. We didn't have to go to the market if we bought a new product.
Yeah.
We didn't have to build our knowledge from the ground up. Those are really some of the key reasons why we picked ServiceNow in our decision-making.
Fantastic. I'm very glad you did. Stephen, same to you as well. Again, faced with all these choices, back to January 2020, what made you go with ServiceNow?
I'll start with the simple one. I'm here because of the partnership. I don't assume we're getting any better rate, which is good for showing up. You know, the partnership stood out to us initially. Ultimately, you know, we were looking at you know, building an enterprise-wide solution across all of UCI that included those distinct units I mentioned, the you know, medical center campus. It's overwhelming. It was overwhelming in the sense that we also weren't alone. We had to gain stakeholder interest from across departments that weren't reporting under HR. The ServiceNow team not only built a strong relationship, a strong understanding of what we're trying to accomplish, but when they pitched the HRSD, they weren't trying to split the atom.
They were showing us exactly how and only how the HRSD could work. I mean, it's a box. It's a huge box, and never have been disappointed with this box, and it's continuing to expand. That one is over. I would say the last thing is, during that same conversation or a series of conversations, you know, I work for the state. My boss reminds me all the time. That means that we can't always bring in who we wanna bring in and when we wanna bring them. You know, we're focused on education and medical and research, and often HR isn't the top priority if other things are working. The ServiceNow team, we did a lot of due diligence on, one, can this work outside and what we're thinking today.
They gave us a lot of confidence in that. Then also during that relationship sessions, they also showed the simplicity. I don't want to oversimplify, I shouldn't say that. The ability for us to support this application, not with third-party consultants, but with qualified people in-house. That was a huge winner for me because we love this platform. Everyone, you know, a lot of people thought, "Oh, it's. We'll get this and we're done." I think the project team, including myself, realized this is just the beginning. To be able to have that confidence that we can expand this on our own, especially with things that are reasonable to do, was a huge winner for us. I can say over the last two years, including the COVID support we've done, we've added probably 60 services.
We've done it all in-house. It's nothing revolutionary, but at the same time, it's true to our hopes and expectations that we can maintain this with our strong support with internal IT, strong support of my team, which is absolutely amazing. It all worked out as we had hoped and even better.
Yeah.
That's a pleasant, positive result.
It's fantastic that you've been able to be self-sufficient in that way.
Yep. It 's key for us.
Put you in really good stead. Thank you, Stephen. Coming back to you, Aaron. In one of our earlier conversations, we were talking about creator and low-code, no-code, and you don't call it citizen development. You've got a different phrase for it.
Yeah, that's correct.
Effectively trying to unlock the productivity and creativity within the organization. Tell us a little bit about, you know, your plans for ServiceNow in that regard.
Sure. We're actually in the midst of our journey. We actually coined the phrase distributed development.
Yeah.
We're distributing the development out into our business. We are a federated IT by design organization. We have a centralized IT organization, which I'm a part of, but we also have sanctioned IT sitting inside of each of our three lines of business, advisory, tax, and audit. Ultimately what we wanted to do is create a platform experience that allowed us to let that development take place in a distributed manner, but still create reusability, sharing of innovation, and ultimately allow us to have some guardrails.
Yeah
Some controls. We have some bit of governance around it. The other piece for us is that we have found that, with the capabilities inside of ServiceNow, like the automated testing framework and just the maturity of the model itself, it really allows us to be able to move that distributed development to more of a pro development-like experience.
Mm-hmm
While we're still able to push out to production. We try to make sure they're certified developers, the training and they have the appropriate insights. Ultimately, it gives us a way with which we can meet the speed of the market w ithout necessarily having to have that centralized IT support.
Yeah. You're using Creator Workflows. You're trying to govern that basically between–
Correct
...getting the productivity lift you want–
Yep
...without it being completely a free-for-all.
Absolutely correct.
Yeah. Awesome. Amazing. Stephen, I wouldn't say the world's exactly normal, but it is more normal than it was during the depths of the pandemic. You obviously went through that phase. You really accomplished a lot for your business in terms of bringing together 400 different centers around. What comes next for UC Irvine?
It's a great question and it's so exciting. Actually, the last two months, we were picked up two years ago. We started talking about what do we wanna do after we went live. You know, one thing we learned from the pandemic, but again, suspected, we created a lot of these working well tools, if it was clear to come back to work, if it was about compliance related to certain things, if it was you're working well. What we designed using our security model was a click of a button. We showed these managers these dashboards. You know, I should say decentralized and centralized HR units. That click gave them the exposure to ServiceNow, and great reviews, but it's not a broad audience. I would like to see us look at the manager dashboard.
I would love to incorporate document management and putting that manager dashboard in their hands, so it's the first thing you look at and it's the last thing you look at in the day, and it's all in one shop. I think for the medical center, understandably, they have very little time. They're looking at something, then they're going through their, you know, 10, 12-hour shift. We can't take too much time. We can't connect too many different systems. I think that would be something that I would really take pride in taking us to the next step.
Yeah. What's really interesting here, and this is, you know, completely unscripted, but you're both converging on a similar path here, right? In terms of you're turning the traditional intranet into more of a system of action.
Mm-hmm.
You're bringing some of the traditional document management and turning that into something that you can master in your management dashboard using ServiceNow and turn that into action as well.
Yeah.
So-
A lot of similarities.
Yeah.
Yep.
Very, very interesting. Aaron, I think it might be the final question, but let's see. You're also looking at a few interesting advancements, taking ServiceNow perhaps out to the front office, but also you've recently become a customer of Celonis as well.
Correct. Correct.
I know you're looking at some of the synergy between ServiceNow and Celonis.
Correct.
Perhaps you can share some insight on that.
Yeah, absolutely. We just recently signed a deal with Celonis, about a month and a half, two months ago. We did a POC or a pilot earlier this year, and we're just elated by the value. One of our pilots was with ServiceNow.
Yeah.
We were able to easily create our connectors to connect Celonis into ServiceNow, and we did it for a couple reasons. One, we understand how easy it was to connect, but number two is we wanted to see how we could use Celonis to feed into ServiceNow. We really call it the automation of process automation. Being able to work with our customers, work with our clients, internal customers, sit down with them and mine out how they do things today. We saw about 40%-50% error rate when we sat down with a business owner and said, "Describe your process," the accuracy of what they describe versus what really happens.
Yeah.
With a tool like Celonis, it allows us to mine directly out of the activity log, and then we can sit down and conduct conversations around what the process is today. How do we optimize it, decrease variance, improve throughput, et cetera. The key for us is we wanna take that and then immediately feed that into ServiceNow, into some of the Creator Workflows, and be able also to take, hopefully over time, the knowledge from the pre-built process flows, like what's at risk today, HR, et cetera, and be able to overlay those process flows and what we've mined out, so we could focus on the deltas.
Yeah.
Move away from having a full bottoms-up conversation on process transformation and really hone in on the ability to identify what process changes we need to make, so that we can immediately shift that into the new workflow capabilities.
Yeah.
We feel like this will help accelerate by, if not weeks, months, our ability to transform either manual processes or legacy processes into a digital experience that we've talked about.
Fantastic. Well, look, we've got two future directions there that you both outlined. When we next come back for our next Financial Analyst Day, we'll see whether we've actually gone and executed those with you, so that will be great. We're out of time now, so I just wanted to say a massive, massive thank you for joining us here and for sharing your stories. Fantastic insight, thank you very much. Please everyone, give them a big round of applause.
Ok, thank you both. And again, just a wonderful opportunity to share directly with our customers how they're using and innovating on the Now Platform. I now also have the pleasure of introducing our next speaker, someone you know very, very well indeed. Please give a very warm welcome to our amazing CFO, Gina Mastantuono. Gina, please come on up.
Thank you all. Oh my goodness, so great to be here in person. Thank you all for traveling to Vegas to be here, and I hope you really enjoyed those customer stories. I know I did. But now taking a step back, I'm gonna pull together everything you've heard today, and I hope you're as excited about ServiceNow's future as I am. We have a tremendous opportunity in front of us and a strong track record of success. Now let's just take a look. Our growth rate over the past four years has been impressive. From 2017 to 2021, we grew at a CAGR of 34%. We're sustaining organic growth at unprecedented scale. I can't help but emphasize that last point enough. In software, we're used to seeing 30% or higher growth, but that's at smaller companies or boosted by M&A.
To put it in perspective, we've added $1.3 billion of organic growth just last year. Let me repeat that. $1.3 billion of organic growth. Remarkable. The durability of our top-line strength is validated by our robust remaining performance obligations, which is essentially our total backlog. This provides further visibility into our future growth. We have $11.5 billion of RPO, with half of that current, setting us up well to deliver against our guidance of constant currency subscription revenue growth to accelerate in 2022 and putting us well on our way to $16 billion and beyond. Our ability to deliver strong results exemplifies the resiliency of our business and the mission-critical nature of the Now Platform. The breadth of our product offering, our geographic reach provide us a diverse array of opportunities for growth.
What gives us the confidence to expect revenues to triple by 2026? Well, we have plenty of runway to land new logos. With over 7,400 enterprise customers, we're just scratching the surface. According to CapIQ, there's about 50,000 companies with over 1,000 employees and $100 million in revenue worldwide, and that excludes China. What's more, with our expanding product suite, which helps us to build these deeper new customer relationships. In 2021, we saw more than 20% of our new logos coming from non-technology workflows. as we talked about last year, the expanded breadth of our product portfolio, along with our focus on solution selling in the C-suite, has allowed us to land larger and larger deals with new customers.
You may recall at our Analyst Day last year, we noted that from 2016 to 2020, we saw a 30% increase in the average number of products sold to new customers. Fast-forward to today. In 2021, we saw another 30% increase in just one year. Over the last four years, that represents 55% growth with a similar uplift in ACV. More products in each of our deals translates into larger ACV. You've also heard about the fact that we've evolved our strategy to focus on the right customers, not just a lot of them. Customers that have growth potential for the long term. That expansion motion is a core component of our durable growth engine. It's predictable, and it's reliable because it's with customers that know the Now Platform and the value that they can get from it.
It's customers that our salespeople already have deep relationships with. When events like the pandemic strike, we don't need to rely on hunting for net new logos. We have a foundation of enterprise customers who are still early in our journey with us. The more they get to know us, the deeper the relationship grows. In 2021, 88% of our new business came from existing customers, and we continue to see a net expansion rate of over 125%. Perhaps more telling of how much our customers love our platform, over 2/3 of existing customers spent incremental dollars with us in 2021. Because of these characteristics, we have great visibility into our future top-line growth. Many of you have seen these customer cohort charts in our IR decks. They offer us valuable information that help us accurately forecast cross-sell and upsell patterns.
Our older cohort continues to drive strong growth. For example, a customer who spent $100,000 with us in 2010 is now spending $2.2 million with us today. That's 22x where they started from and represents annual growth of 176%. Now let's double-click into a couple of customers to see how that expansion motion has evolved over time. The following examples are with customers of comparable size, about 50,000-75,000 employees, and are representative of the overall average annual growth for our 2013 and 2019 cohorts. Starting with the 2013 cohort, we take a look at the customer journey of a large telco company.
After initially landing with ITSM and ITOM in a $1 million ACV deal, we've seen a steady progression of expansion into App Engine, security, risk, SPM, then an upsell into Pro, followed by the adoption of ITAM, CSM and HR. Today, that customer does $10 million of ACV and uses 10 of our products, with plenty of room still for future growth. Looking at our more recent 2019 cohort, we look at a public sector customer, and what immediately should jump out at you is the size and breadth of the initial land. We landed with six products, including two Pro SKUs, with a total ACV of about $4 million. In just three years, this customer has already caught up to the 2013 cohort, leveraging nine of our products for an ACV of $10 million. What does this tell us?
This shows that we're really selling a comprehensive digital platform solution and not just point products, and it's paying off with strong renewal rates and expansion rates. You're seeing this in our deal sizes. We grew our $1 million+ deals by about 40% in 2021, which is helping to drive a 3x increase in the number of customers over $1 million in the past four years. We now have over 1,345 customers paying us over $1 million annually, and our largest customers are growing even faster. From 2017 to 2021, we've seen our 10 million+ customer count grow at a CAGR of 95%, and they're not anywhere near their full potential. As we mentioned earlier, our portfolio of products is still very under-penetrated, even within our current customer base.
That includes our core technology workflows, which some erroneously view as nearing full penetration. The reality is that over the last four years, our emerging technology products have grown with a CAGR north of 50%. The penetration of these products, including ITAM, security, risk, and SPM, is still below 20%. If you add to that Lightstep, which makes us relevant in the observability market and with new buying personas, there's plenty of growth opportunity ahead. We also believe we have a massive opportunity to cross-sell our newer workflows. Only 10% of our customers are using all four workflows today. As CJ noted earlier, we're continuing to innovate and expand our product suite to further deepen our customer relationships.
With the introduction of our AI-powered experiences, including chatbots, process mining, workforce optimization, we've also created premium SKUs that allow us to upsell our existing customer base into higher value, higher price point offerings. The adoption of our Pro SKU continues to drive healthy growth within ITSM. Customers see tremendous value in the offering as the realized price uplift remains steady at 25%, and the Pro SKU is now penetrated in 30% of our existing ITSM customers. Furthermore, 60% of ITSM new customer ACV comes from the Pro SKU, so our new customers see the value in this premium offering as well. In addition, our industry SKUs are already exhibiting strong potential. For instance, our telco SKU has done well since the launch just in 2020, as nearly one half of the top 20 G2K telco companies are currently using our solution.
With only 13% penetration among our overall telco customers, we see a lot of runway ahead. What's more, the average deal size is about 2.5 x a traditional CSM deal. With the majority of business coming from existing customers, we see strong sales and marketing leverage from enterprises that expand with ServiceNow. With the one platform model, it's easy for customers to add capabilities all on one architecture. These customers understand the power of creating cross-functional workflows throughout the enterprise, all on one platform, driving greater productivity, efficiency, and better experiences. As a result, sales cycles get shorter over time, leading to better rep productivity. Over the past four years, we've seen a 43% increase in sales rep productivity, including a 16% year-over-year in 2021 alone. Our sales teams are clearly doing a great job.
This has led to increasing sales efficiency as we scale beyond $1 billion in revenue to $2 billion, $4 billion, and now over $5 billion in revenue. Switching gears slightly now. To further reduce the friction in our buying process, we introduced the Now Buying Program back at the end of 2019. The combined capabilities of the Now Platform are just better together. They deliver even more value than the sum of their parts. The Now Buying Program helps customers realize those synergies quicker by simplifying the buying process and providing greater usage flexibility, all while improving business impact. It's still early innings, but we're seeing real success. Since inception, the Now Buying Program deals delivered twice the ACV growth versus overall 1 million+ deals with comparable price performance. That's important. Comparable price performance.
Also, what's more, NPS scores for those customers are 14 points higher versus the overall company. Together, the efficiency of the Now Platform and our land and expand growth engine have driven a business model with inherent margin expansion, which allows us to heavily reinvest in R&D to expand our total addressable market, even while continuing to deliver strong profitability. From 2017 to 2021, our operating profit grew at 43% CAGR. Margins have expanded from 18% in 2017 to 25% in 2021, and we expect to hold them in 2022 despite COVID-related savings fading. That operating profitability has dropped down into robust free cash flow generation. In that same period, we've seen free cash flow grow at a CAGR of 40%. In 2021, we generated nearly $2 billion of free cash flow with 32% free cash flow margins.
That's amazing when you also consider we grew subscription revenues at 30% to over $5.5 billion. Combined, that equates to a revenue growth and free cash flow Rule of over 60. As you can see from this chart, ServiceNow generates an unmatched combination of organic growth and profits. In 2022, we expect that momentum to continue with subscription revenues at 28.5% and Q2 current RPO at 28%, paired with strong free cash flow generation of over $2 billion, driven by a 31% free cash flow margin. You've also seen that discipline with our share dilution, which was at the low end of our peer group at 1.6% in 2021. Over time, we expect our stock-based comp to further decline as a percentage of revenue.
No other software company has achieved Now's scale, size, and profitability profile organically. You've heard CJ and Bill talk about our investments in product and go-to-market and talent to ensure continuous outperformance. We're seeding future growth through innovation, scaling our go-to-market reach, and ensuring we have the best and brightest talent. We have a disciplined investment philosophy with a focus on R&D as well as productivity and efficiency to drive scale. This enables prudent reinvestment in strategic priorities to sustain strong growth over the long term. While our top-line growth and profitability targets are ever important, it's also important that we get there the right way. Profits and purpose are not mutually exclusive. We're able to run this extraordinary business with ESG as a strategic imperative. ESG connects to business strategy in a way that's good for the planet, good for people, and good for profits.
We recognize that ESG ties to enterprise value creation and financial performance over the long term, which is why we're embedding it in our strategy, our solutions, and our culture. Driven by ServiceNow's overarching purpose to make the world work better for everyone, our ESG strategy centers on three main pillars: sustaining our planet, creating equitable opportunity, and acting with integrity, all supported by the Now Platform and solutions, which is the force multiplier that helps our customers in their ESG journeys. In our environment pillar, we're focused on accelerating decarbonization and engaging our suppliers as we continue in our commitment to net zero by 2030. In our social pillar, creating equitable opportunity, we're focused on our continued commitment to our employees and the recruitment and advancement of a diverse slate of talent.
As well as ensuring we have a positive impact in the communities in which we live and operate through community investment and volunteerism. Last, but certainly not least, we continue to drive our strong security, data privacy, ethics, business continuity programs, as well as enhanced disclosures as part of our governance pillar. Let's not forget, it's all underpinned by the ServiceNow platform and solutions that not only help activate our own ESG journey but also enable our customers to accelerate their ESG strategies, goals, and successes. Last month, on April 22nd, Earth Day, we published our second annual Global Impact Report. I hope many of you have seen it already. If not, it's on our website. Please take a look. A few highlights from 2021.
We launched our ESG Management solution, and we were actually customer zero as we pulled all the information we needed to put our global impact report together from disparate systems across the enterprise. What's more, we were able to ensure the reporting was accurate and auditable. We achieved 100% renewable electricity and carbon neutrality. We increased diverse representation for women in leadership, Black or African American, and Hispanic or Latinx. We've fully distributed our $100 million racial equity fund to communities across the country, and we tied executive compensation to environmental and DE&I targets. As we look forward to 2022, we've made several new commitments. We'll continue to deliver additional product solutions that help our customers and empower them on their ESG journeys. We'll be providing our customers with a carbon neutral cloud by the end of the year.
We set a goal of employing 15% of underrepresented groups by 2025. Okay, I know you're all waiting. Now to the numbers. The investments we have made are bearing fruit ahead of plan, and as a result, we're updating our long-range targets. For full year 2024, we're raising our subscription revenues target from $10 billion to $11 billion+. We're raising our non-GAAP operating margin from 26.5% to 27%. We're achieving this all while maintaining our expectation of 2 points of free cash flow margin expansion over the next two years to 33% by 2024. We now expect 200 customers to be paying us over $10 million in ACV, up from 140 just last year at our Analyst Day, as those customer cohorts continue to grow at over 30% CAGR over the next few years.
From a workflow perspective, we continue to expect our customer, creator, and employee workflows to become the majority of net new ACV as we reach $11 billion, with creator workflows contributing 20% and customer and employee workflows contributing 35% of the mix. We continue to expect geo net new ACV mix to diversify with over 40% coming from EMEA and APJ in 2024. Longer term, you recall that our Analyst Day last year, we announced a target to achieve $15 billion in revenue by 2026. Since then, ServiceNow has continued to outperform, and our strategic initiatives have gained further momentum. ServiceNow is creating product experiences that people at work love. We have an innovative, scalable, secure platform to digitize workflows across the enterprise with great user experiences.
We're engaging customers with a world-class go-to-market, and we're force multiplying that reach with industry and partner ecosystems. As a result, we're raising that target by $1 billion today to $16 billion+ by 2024. To sum it all up, we have an incredible opportunity in front of us with plenty of customer white space to go after. Our durability of growth, the efficiency of our land and expand motion, and the inherent profitability of our one platform model all contribute to our continued confidence in this incredible business and in the increase in our targets that you've heard today. On behalf of the ServiceNow team, I wanna thank you all for joining us today. With that, I wanna invite my team back on stage and open it up for Q&A. Thank you.
All righty. For those of you in the room, please raise your hand if you have a question, and we will send a mic around. If you don't mind, please stand up and state your name and company. We will make sure everyone on the webcast can hear as well.
Why don't we do our first question here with Alex Zukin in the front row?
Hey guys, Alex Zukin with Wolfe Research. First, I just wanna say thank you. This was a master class in Analyst Days. Truly it was succinct, it was to the point, and it was, I think, pretty clear.
Thank you.
I wanna ask a question. One of the things that you guys mentioned today was you're going from powering a company's technology and infrastructure to actually being a part of their product. In the cohort slides, you talked about, I think, landing larger than you've been. You even mentioned telcos, the deal size was 2.5x t he CSM deal. How important is that to that pathway to $16 billion? How, you know, much in terms of the end product of your customers do you expect to be? Where, you know, I think you mentioned a telco example, but if there are any other ones that resonate would be super interesting.
You.
All right, I'll start first. Alex, I was expecting first question from you. I had a bet on it. Thank you. Here is what I would say, that when we create specific product content from data model, workflow, and integration perspective, what Gina showed in her slide is absolutely true. Telco is a big opportunity because telco is a technology company at the end of the day. Media companies are becoming technology companies, and tech companies are also technology companies. Super important is the simple answer, that as we scale, like telco, we are now on the network side in many of the telcos, including some of the stats that Gina showed. On banking, that's where we want to land on the line of business. You know, they do now HR as well. But in general, very important.
Hey, Michael Turrin with Wells Fargo. Thanks for taking the question. Gina, you stepped through it pretty quickly, but the increase in sales efficiency to more than 5x from 3.5x the past couple of years stands out.
Yep.
Is that a function of scale? We're getting questions or just around the ability to sustain efficiency gains as we go into potentially a period where demand is a little tougher, or some pockets of the market aren't quite the same. What are some of the things you've learned in 2021 to drive those improvements? If we think about driving further improvements into the future, what can you take advantage of there?
Yeah, I think it's a great question, and absolutely, scale is a big part of it, right? That's 100% a big issue. You've also seen the 5.1% in 2021. We absolutely had COVID savings in there as well. I've talked a lot about the fact that we believe 100% that we are gonna operate in a different operating model post-COVID. We will reinvest some of the dollars. Some T&E is gonna come back, travel is going to come back, but as we scale, the incredible part of our business is that we're able to really drive these efficiencies on sales and marketing, and we'll continue to see it. Will it come down slightly from 2021? Perhaps, as some of those COVID-related savings fade.
Oh my goodness, the efficiency that we're able to get from our model, and with Paul leading the charge from a sales and go-to-market, I have no doubt that we'll be able to see real, improvement and continued success there, for sure.
Hi, Phil Winslow, Credit Suisse. Just a question on the employee and customer workflows. Those went from, I think it was 24% to 28%, and the guidance is to 35% of the mix of the business. I guess question for you, Gina, when you look at that breakdown there, are you seeing more momentum in one over the other, you think, in the customer or the employee side? Then a question for Bill. When you talk to customers, why are they choosing ServiceNow for those two workflows, those newer ones versus the traditional technology ones? Thanks.
I'll start with we're seeing really incredible success, Phil, in both customer as well as employee. We don't break it out, but they are both growing at very strong rates. We talked in the past about the size of those businesses, and we'll tell you today that customer is at over 600, creator is at over 650 now, with employee at 500. The growth rates that you've seen even over the past year have been pretty significant, and it's been across the board. You've heard customer experience and employee experience are more important than ever. We are very well positioned to take advantage of that trend and to really help our customers as they lean in to both customer and employee experience.
Yeah, Phil, I think, Gina said it right. You know, we're in the experience economy right now. If you can't give people a great experience, you can't retain them, you can't drive productivity, and you can't bend the curve on how your company actually runs its operations. People have to do more with less, and the current macro is only gonna feed that cycle. On the customer side, a lot has been done on the engagement layer of CRM, and there are many participants in that. But not a lot has been done to connect the mid office and the back office, which is where ServiceNow is particularly strong. I gave an example today just on call centers as one example. Any company you walk into, 30%, 40%, 50% turnover. I mean, come on. How do you run a company like that?
There's obviously something missing there. I can cite one very large utility company based in Rome that wants to completely rethink that with AI operations and ServiceNow's platform to basically have 95% of the cases solved by ServiceNow and the intelligence of that platform so the people get to do high-quality work. Again, it's not just the experience that you ultimately deliver to the customer, but it's also given the people an experience that they're proud of. You know, you can't give the customer a three-star Michelin experience if you don't first give it to your people. That's what CEOs are thinking about.
Hey there, Tyler Radke from Citi. I have to compliment your jacket choice, Gina. It goes really well with the slide.
I'm glad you noticed, Tyler. Thank you.
Yeah, absolutely. Two questions, maybe one first for CJ and then another for Bill. CJ, you know, obviously you talked about a lot of really interesting new products that you're releasing. Can you just talk about how the competitive displacements, who those vendors might be today and how they've changed? Obviously, in the old world, you were kind of displacing the on-prem ITSM products. Who are you displacing now as you're doing these larger platform deals? Then for Bill, just on the M&A environment, clearly we're not seeing so much green in the market lately. What would it take for you to kinda adjust your posture, and are there interesting opportunities that you're looking at? Thank you.
Yeah. The way I think about it, just philosophically, where we are system of record, which we are in ITSM, which we are in ITOM, we are in risk. Sometimes we are in customer service, depending on the segment of the market. We are absolutely displacing our competitors, and they are not the same few that you thought of, like, say, five years ago. That has changed. When it comes to telco, core banking and other places where we have penetrated, it's typically homegrown solution as well, besides some legacy systems. As we are going to Workplace Service Delivery and others, which are the new growth vectors, we are also still displacing legacy. It's a combination based on whether we are a system of record, which we are in ITSM, ITOM, risk or Customer Service Management and Field Service Management.
We are displacing some of the top competitors that are out there right now. When we go after a line of business in telco, typically it's homegrown solution or some legacy vendors that maybe they're on-prem when the telco wants to move to the cloud.
Just adding something to CJ's answer there. Sorry, Bill, before–
No, please.
Before handing over to you. Often it's an additive as well, right? It's not a replacement, it's additive. I'm thinking back to a conversation with a well-known U.K. bank that you and I had.
Yeah.
Only just recently, they were about to go and finalize the decision on what was gonna be their human capital management solution, you know, flavor A or flavor B. Their message to us very, very clearly was, "Well, it doesn't really matter whether we go with A or B," and you can probably guess who A or B were, because in each case, we're gonna be putting service management in front of it as the system of engagement, that beautiful employee experience layer. It wasn't displacement, it was like, this is happening in our business, and we're gonna add ServiceNow to it to get the maximum value out of it.
That's a great point, Paul, because the other important conversation that goes on very often because a lot of decision makers want innovation without disruption. With ServiceNow, you could do exactly what Paul and CJ said without necessarily disrupting the infrastructure that you, in some cases, have worked very hard to build. It doesn't take the customer long to realize once they have consolidated to this automation platform called ServiceNow, they have lots of different options, and many of them not only include consolidating systems, but taking millions and millions and millions of cost out. That's an important point. In terms of the M&A situation, I really wanna make this point.
I'm so proud of this management team, and Alex, your kind remarks today really inspire me because I, on this stage, I'm just honored to run with this team, and we believe so strongly in what we're doing on the product side, on the sales and solutions and service delivery side, and obviously you can see the handle that Gina has on the business, and that is true with all the reports to this management team. People know what they're doing. We're in a great situation here. We have several billion in cash now. As Gina's slide pointed out clearly, we'll spin off several billion in cash again and again in the coming years, and before you know it, there'll be $10 billion sitting there. I want to communicate something right from the heart, 'cause this question is gonna, you know, be on your minds.
We are gonna do it organically in terms of the projections we gave you. We're also very aware of what's happening in the market, and if there was something that was in the interest of the customer because it was a breakthrough technology and we could work it with the Now Platform, as we've proven our engineering team's the best in the world, it's not like we would shy away from something that was accretive to the whole story. You have to remember, when you're operating at the Rule of 60, the bar is really high for what you would put in front of your shareholders as an intelligent move, because almost anything out there is dilutive to either the revenue or the margin. It better be a great technical breakthrough and it better, in combination with what we have, really take us to a new place.
I think you should walk away from that answer saying, "These guys get it. They wanna do the right thing, the smart thing." It's good for our shareholders to know as that cash position builds, we'll all have optionality, and we're on the same team. We're working this together. It's not like, you know, you have one idea for ServiceNow and we have a different one. We're thinking like a shareholder thinks as we think about the strategy and the executional opportunities of the company. Very important, and we talk about this on a regular basis.
I can tell you it's amazing how many people wanna have conversations with us about almost anything these days, and that's also another thing you should keep in mind because these post-IPO companies that had revenue on, but not so much on the profitability, you're not as interested in selecting them as you once were. I think that retains our people and keeps them committed to our mission, but it also just increases the value and the perimeter of value in the ServiceNow franchise. I mean, it's all going in the right direction.
Hey, Kash. You had a question?
I got the mic here.
Hey, Kash.
Kash Rangan at Goldman Sachs. Bill and team, congratulations on a fantastic analyst day. I think it's your first in-person analyst day since you joined ServiceNow, so great to see the energy as you promised on the earnings conference call. Electrifying. I have a question for you, Bill, and one for Gina. Bill, when you look at the ERP market, I think you're one of the few people in the world that understands that market inside out. You've done a great job creating a CSM workflow market out of the CRM market. You've created an employee workflow market out of the HCM market. Now, you're sitting on the next big, I think you've characterized it as a $400 billion TAM. What is it that you see based on the pattern recognition from your prior operating history that could be the next...
When are we gonna see Gina talk about that as being the next $500 million-$600 million run rate kind of thing? What is the unique opening that ServiceNow has that makes you qualified to go after that market?
Yeah.
I'll pause to get to Gina on her–
Well, Kash, first of all, thank you very much and, yeah, it's great to be in person with everybody. Thank you very much for making the trip and for the interest that you've taken in our company. We don't take that lightly, and we're gonna work very hard for you. In terms of what I see happening, you know, CJ talked about procurement and the procurement component of ERP. If you noticed, there once was a time where the business network in the procurement channel was kind of the big idea, where it's like, wow, you know, the real value is not in the financial system or the procurement features and functionality, it was really in accessing the business network. If you noticed lately, those procurement clouds aren't growing, and the market caps are reflecting that. What's happening?
Well, the customer's basically saying, "I need to automate what I thought I once automated." They can keep the financial system that they have. On a list of 100 things Gina wants to do, that's ranked like 99th on her list of things I wanna do, is change the financial system.
What's wrong with that?
Right. Yeah. To make everything super user-friendly, to automate the way we work, to automate the way we look at data, to think about the cross-functional nature of looking at how business flows, to be smarter in the procurement decisions we make. Gina talked about ESG and the smart network that we wanna do business with. We wanna do business with people that follow our DEI concepts, and we don't wanna do business with people that don't. Doesn't make them bad people. We just don't wanna buy from them. All of this is being hyper-automated on the ServiceNow platform, and that's the world I see.
As there are different components of business processes that involve people, whether they're in a network or they work in the enterprise or it's inter-enterprise or intra-enterprise, the way to look at it could be workflowed and it could be automated in the workflow. You know, there's a very big chemicals company in Germany that is very focused on the ERP system they have, and they've had it for a long time, and it's a great ERP system. But all the work now has to be automated for people, and they're not interested in going in forced marches or tying up their resources in the way they used to. They wanna rethink everything. That's also true of a very large telecommunications company in the U.K. I can go on with an airlines company in Germany and so forth.
Think about it as software and people is always going to come to a modern platform now. The smart ones. Kash, I'll give you an example. One CEO is there with the chief digital person, and they went down the old route, and as we're going through this conversation, the CEO lost all color in his skin. He just looked like, "I'm trapped. I went for that. I didn't know about this." There's another meeting where they know about this, and they chose to wrap that up in a good bow, but automate above it, and they look like they're the winning hand. That's what's going on out there.
Our biggest challenge and the thing we have to do and the reason why we have to be evangelists about this is we need to make people aware that digital transformation isn't doing what you used to do. 'Cause we all know how it works, right? If you always do what you always did, you're gonna get what you always got. So we gotta get the word out there, and you guys can give us a hand with that.
Thank you, Bill.
Thank you.
Gina, a question for you. You're the 30 in the Rule of 60, the margin, right?
Mm-hmm.
What is driving that enormous increase in sales productivity? Maybe Paul can opine on that as well. As you look at your long-term margins, are you assuming sales productivity to go up at all? Because if it did go up at the rate that it did, you would be in the Adobe class of operating margins of 45+, not to put too much in your long-term forecast, but give us a bit of your insight. Thank you so much.
Yeah. First of all, I think it's important to realize that the increase that you've seen since 2019 to 2021 has a lot. Scale is in there for sure, but that huge increase has a lot to do with COVID, right? A lot of the COVID-related savings that were with us in 2020 and 2021. That being said, if you exclude those, you see real progression, just not that big hockey stick. You're not gonna see, nor do we have planned, big hockey stick improvement in sales efficiencies. You will absolutely see continued sales efficiencies as we continue to grow and scale to $11 billion and then $16 billion. I've given you strong guidance on margins through 2024.
Past 2024, I'm not giving guidance on margins, but what I would tell you is that we have a best-in-class margin structure today and a history of a focus on growth and profitability and a really strong balance. You should expect this management team to continue thinking similarly even past 2024.
I think just adding to that, Gina, I think from a sales perspective, I've certainly committed to you some year-on-year margin improvements and productivity improvements and how the sales team's gonna perform.
Yeah.
Some of what we're seeing as well is just as you reach critical mass in a particular market, you just start to unlock more in terms of the appropriate application of specialist resources, verticalization, and so forth. That naturally will lead to an increase in sales productivity, and we're gonna be continuing to do that in new markets. You saw Bill and CJ's comments earlier about Japan and Australia, New Zealand, and so on and so forth. I think the other thing as well is as the surface area of the product portfolio has broadened, it allows us to land more meaningfully in terms of some of the new logos and some of the bigger deals that we're driving.
That just means that your productivity per sales head, because they have effectively a broader portfolio to go and communicate and sell and solve bigger business problems with better outcomes in our customers, that will naturally lead to an increase in productivity as well.
Hi. Kirk Materne with Evercore. Thanks again for the afternoon. Bill, you've talked to a lot of CEOs over the last, I don't know, two weeks, two months, I guess, since you've joined. Can you just talk about how they're thinking about ServiceNow today in terms of prioritization of spend? Obviously, everybody's worried about the macro, but it sounds like from what you're hearing, if things were to get worse, you're in a better position to take share from a wallet perspective. Can you just add a little color on that? For CJ and Paul, I was actually just curious, you guys have built out a great product portfolio.
One of the challenges for a lot of companies when you have newer products is getting sales attention on those products, 'cause sometimes they don't move the needle as much from an ARR perspective. How do you make sure that the newer products get the right amount of sales attention so that they don't get sort of abandoned before they get to critical mass? Thanks.
Kirk, thank you very much for the question. I have to tell you, one of the fun meetings that I had in 2019 when I first began, you know, we went on a 100-day tour around the world to meet our biggest customers and every employee in person. I got lucky because that was just before COVID, 100 days before COVID. I would sit down with the CEO and they would say, "I don't know anything about your company, but I know you do some things in IT. My IT people think it really works well." That was a standard meeting. Now the meeting is, "My people are really happy.
They really like your people, and you're solving important problems, namely, and they'll go at this, "you know, now I have visibility into the people and the experience that they're having," and they like that. CEOs love that. They don't care about a system of record. Those are there. What they care about is that they get new hires, they get them super happy, super productive, enculturated into the firm, and they have a frictionless mobile experience with one portal. They can articulate this now. The CEOs can articulate this. They are very good at understanding the customer relationship and the challenges and predictive things that get in front of problems, especially in the manufacturing sense. "Wow, I can predict.
I can have a fleet of things out there, and those things can connect into a platform, and my people in the operating jobs tell me that you guys are really good at that. I had one bank CEO tell me, "We're trying to modernize 5,000 applications." Instead, now they can tell me, "Well, probably we'll never get there, but we can start building some new ones that are for my high-net-worth clients and so forth." They are understanding the platform. Is it 100%? No. But it's at least a third now, where they don't know everything, but they know enough to realize we're an enterprise platform. We're an enterprise company. We're not functionally beholden only to one department. We are now playing ball at the big league table in the enterprise. That to me is all we needed.
We needed that gateway to be an enterprise platform and be regarded as a really good company with really good people that their people really like. I tell you this, if you prove me wrong, give me a call. I haven't found a customer yet that doesn't love ServiceNow.
No one. You can't find one that doesn't love the platform. They really love it. We go in with really good momentum, and we walk out of those conversations with next steps and action plans, and we're rolling. It's really getting better by the day. In terms of the wallet share, again, this digital transformation is on, and customers are not gonna turn it off. You gotta be at the relevancy table to make sure proportionally you're getting your fair share on the wallet. I would say I am not at all worried about that one iota. As long as we create awareness, once they consider us, when we go into the table to get the funds, we always get 'em because why? Why do we always get the money? Because we have such a fast ROI. That is the key to this whole thing.
We're not talking years. We're not even talking multiple months. Sometimes we're talking days and weeks and a few months when you're dealing with a really big problem that you're solving. That's what they want: fast ROI. Anything within a zero to 12 month is in the ballpark. Anything within zero to six month, they sign. You prove the business case, I go with you. Then we back it up with impact, right, Paul?
Mm-hmm.
We're off and running. These two gentlemen on either side of Gina and I work together like hand and glove, and everybody else from engineering and the go-to-market like that too, and the customers see it. They feel it. That's, you know, a big thing. We're gonna get a much larger share. I think in the early days when you were just focused on one thing and doing it really well, it's great, but the deal sizes are small. As Paul said, the deal sizes are expanding by the day. We're now at big tables. I mean, wanna give you one example. We sat at one table in the U.K. that had an $80 billion budget, and we're the protagonist in how to solve massive problems and rethink an incredibly complex system. We're at that table. We're hosting that meeting.
Were we there two years ago?
Yeah. We were not there two years ago.
Okay.
I think on your question related to product portfolio and the focus from the sales team, I'll let Paul comment on the sales teams. Five years ago plus, when I started here, and Gina mentioned customer workflow, employee workflow, creator workflow, those were tiny. The same question was asked. Outside of IT, can ServiceNow execute? We have world-class go-to-market teams. That doesn't mean it's easy. Takes a lot to execute on these new products. Pablo talked about four specific products north of $200 million. Two of them did not exist when I start here. That just tells you that when we put focus, and the most important piece is it a real problem that we are solving for our customers, and is that a priority for that customer?
Once you do that, our sales teams, they go in, they find out, and they make sure that customer is aware and purchases the solution. I don't worry about it. Paul?
No. Again, I think similar. I think two things. You know, one is there's a steel thread that connects all of the product solutions. It's not like there's a massive context shift required in the mind of, you know, our sales team in terms of what they're talking about with the customer, 'cause fundamentally, they're solving the same problem, connecting back office, middle office, front office, and creating beautiful experiences, whether it's internal, external, solving supply chain issues and so forth. I think the other thing is CJ's team has done a beautiful job of making sure that these new products that we introduce are natural adjacencies to what we already have, right? It's not like, again, like a product, a rep going, "Hey, what's this new acquisition?
How the hell do I process this?" It's like, you know, I'm just thinking now to a sales team managing an oil major that, you know, they have the core account plan, and then it's a very easy add-on. "Oh, Workplace Service Delivery. Oh, Legal Service Delivery." It becomes a natural evolving roadmap.
Hi. Michael Turits from KeyBanc. Thanks for everything. You've mentioned telco a few times as a successful customer and sector outside of IT. What has enabled you to get in the telco space so well beyond IT into their core business? What are the other adjacent sectors that might fit that same model?
I can take it. One of the things that we see in telco is that a strong connection between the CIO and the individual running the network. Network is the business, obviously, for telco. Any telco is serving B2B customers as well as direct to consumers, so B2B and D2C. When you look at fundamentally behind the scenes, it's still the core technology platform that they have, which they want to transform, modernize, move to cloud, et cetera. What has worked for ServiceNow is seeing the power of CMDB and what we have done in IT from mean time to resolution and many other things from an efficiency perspective and productivity standpoint while improving the employee experience.
We are just extending that on the network side while delivering better customer experience for B2B customers or for direct to consumer, as well as having the network inventory in our CMDB. That's why the example that I shared in my opening remarks is with this large telco, they are actually more focused on ServiceNow on the network side, which is massive, like orders of magnitude bigger than their IT footprint. They said, "That's where we want to use ServiceNow to deliver better customer experience." Being a technology company as in telco and having a lot of these homegrown solutions in the past that they need to modernize, move to cloud, they feel that ServiceNow is a perfect extension with the data model, logic, and integrations we have built. You can extend that too. I would say that you can definitely extend that sometimes in the healthcare.
Healthcare, specifically on providers, they used us for IT, but now how can we do direct to patient experience better? We are in the early innings. We see that with payers. If you think about payers, they are processing lots and lots of claims, and they're like, "Wow, ServiceNow was my workflow for IT. How can I just extend that for claims processing and do case management from a payer standpoint?" Some of the largest payers use ServiceNow from a customer service standpoint. I think specifically within healthcare and the payer segment is another adjacency that I'm excited about.
I think Brad's next.
Thank you. Hi.
Hey.
Brad Zelnick, Deutsche Bank. Thanks again for a wonderful day. Very clear message. I think most people associate ServiceNow with very large enterprise, where you have a ton of success, so many great logos. I think you said 23 customers paying you $20 million or more, which is extremely significant. You also, Gina, in your presentation, you talked about a target upmarket opportunity with 50,000 businesses outside of China with over 1,000 employees.
Mm-hmm.
Can you perhaps talk maybe from a product perspective and a go-to-market perspective, how much of the forward targets, 2024, 2026, depend upon penetrating downmarket? Do you aspire to be there? Because at the same time, you talk about focusing on the right customers.
Mm-hmm.
Just how important is the mid-market for ServiceNow?
Mm-hmm.
Thank you.
Yeah. I'll start on the product standpoint. First of all, you know, Gina had key stat in there, 1,000 employees or $100 million+ in revenue, where they can truly benefit from a platform versus a cheap point solution. In that customer base, if they say, "Hey, we are comparing you to this low-end solution or some team-based product," I say, "You are talking to the wrong company." Because our entire value add is on a single platform that will give you big efficiencies from that standpoint. I'm really proud of Paul's U.S. Commercial team that serves that segment, and they always crush it with having that platform story and always executing and delivering great numbers for ServiceNow, not only from new logo, but an ACV standpoint.
Our product, I would say we still focus on platform as a lever, and then you can use IT Service Management, where we are world-class, IT Operations Management or Customer Service Management or HR, and I can go through the entire portfolio. It is a super important segment f rom a future perspective, both landing new logo, but also expanding as those companies that are small today, like Zoom five years ago versus Zoom today, it's a large company. That was a commercial segment company.
Yeah. I mean, look, I think CJ nailed it all there, right? In terms of, it's a very important segment. Actually, great that you mentioned that U.S. commercial business, 'cause they had their most successful quarter ever in Q1 this year, right? You know, that business just continues to go from strength to strength. They re–
They've had. They continue.
Yeah.
Every quarter, they continue to have their best quarter.
They re-accelerated their net new ACV growth. I'm thinking it was maybe one of Pablo's slides that had Zalando up as a logo, exactly the same as Zoom. You know, that wasn't a massive company a few years ago, but growing incredibly fast, dealing with a lot of complexity. There are firstly, I think within that 1,000+ segment, there's a ton of value that we can provide to, you know, the vast majority of those organizations. Within that, you have the fintechs, the technology companies, the ones with incredibly high growth ambition, where we are really well set up to help them on that growth journey. Again, like CJ said, whether that's with customer success management, employee experience, onboarding tons of new employees.
Yeah, it's a fundamental part of certainly my strategy going forward.
I think in answering the question also, correct me if you guys differ on that, if we focused on the top 2,000 and did a fantastic job with them, we would far exceed our $16 billion+ .
Yeah.
When you think about Gina's $50,000, the other $48,000 is all upside for you.
I think Karl Keirstead had a question next.
Yeah, great. Karl Keirstead at UBS. Thanks again for today. I'd love to address the macro, the demand environment. I think all of you on stage have been through downturns before, certainly the COVID crisis, but most of you probably 2008, 2009. You've learned a little bit over your careers about what a downturn playbook should look like. I guess my question to you is, assuming we're entering a downturn now, where deals are gonna get tougher for ServiceNow to close, I'd like to understand what your downturn playbook looks like, and if you're starting to exercise it. Bill and Paul–
Sure.
Are you starting to get the sales teams to change the message a little bit to reflect the new reality? Gina, are you scrutinizing new hires a little bit more and just gently starting to tap the brakes? I don't think it would be a big negative if you acknowledge that the environment's tough. I think everyone in this room acknowledges that it is. I think what we'd love to hear is confidence that ServiceNow can navigate the reality better than your peers. I'd love to understand what your playbook is.
I'll start it. I think it's a great question, first of all. I remember September of 2008 like it was yesterday, because I was running a business where I saw EUR 1 billion in pipeline disappear overnight. It was a very serious thunderbolt. The recovery was okay, but it really took till the end of 2009 before things normalized. In that time frame, if you remember, the big idea was the cloud. Because the centralized decision-making for heavy on-premise solutions dried up. The CEO then empowered the management team to do point solutions that were cloud-based with a fast return on invested capital. That forced the big players to not only accelerate to the cloud, but also go on a buying spree to get into the cloud. Fast-forward now to ServiceNow's environment.
We are born in the cloud. Besides the incredible user experience which differentiates us greatly, the rapid time to value or that ROI cycle is our core competency. Yes, I agree that decisions will be more carefully scrutinized, and we had one that was in the auto manufacturing industry as an example, that we expected to close in March, and we got the feedback that it's the winning solution. We totally wanna go with you. We instituted a new procedure within the managing board where the CFO is gonna stack rank the things that are have-to-haves or must-dos. Now, we were at the top of that list, incidentally, and that business has since come in. What I think you could potentially see is deals getting more heavily scrutinized and higher levels of authority actually getting involved in the decision-making process, which is something we understand very well.
We also understand that we needed to operate at the C-suite level, so we're in front of things as opposed to being surprised by them. We also put impact into our business model, and impact really is taking the pre-sale, sale, and post-sale process in alignment with the financial goals of the company and what they're trying to achieve, which is mission critical, because you're basically saying at the point of sale, "I got you, I got you fast, and now we have a system where we're gonna record this together and chase this together all in real time." While there may be conditions that will get a little tougher, I feel that compared to anybody, this franchise is better prepared to deal with them.
Now, on the hiring side, just for the record, what I really like about our situation is we're getting people wanna be here, but certainly, as we watch things in real time. We're preferring engineering and people that actually do the coding, and in sales, we prefer people that actually have a quota, and we're trying to keep the company very agile in the middle of the management hierarchy and in jobs that support people that either make or sell software. And that's just the kinda way we operate. 'Cause if you look at engineering as a percentage of our headcount and compare it to any of the participants that compete against us, you'll see we put more into the R&D as a percent of revenue, and you'll see that the R&D machine continues.
On the sales side, you'll see we're leaner than the others because we prefer people that carry a quota. I just give you a rough outline, and I also want you to know, on my iPhone, I'll be happy to show it to you. I drive them crazy with this. We have something called the CEO Dashboard, where thanks to the great engineers and the AI professionals in our company, I see everything in real time, and so do they. We can, on a moment-by-moment basis, track the flow of the business and the pipeline itself and the way the pipeline is behaving against prior year actuals and other things in real time. If we have to adjust, we're prepared to do that.
I can also tell you the pipeline right now and the flow looks, you know, exactly as we told you it would in all of our guidance material. I'm real confident. It does not, the environment does not feel like 2008, by the way. This doesn't feel like that. It feels like people are uncertain, just like you've been uncertain in the capital markets. Where is inflation gonna land? How does that correlate with the interest rate? People wanna get that firmed up. The supply chain situation on a global basis has been very difficult, particularly in Europe with the Ukraine war situation. Other than that, the behavior on digital transformation and the investment cycles that we're having with our customers, all things are green.
The only thing that I would add to that is similar to what Bill says, the macros are not happening in isolation. There's so much else going on, the war for talent, the new hybrid distributed workforce, that customers that we're talking to every single day know that if they pause on their digital transformation efforts, they're not gonna come out of this as well as they could. Very different than what we've seen in the past. The other thing I would just add is look at what we did as a management team in 2020 when COVID hit. We were very prescriptive about how we managed that situation, very focused. We grew our head count even then by 26%.
Very focused on R&D engineering and go to market, so that when things opened up again, we were very well positioned, and look what happened as a result. You'll see us do the same playbook. We'll be very focused. The great thing about the business model is, as Bill said, we can react very, very quickly to changing environments.
Yep. And , one point I would make, though, to underscore the great question. Commodity things and commodity tech and postponable decisions that would have been normally made in the normal course of things, they're gonna get moved down on the list.
Okay, thank you.
Raimo had a question.
Hey, thank you. Raimo Lenschow from Barclays. Gina, you kind of talked a little bit about the challenge you're going to have or not a challenge or the achievement by adding like $1.3 billion in your business and as you grow, you know, you're going to keep adding more. In that respect, CJ, a question for you there. Can you talk a little bit about the adjacencies with in terms of going from the four pillars that you talked about towards more like adjacent areas like observability, process mining and some and things like that in terms of the opportunity and how that fits into the platform and how you make sure that kind of is still a consistent message? Thank you.
Sure. I think as I shared, four workflows, you know, start with technology, HR, employee, customer and creator. Let's just take an example of technology because you asked about observability. Technology portfolio is pretty wide, so I'm gonna list it on purpose. You have ITSM, ITOM, IT asset management, you have Strategic Portfolio Management, you have security, two products within security, you have digital risk and enterprise risk and observability. This is all within the CIO buying center and sometimes CTO, depending on the industry we deal with. When you look at what some of the things that Gina shared, there are very few customers who use that entire portfolio. There are some who use that entire portfolio just within technology.
That's where we see that as long as we have the best products, we are gonna win market share, and the CIO or the CTO or the chief digital officer will expand just within technology workflow, and that's where the go-to-market team is focused on that specific segment in there. There are multiple adjacencies within the workflow. Similarly, for employee, you have HR, legal, workplace. Customer service, field service by line of business, and then you have in creator. You know, in creator workflow, we have something called Automation Engine, which combines RPA and other technologies. A lot of our competitors have bought something for that. We built it in the platform itself. Process Mining. Our Process Mining is world-class. Built in the platform, whether you have ITSM data, CSM, some of the things that Amy showed, that's our in-built Process Mining that we did in Now UX.
We look at specifically horizontal platform technologies where we are Process Mining or RPA, and we monetize via ITSM Standard, ITSM Pro, ITSM Enterprise. That's why I come back to the same message, 4 workflows, 20 large product categories, good, better, best. You have 4 x 20 x 3 just in the existing install base. With the adjacencies in mind that Paul talked about, not going completely to the left field to say we are gonna solve your manufacturing logistics problem. No, we are not gonna solve that.
I think Brad has a question.
Oh, great. Thanks so much, guys. Brad Sills from BofA Securities. One of the things that stood out for me early on with the Analyst Day, Bill was your comment that you have 80% of the Fortune 500 and there's a path to getting to 97% in fairly short order. I guess, what's held back some of these larger Fortune 500 organizations, and what gives you that confidence that, you know, here and now with the stack that you have, the progress you've made with the platform, you'll be able to convert the remaining 500? Thank you so much.
Yeah. Thank you, Brad. I mean, it's awareness for one thing. You know, it's important that, you know, you don't just enter in one dimension of a company. The evolution of ServiceNow, you've now seen it play out where we became an enterprise platform as opposed to a company that is selling a very good IT solution but into one buying center. In that case, you're stuck with one relationship plan, and if it doesn't work out, well, eight out of 10 times it worked out, but the other two out of 10 it didn't. Now we can come in in so many different ways. We can come in with Creator. We can solve your problem with Customer Service Management.
We can lean in on the employee experience, and the employee experience is really a natural because we're so good at it, and it's just catching fire everywhere, and the talent war is so pervasive, and inflation and supply chain challenges and the lack of digital skills in the world to fuel digitally led companies is making CEOs sit back and say, "I gotta get this one right." The board expects the CEO to get that one right. Obviously, when you think about IT and the service management, operations management, asset management, the plethora of things we can do, including observability, where we can even come in direct to consumer with the AIOps product or do some things on observability that we weren't even doing, a year ago. There's just so many dimensions to it.
The biggest one for me is companies have to be brand led. You've gotta have a great brand to have a great company. The product has been there, the culture and the people have been there. We're expanding the ecosystem. You know, the ecosystem, especially as CJ runs the industry play with Paul, more and more of that is gonna be, you know, sub-market segments built with industry participants that have large consulting forces in their different geographies. They're gonna be pulling ServiceNow in. So it's not just ServiceNow pushing, which is the world we came from. It's a good world. But if you want to be the defining enterprise software company of the twenty-first century, you got to do what we're doing now.
I think something to add to that, Bill, as well, is we haven't been in an opportunity-constrained environment, right? Where we focus, we win. I don't think I've ever encountered a situation in my two years here where we've really truly focused on understanding a company's business problems, we've mobilized the team, we've gone and executed. Yeah, they ultimately end up becoming a customer of ServiceNow. Honestly, a lot of what I see of that 20% of the Fortune 500 that isn't yet a significant customer of ServiceNow, I genuinely might have a sales team that is doing really well on this customer over here, and they haven't necessarily focused on one of those 20% over there. I'm very focused on that now. You know, the focus is going to be there.
When we focus, we win.
By the way, Paul's doing a great job. He did a great job in Europe. He's doing a great job taking us to that solution services and business impact ServiceNow, and I'm like so happy with the way things are going, obviously at this table, but also at the table in the field and the various functions of the company, 'cause everyone wants those 20%, not just us. The focus is on execution. It's all about execution now. The product's there, the team is there, the will is there. Let's go get it. Then I think the brand is really coming through. How'd you like, you know, the way the brand's coming through? Gina, you wore the brand fantastically today. I mean, you know, come on, you were there two years ago, right? You see what's happening here.
All right. I think we have time for one last question. I think Samad has the mic.
Hi. Samad Samana from Jefferies. Sorry to be the last person between you and me and customers or happy hour. Maybe Gina, just a quick one for you. Was there any change in the guidance methodology for the long-term targets when you set them this year versus maybe prior years, or any factors you changed, just as I think about Karl Keirstead's question around the playbook?
No, there's been no change in our methodology at all. It literally is outperformance just being there, and more momentum than we even thought even just a year ago. No change. We feel great about it. There's no M&A considered, any big M&A in those numbers. It's just continued outperformance from the incredible team that we have across the globe.
Very helpful. Bill, maybe just a follow-up for you. You guys have done amazing with large customers. I'm curious, when you think about the largest customer that ServiceNow has, what are they doing besides just product adoption that's philosophically different than maybe the customers that are earlier in their journey with you? What are they doing or thinking about that your other customers of similar size, whether it's revenue, that they could be that big with you as well?
I think they're thinking about platforms too. What you're seeing now, and I led into this with one of the slides where I was very polite about the market participants and the cloud platforms that I felt are the future, and I actually called them out today. Those decision makers now, instead of letting every department kind of do its own thing, they're starting to standardize on platforms that they believe have the sustenance, the innovation, the staying power, where they can build a partnership, they can absolutely go through a product roadmap and a future design roadmap to build out their dreams. There are gonna be a handful of them. I already told you the hyperscalers. I told you where we fit in that and maybe one other one.
There's gonna be the betweeners, and then there's gonna be the legacy players. They're gonna want the legacy players to probably clean it up a little bit. The betweeners will do what they're doing. The innovators on top are gonna be the ones that they're gonna bet on to change the world and lead their digital transformation journey. I really want you to know that example I gave you of the one CEO with the chief digital officer and all the skin just went flush, went gray, when he realized that he was going down the old path, and he had already committed to it. It's like so many hundreds of millions tied up in it.
I'm like, "Oh, this is the path." We had to leave that meeting, and he literally looked at his chief digital person like, "You let me down, man, 'cause if this guy is even half right, we're in trouble." They basically came back and said, "What one thing can we do? 'Cause I'm so budget-constrained, but I believe in the story." It's gonna be platforms, and they're gonna lock and load on these standards, and that's what's gonna happen across the global economy. It's gonna happen faster than people think. I think it's gonna. You know, we talked about the tailwinds, and we also talked about the crosswinds. If you've ever been in a good storm and those winds are blowing, lawn chairs are flying, umbrellas are heading into the air. It's like that's what's happening right now.
It's not like they're gonna decelerate. They're actually gonna accelerate, but they're gonna do it with fewer companies.
Thanks a lot. All righty. That concludes our day. Thank you all for joining us both here and abroad.
Thank you all very much.
For those of you in person, we have drinks at Tao. If you don't mind letting these folks get over there, we can all have our follow-up conversations over there.
Thank you very, very much.
Thank you.
You were great today. Thank you. Thank you.
Thanks so much. Oh.
Sure.