Welcome everyone to ServiceNow's Financial Analyst Day 2021. Thank you for joining us today. I'm Darren Yip, head of investor relations. Today, you'll hear how ServiceNow is well-positioned to drive a balance of durable growth and profitability at scale. We have a great agenda for you. Bill will kick us off with an overview of our strategy and vision. CJ, Jon, and Josh will walk you through our product and platform innovation. You'll also get to hear from one of our customers and how they are using the Now Platform to help drive a broader transformation of their technology infrastructure. Gina will provide a financial overview and introduce our ESG initiatives. Then we'll take a short break to reassemble for Q&A.
Before we begin, I want to remind everyone that this presentation may contain forward-looking statements that are based on the current beliefs of ServiceNow and are based on information currently available as of the date of this presentation. These forward-looking statements involve various risks and uncertainties that may cause actual results to differ materially and should not be relied upon in making purchasing decisions. Today's presentation materials, including footnotes and the reconciliation of GAAP and non-GAAP results, are available on our investor relations website. With that, I'll turn it over to Bill, our President and Chief Executive Officer.
Thank you, Darren, and a warm welcome to all of you. I'm delighted to be speaking with you live today from our Santa Clara office. Let's take a moment to send our heartfelt wishes to our friends in India and Brazil. We're with you all the way through this tough COVID battle, and we look forward to the better days ahead. Today, I'll provide you with an update on ServiceNow's vision, our innovation-led strategy, and the high expectations we have for growth. CJ, Gina, and I look forward to taking your questions after the presentations. You'll see that our momentum shapes our absolute belief in this remarkable growth story called ServiceNow. Digital transformation is the opportunity of this generation. Last year, in a declining GDP environment, you saw increased investments in digital transformation.
Now, as things open up, you'll see an additional $8 trillion invested in digital transformation in the next three years. ServiceNow is perfectly positioned for the secular tailwinds coming our way. We've not seen our pipelines as big as they are now. CEOs are digitizing their businesses and inventing new business models. Over the next three years, 20% of new revenues will come from businesses they're not even in today. Everyone wants to create premium-priced and highly personalized experiences for their consumers. Technology leaders are accelerating their migration to the multi-cloud world, and they are driving innovation at the edge of the enterprise. There's a real creator movement underway, with professional developers and citizen developers building next-generation business applications. In fact, by the end of 2021, 75% of new application development will use low-code platforms.
All CXOs are driving hyperautomation of old business processes into new workflow design. Here's the takeaway. All of these roads lead to ServiceNow. We are the control tower for digital transformation. ServiceNow is executing at an art form level. You know, there's a rule of forty out there. ServiceNow actually has been operating at the rule of sixty plus. This is a tangible demonstration of the strong unit economics within our business, and it showcases the durability of the ServiceNow business model. The question is, what drives our performance? I'll sum it up for you in two words. It is this engineering pride that we have. We are focused on innovation and culture. This unbelievable continuous innovation on top of our single platform is leading to a flywheel of product and use case extensions, which are increasing ServiceNow's addressable market and providing more vectors for growth.
ServiceNow is actually building products faster than ever, from ideas to customer-ready in days. We have an outstanding track record of commercializing new innovation. There are 1,700 new customer capabilities in our Quebec release alone. Our success has been one driven by organic growth. We haven't purchased revenue. We always protect our customers from technology debt. Our platform architecture is clean. Our consumer-grade UX is consistent. The culture, which is our second big driver, is based on true customer centricity. We know the customer is the only boss. This is why we have a 98% renewal rate, very strong net promoter score, and an ever-increasing base of successful customer references. We stated a no layoff policy during the pandemic, and we delivered with 3,000 new hires, and we are now 14,000 ServiceNow strong. Our team has a deep passion for diversity, inclusion, and belonging.
Our employee engagement scores are soaring. Our people are really happy, and they're so proud to be a part of ServiceNow. Basically, our team is just fired up to be the fastest-growing SaaS company at scale in the world. In terms of ServiceNow's growth trajectory, we have built an unprecedented organic innovation engine. CJ and Gina is gonna give you the details. Here's my quick preview. We're now participating in a TAM of more than $175 billion. Our path forward is clear. Today, I am confirming that ServiceNow will be a $10 billion revenue plus company by 2024. ServiceNow is the only cloud company to have ever reached $5 billion of revenue organically without having done a $1 billion plus M&A deal. Because of this, we don't need to do big deals on our path to $10 billion and beyond.
We will achieve this milestone faster than any other enterprise software company. We will do it with a best-in-class margin and free cash flow profile. In fact, ServiceNow's current free cash flow margin is equivalent to many companies' long-term, often aspirational margin targets. Now we are in hot pursuit of adding an additional $5 billion in revenue by 2026. That's right. We will become a $15 billion plus revenue company by following our consistent strategy. Here it is. Organic innovation, accelerating our go-to-market machine in all geographies, in all industry verticals and buying centers, and we're gonna have an ever-expanding partner ecosystem. I'd like to tip my cap to the seven global strategic partners who have already committed to ServiceNow practices that are a $1 billion in revenue or more.
Now, look, while all of this success multiplies, our balance sheet is going to become an even stronger asset for shareholder value creation. Ladies and gentlemen, in every way, we're just getting started. Here's how we're going to go even further. A next-generation suite of solutions all built on a common core platform. We are a platform company. The flexibility and extensibility of the Now Platform is our differentiator. Every opportunity we have now is multi-product, which gives us a big upsell and cross-sell effect from the core to the edge and the edge to the core. Unlike an application company, this is not a case of going head-to-head with a legacy vendor to rip and replace. ServiceNow is creating our own markets, going after greenfield opportunities and actually lowering the competitive friction as we grow. The Now Platform for digital workflows enables IT, employee, customer, and low-code apps.
We have a platform of platform architecture, which has actually become a cross-platform integration engine, which seamlessly ties together business processes from collaboration to system of record. It forms a system of action. That's what the market wants. This makes work work better for people. As the platform for IT and technology, we help teams build and run the applications of the future. Today, we announced Lightstep, our move into DevOps and observability, which is gonna open an even more addressable market and a larger TAM. We're so excited to change the world with Ben Sigelman and his amazing team. Welcome, Ben. We're also driving consumer-grade user experiences for employees and customers. Soon, you'll be hearing about how we're reinventing the customer experience. This will be our next billion-dollar cloud business.
In terms of every new business we call on, the CEOs, the CFOs, and the COOs are all investing in ESG. We're embedding ESG into all of our workflows, and we will be introducing market-leading ESG products. Think about it. ESG, process mining, RPA, AI, and low code, all fully integrated native on our platform. This is gonna form multiple tailwinds that will affect future growth for ServiceNow. There are many businesses that ServiceNow is in that gives us the completeness of vision for our customers and a rock solid certainty for our shareholders. On industries, we're getting tremendous uplift from our telecommunications and financial services solutions. We're also going very deep in manufacturing, government, healthcare, transportation, technology, retail, and many others. This vertical expansion is happening in lockstep with our partner ecosystem, which is actively co-developing industry solutions and services with us.
Our customer-facing teams are getting stronger by the day. We have a well-established Now Value methodology to drive large transformative enterprise agreements that validate our unique competitive advantage on time to value. We have a complete end-to-end reference architecture with our Now-on-Now program. This year, we have hired many new chief transformation officers who are luminary industry practitioners distributing this architecture to our largest customers. We're also completely reimagining our customer success offering to help customers adopt all the value that this platform has to offer. The list goes on and on. I wanna salute our management team, not only for what they've accomplished, but even more for their belief in our future. We're better than we were yesterday, and we're not as good as we will be tomorrow. This is where we're taking the company on this path to $15 billion plus and beyond.
We aren't here for linear thinking. This is an exponential opportunity. To be the defining enterprise software company of the 21st century reaffirms our belief in ServiceNow every day. We are a growth company, and I might add, an organic first growth company. We invest for growth, and we're highly committed to expanding shareholder value. In closing, there are a lot of ways for you to size up the potential of platform companies, but here's my summation. Look at our customer stories. Look a little bit behind the logos. Look at the kids who went back to school safely on our platform, or the millions getting greater access to city services, or the manufacturing employees jump-starting entire industries, or the public servants on the front lines of COVID-19, or the millions of vaccinated people around the world.
The ultimate test of a platform is how many lives are improved through its use. We're extremely honored to be something of an unknown savior for the billions of people we serve, our customer's customers. To us, service has always been more than a concept. It's our DNA. It is who we are. It's what drives us to make the world of work better for people. We will never take for granted that the world works with ServiceNow. Thank you for your time. Thank you for your trust in ServiceNow. I'm looking forward to taking your questions a little bit later with CJ and Gina. For now, I'd like to turn it over to our Chief Product and Engineering Officer, Mr. CJ Desai. CJ, over to you.
Thank you, Bill, and welcome everyone. Today, I'm excited to share with you all the innovation ServiceNow team is delivering for our customers. Let me start first by saying we are a platform company. We have one platform, one architecture, one data model for all of our products. This results in simplicity in terms of cost of maintaining the platform, operating the platform, resulting in world-class gross margin. The platform provides many core services, whether it's user experience, whether it's workflow and automation or integrations. We organically built IntegrationHub about two-plus years ago, and this IntegrationHub has most widely used integration technologies and systems that exist in our customer's environment, whether it's Microsoft Azure, AWS, Zoom, Microsoft Teams, Splunk. The platform also provides native AI services. AI is something I'm really excited about because AI is what drives intelligent workflows for our customers.
What does that really mean? During the pandemic, let's say Erin is requesting a larger monitor for her home. Our AI technologies, which are built in the platform, first tries to understand what Erin is requesting. Once we understand what she's requesting, based on her request, we try to reason or recommend that her role, other employees in her department, and what we have learned across the enterprise, we will give her maybe three options. Erin picks an option, and then we will kick off a workflow so that she gets her monitor as fast as possible. This is an iterative process behind the scene in the platform, and our platform is constantly learning to make Erin's experience better. This is what we do when we say that we are delivering AI, whether it's for ITSM Pro or for CSM Pro or HR Pro.
This is not just one thing, whether it's request management or incident deflection. We also now, beginning Quebec release, have AI operations, AI search, and many other technologies which are the foundational technologies for these capabilities, such as natural language understanding, natural language query, categorization, classification, and so on. These technologies are powering our fastest-growing product lines at scale, such as ITSM Pro or an ITOM Pro or a CSM Pro or HR Pro. That's the differentiation between a standard ITSM and ITSM Pro, is many capabilities in AI, and we are constantly thinking of how to deliver these values fast to our customers and at scale. When I think about the platform and all the products we have, they have all been built on this platform. Even when we have acquired a piece of technology, we have made that native in the platform.
Our product portfolio has been divided into 4 buckets: IT Workflows, Customer Workflows, Employee Workflows, and Creator Workflows. These are fundamentally really good markets that are growing. We believe that we have $175 billion TAM, and there is a lot of TAM that can be captured via our existing products and some of the products that we have in the pipeline. When you look at the innovation that have been delivered by ServiceNow team, you know, we started with IT, as all of you know. We delivered our Customer Service product and HR product, which is now contributing significantly to the growth. As you see this chart from 2016 through now, our portfolio has really picked up the pace from a new product innovation standpoint in the past few years.
We started in 2016 as we expanded beyond IT with Customer Service Management and HR Service Delivery as scoped applications. As you see here, in 2019, 2020, so many new product innovations. In 2021, I'm also very excited, not only with the Quebec release from March of this year, but we still have many new innovations coming throughout this year. I'm also really inspired by what innovations we will deliver in 2022. When I look at our pace of innovation, you know, we do platform releases every six months, like our Orlando release or a Paris release or a Quebec release, which is in March of 2021, and Rome release in September of 2021. What the team has done in the past couple of years is that now we do monthly releases for certain products where customers demand rapid innovation.
For technologies such as artificial intelligence, we do bimonthly releases. Of course, for certain products, we also do biweekly releases. As you see here, in 2020, 2021, and 2022, there are so many new products that our customers are gonna benefit from. When I look at the portfolio and how we have divided this portfolio, even though every single product is built on the same platform, every single product can talk to other product in this platform. We can also talk to any systems in customer's environment via IntegrationHub. IT is our widest and deepest portfolio. For employee, we introduced legal and facilities module, which we call Workplace Service Delivery. For customer service, besides Field Service Management, we introduced Connected Operations and some industry products.
For our Creator Workflows, we have App Engine Studio, IntegrationHub, and we just recently acquired Intellibot, which will become native in our platform and come with robotics process automation technologies in the beginning of 2022. This is how we have divided all of our products into these workflows. Let me first start with our biggest workflow and the deepest workflow, our core business, our core product line, IT Workflows. This is a large TAM, and it's a growing TAM, $61 billion by 2024. Why is it so large? Every company is either reinventing their existing business model via digital services or creating a brand-new business model while trying to modernize their technology infrastructure.
Every CIO that I speak to or a CTO says that their role has expanded significantly as many technologies have been introduced in their environment, many clouds have been introduced in their environment, and ServiceNow becomes that platform for IT so that our customers can innovate faster. Make sure that all the services are resilient and available while reducing the cost. At the highest security standard. When I specifically look at our strategy, which I feel very good about, we need to innovate in our biggest portfolio. This is our core portfolio that continues to grow, and we have to out-innovate for our customers and stay ahead of that innovation curve via investment in machine learning or AI operations or process and workforce optimization or automation technologies and integration technologies. We also have to extend our portfolio for all technology buyers.
That could be technology teams in application development organization, or a site reliability engineer, or somebody who is dealing with multi-cloud footprint and how to make sure services are always up and running. As our portfolio has evolved, we have heard not only from the CIO and CTO, a chief risk officer may say, "CJ, we are expanding from digital risk to enterprise risk, or we are expanding from IT asset to enterprise asset," and we want to make sure that they can benefit from ServiceNow platform and ServiceNow products. I'm so excited by our new announcement of Lightstep. This is an amazing team with pedigree in Google. They solve some of the most complex problems at scale in observability and have a very disruptive approach. Say you have any type of B2C service, it could be a ridesharing service that needs to be always on.
It is distributed and built in a cloud-native fashion and serving hundreds of millions of users every day. What Lightstep team has done is that they have solved observability problem for that architecture, whether they are metrics, traces or logs, all of them are in this platform rather than three different silos. You have the context, you have the data, and you can solve any types of problems via amazing insights, so that the services are always up, running, reliable and performing. This particular technology opens up ServiceNow's appeal to new type of buyers, application development team, or a site reliability engineering team. We have a few other products in the pipeline which will work really well with this technology and solve the biggest and most complex problem for our customers.
The evidence that we have been delivering the value for our customers is when I look at products, IT products that are used by our customers, the number of customers that use three or more products, whether it's ITSM, ITOM or ITBM, has doubled. We are also seeing market expansion opportunities. We have invested to capture those opportunities. We expanded in Korea, we created data centers in Germany. Now we are expanding for regulated markets, whether it's Singapore, France, Australia. Last year, we released Impact Level 4 in 2019. This year, we are releasing Impact Level 5 via investments we made. You will continue to see that for our core portfolio, because we typically start with ITSM and ITOM, that we will expand in geographies and in regulated markets where it makes sense. Analysts are recognizing us as a leader.
Even some of our new products are being received so well by our customers. You know, we, for example, just launched Software Asset Management in 2017. It's only three years old product. Then we released Hardware Asset Management towards the end of 2020. When you look at the Magic Quadrants from Gartner or the Forrester, they are all recognizing that there is a great product market fit, and these products are delivering amazing value to our customers. You know what really encourages me that we are capturing market share via these products? You know, ITSM being number one or ITOM being number two. Our security operations product is received really well in financial services and healthcare.
When I look at risk product, the traction for risk product with some of the largest regulated enterprise has been very inspiring, and it just tells me that our innovation is hitting the mark with our customers. With that, now to tell you more about our Customer Workflows, I want to introduce our newest leader, John Ball, who has a lot of experience, not only in enterprise software, but also on customer service, customer operations, artificial intelligence, and just a phenomenal leader to work with. Please welcome John Ball.
Thanks, CJ. It's great to be part of ServiceNow, and I'm excited to give you an overview of Customer Workflows, which is our portfolio targeting the customer service and support market. We believe we are well-positioned to win in this very large and growing market, a market that Gartner estimates to be $20 billion today, growing at a CAGR of 13% to $33 billion by 2024. This growth is being driven by digital transformation, which is all about the promise to improve end-to-end customer experience while also driving operational efficiencies. These trends of direct to consumer, everything's a service, work from anywhere, they were all amplified and accelerated by COVID. As a concrete example, literally millions of customer service agents were sent home overnight at the start of COVID.
Companies that had invested in modern digital customer service adapted well, but those who hadn't suffered severe disruptions. Speed, agility, and efficiency have become the key requirements for customer service, and these changes play to our strengths and advantages. Our product strategy for Customer Workflows is simple but powerful. We build market-leading applications with all the capabilities you need to drive world-class customer service and support. The core of our portfolio is Customer Service Management. This is the product that powers modern digital engagement across all channels, including agent desktop, chat, virtual agents, and embedded service that you find in web portals and mobile applications. We deliver all the horizontal capabilities you need, like enterprise case management, advanced work assignment, major case management, knowledge, workforce optimization, and Process Optimization.
We package our capabilities into good, better, best editions, which simplifies consumption for our customers based on the sophistication of their needs without all the add-ons and hidden charges too often seen in this market. The second major product in the portfolio is Field Service Management, which is used by our customers who need to send technicians out into the field for installation, maintenance, and monitoring of equipment and services that impact the customer experience. This includes capabilities such as work order management, technician dispatch, asset and inventory management, scheduling optimization, and of course, a great mobile app for the field techs who operate on the go. Now, a really key differentiator for Customer Workflows is that we are built on the Now Platform, which can be easily extended and customized through our low-code, no-code platform.
This gives us a tremendous time-to-value advantage in the market, which is now more critical than ever before. The third and last part of our product strategy is to further enhance our time-to-value advantage by delivering industry-specific solutions. We delivered telecoms and banking in Q4 of 2020 and have already seen great market traction. One telecoms customer deployed order management, which is a mission-critical application, in just two months. That's just incredible, and it's a great example of why this industry strategy plays to our core strength of speed and agility. This strategy is working. We are winning, and we see it in the numbers.
We have over 1,500 customers and have surpassed an ACV run rate of $400 million in just four years, having grown at a CAGR of 111% from 2016- 2020. We have over 75 customers with more than $1 million in annual contract value, which is a great indicator of how strategic this product has become for our customers. Our vision for the market and execution strength has been noticed by the industry ecosystem as well, shown by how we skyrocketed into the Gartner leader quadrant in just four years and by the tremendous growth and momentum with our partners. We are winning and driving customer success across a wide range of industries. We started in high tech, of course, and are present in about half of the Fortune 500 high-tech accounts.
We expanded rapidly from that initial strength and moved into telecoms, financial services, healthcare, government, manufacturing, and more. That's because every industry needs to modernize, get more efficient, and deliver better customer experiences. As companies modernize and digitize, it's software and IT that's driving that modernization. Our IT roots present a big advantage for Customer Workflows. First, just from a go-to-market perspective, because we are known and trusted in these accounts, but also because as all of these digital services are being built out, we can hook into them natively and deliver proactive customer service, a capability customers are looking for more and more in industries ranging from telecoms and media to financial services and manufacturing. Let's take a step back and see what makes ServiceNow special in the market.
Historically, the customer service market has been focused primarily on the engagement layer, which is all about how a customer's request is received or fielded. The engagement layer, however, is only half the story in customer service. The other half of the story is how you actually get the work done to fulfill the request. This is performed in the customer operations layer. In customer operations, you need to orchestrate a series of tasks to fulfill a customer's request. That orchestration is what we call workflows. To make this concrete, let's look at some real-life examples of customer service requests. A request might be simple, such as, "What's my order status?" This is a request that can be handled in the engagement layer by an agent, by a self-service web portal, or increasingly, by AI-powered virtual agents.
The engagement layer is all about meeting the customer at their point of need and in the channel of their choice. This is all great, but most customer requests, and certainly the most impactful ones, are more complex. For example, I would like to file an insurance claim, or I want to dispute a bank payment, or I want to increase my bandwidth and add a channel to my subscription. These are all good examples of requests where a series of tasks must be orchestrated to fulfill the request. Often, that process spans multiple systems and even sometimes multiple departments within an enterprise. Traditionally, a lot of this work gets done manually by swivel chairs, emails, spreadsheets, and phone calls, all glued together by agents and middle office workers. Sometimes this workflow is not even defined in software and is dependent upon tribal knowledge.
The end result is slow, inconsistent process, and as a customer, you end up frustrated. Unfortunately, we've all experienced this. ServiceNow solves this problem and delivers great customer experiences by combining our modern digital engagement with our powerful workflows and operations. We take a very different approach in this operations layer, because we are built on the ServiceNow platform. Unlike others who rely on low-level custom code, we define and structure these workflows through our declarative no-code, low-code platform tooling. This product-led approach to workflow definition has huge benefits, starting with dramatically faster time to value, but it also enables us to deliver Process Mining and process optimization native in the platform, something that you just can't do with alternative approaches that rely on low-level custom code. The end result is faster deployments, higher levels of automation, and ultimately, much better customer experiences.
Okay, I'm gonna walk you through a couple of proof points of how we were able to quickly innovate on the platform. First, we delivered a purpose-built solution for vaccine administration management in just one month. The application provides best practice, yet flexible workflows to address the three main challenges the world is facing in getting shots in arms as fast as possible. First, consumer-grade scheduling at scale. Second, efficient and contactless clinician experiences. Third, vaccine site and process administration. Now, these interfaces we're showing here look simple, and they are. They're simple and easy to use. But what you don't see is that there are massive technical and operational workflow challenges behind the scenes. The application has to be massively scalable. One of our customers, for example, was handling 7,000 requests per second when they went live.
The application has to be flexible and agile, capable of handling mass scheduling for millions of citizens, as well as individual self-service scheduling. You have to manage varying eligibility requirements by region, even adapting the system week by week as the CDC guidelines change. Most importantly, it has to be fast to deploy, because literally every day counts in this crisis. One of our customers, Children's Minnesota, deployed the application in just five days, and the results were amazing. Patient wait times went from three hours down to 10 minutes. It's just an incredible story, and we couldn't be prouder. Another great example is how one of our banking customers, Lloyds Banking Group, digitally transformed their mission-critical payment operations in just 12 weeks, significantly improving their customer experience and the experience and efficiency of their service agents in the process.
Previously, agents had 16 steps and had to interact with six different systems. This wasn't good for the agents or the customers. With ServiceNow, we collapsed this down into two steps and one system of action, and the results are just fantastic. 70% faster resolution times and increased customer satisfaction, all while reducing errors and reducing mundane tasks for those agents. This is a great example of how innovative customers can both improve end-to-end customer experience and drive massive operational efficiency with Customer Workflows. That is what digital transformation is all about. All right, to sum up, I couldn't be more excited about the opportunity we have with Customer Workflows. We have a highly differentiated solution and are operating in a very large and growing market. We are growing significantly faster than the market and taking share from the competition.
The market is evolving in our favor, where a complete solution for both customer engagement and customer operations is becoming a must-have. The advantages we have and time to value, thanks to the Now Platform, will only grow over time. That time to value advantage will just keep accelerating and expanding, thanks to our ability to quickly build meaningful vertical solutions. Simply put, we have an enormous opportunity with Customer Workflows, and we are executing to win. Now to hear more about the power of the ServiceNow Platform, it's time to pass the mic to my partner in crime and Head of Creator Workflows, Josh Kahn. Josh, take it away.
Thanks, John. The Creator Workflows TAM is over $25 billion, growing to $36 billion in three years. This has a number of subsegments, including low-code application platforms, business process management, robotic process automation, and others. There's three key trends that we're focused on that are driving the growth in this TAM and will drive ServiceNow's growth in this market. First, COVID has caused a huge acceleration in the digitization of internal operating processes. These are manual processes that are handled with email and spreadsheets today. Amazingly, many business-critical processes in multiple industries are handled with email and spreadsheets. Organizations are trying to build those into an application so that it provides a better experience, it delivers greater efficiency and greater process agility. Unfortunately, there aren't enough software developers in the world to build all those apps. There's this huge unmet need and a backlog of applications to build.
That's leading to a rise of citizen developers, business analysts who use low-code tools to build the applications to digitize their work. The third key trend is that there are a lot of automation technologies to help, but they've been deployed in silos. As a result of that, in a lot of cases, people have chosen the wrong automation for the job. That's failure-prone, it's not scalable, and it prevents organizations from moving fast enough in their automation journey. These three trends present a unique opportunity for ServiceNow specifically to capture a large share of this $36 billion TAM. Product is the foundation of our strategy. We're providing a complete platform for process automation. At the core of it is workflow and process analytics built using low-code tools. This digitizes the process, which makes it measurable, and that becomes the foundation of automation.
We also provide a complete spectrum of automation technology because you need different types of automation for different use cases. For example, if you want to automate a step where a human used to take data out of one system and types it into another system, swivel chair, as they call it, you'd want to use an API-based integration. If you don't have APIs accessible, then you use an RPA or robotic process automation-based integration. You might also have cases where humans are having to make decisions. In some cases, you have enough data, and you can build good enough models that you can predict that decision with a higher degree of accuracy than the humans that were setting that decision before. Across the foundation of workflow, you want different automations for different steps in the process.
You also need a UX layer that makes it feel like consumer software, not the enterprise software of yesteryear. At ServiceNow, we deliver a single platform. When we acquire a company, we re-platform that technology on the Now Platform. We combine that with organic innovation. This keeps our platform pure and consistent. Nobody else has this. We are also clear on our primary buyer, the CIO and the IT organization. We already are the strategic platform for IT, thanks to our IT Workflows. The CIO is our best advocate. IT is focused on two goals with respect to application delivery. First is delivering applications faster on behalf of the business. Second is empowering the business itself. We help IT deliver mission-critical apps faster because we have a single platform, and we have low-code tools that speed the delivery.
We also help them empower the lines of business to build awesome apps because we provide best-in-class low-code tools. We expect IT to control most of this TAM spend. We're already seeing platform consolidation. We're already seeing lines of business come to depend on IT to provide them a citizen developer platform. These two components of our strategy are the most important to understand to see our differentiation in this market. We'll also win with other buyers by going with our ServiceNow products to those buying centers. We provide the low-code tools that help those buying centers empower their own analysts to build applications alongside our products. In the customer buying center, we go with Customer Workflows. In the employee buying center, we go with Employee Workflows. Finally, it's important to understand our go-to-market strategy. App Engine is addressing the low-code application platform market.
This is the majority of the Creator Workflows TAM. We have dedicated solution sales, dedicated marketing, and dedicated go-to-market spend to get after this space directly. With IntegrationHub and robotic process automation, it's a little different. We're focused on ServiceNow-centric use cases. We're not trying to be a pure play. For example, in RPA, we have partnerships with RPA vendors. We expect that to continue. This go-to-market strategy gives us a very leveraged go-to-market investment and still allows us to capture this huge TAM. We're on a good path. Our success is accelerating. We have over $450 million in ACV growing at a 45% CAGR in the last four years. We have over 2,000 customers. In analyst rankings, we continue to move into the leadership ranks across the board.
Lastly, as we look at our customers using the technology, we have over two million monthly active users. It grew 35% last year, and integration usage was up more than 500% last year. Let me give you a couple of examples of the kinds of applications people build. I'll start with a complex application. This is a business-critical application for a prescription benefits management provider. They need to propose drug pricing to their client. This is a workflow that went across 22 different departments from sales before it reached the customer. That process involved emails and spreadsheets, and then each department in the process had their own process with emails and spreadsheets. There was no visibility to the end-to-end progress. They were missing SLAs and paying penalties. With ServiceNow, it started in the CRM system. An integration into ServiceNow kicked off a workflow.
That workflow ran across 22 departments, where each department had their own workspace to structure their work and conduct their work. There were analytics across the entire process. This workflow saved the organization over tens of millions of dollars in penalty payouts. An app like this is built typically in weeks or maybe a month or two, but not years. Let me give you another example of a really simple process. This is one that happened thousands of times a year at a consumer packaged goods manufacturer. Regional marketers needed to go to events. They wanted brand materials and people to help staff the event. That had two different email-based processes, one with HR and one with marketing. The regional marketer was constantly emailing, checking in, hoping it worked. With ServiceNow, the regional marketer makes a simple request. It's routed to the right department.
These apps can be built in hours or days. Let's take a look at what an app like this looks like and how you might build it. I'm going to show you three things. First, the end user experience for the regional marketer making the request. Second, the agent experience for the team delivering on the request. Last, we'll show the developer experience for the marketing analyst building the app. Let's start with the regional marketer. Here you see the employee portal based on our Employee Workflows product. This is where employees get everything they need. Down here is a virtual agent, where our marketer can ask for help with their trade show. The virtual agent is going to ask a few questions, when and where, what brands are to be represented, and what kind of staffing support is needed.
Now the request is submitted. Let's flip around and show you the experience for the agents delivering on this request. This is the workspace where they see all the requests coming in. Now that it's digital, there are analytics, so they can see the history, the breakdown across brands, how they're doing against their service level agreements. Finally, I'm gonna show you how a marketing analyst builds an app like this. This is our new App Engine Studio. It helps citizen developers build apps fast. They can create from scratch by clicking in the upper right corner, or they can use any of these templates provided in the product. We deliver more templates every quarter. They can also see all the applications they recently worked on. Let's click into the trade show app and get a look at that.
Here we have a great overview of all the application components, the data, the user experiences, the automations, and more. If they were building a new app, it would walk them through step by step, as you see over here on the left. Let me show you how they can add new data sources. By clicking here, they can build the table manually or automatically build the table based on uploading a spreadsheet. If they upload a spreadsheet, it can automatically import the data as well. To change the user experience for agents delivering the request, they click here. They get a real layout of the workspace. They can click and change behavior or the appearance of the components. They can even add new components to the page by dragging and dropping from the palette. Logic is in the automation section.
This is a simple natural language view of the business logic. A citizen developer builds it in the exact same way they describe the process to a friend, including adding integrations to external systems to automate steps in the process. Lastly, an analyst can publish the app, and it goes through approvals and health checks. This is how we ensure that citizen developers are empowered to build high-quality apps that IT feels good about. That's a quick overview of App Engine Studio, our new foundation for low-code development. It empowers citizen developers to build meaningful apps using wizards, guidance, and templates. It also helps IT developers build apps faster, doing the simple stuff quickly, so they can move on to coding. It's a single platform, so these IT developers can build reusable components that help citizen developers get past hurdles and build applications that really transform their work.
Many no-code tools in the market are just too simple to build applications that are actually gonna have an impact on their day-to-day work. It's not just about the tooling. An app is only as good as the platform it's built on. Our workflow drives the core process that holds all this automation together. It's the foundation on which you can optimize the process using automations. We have a complete set of automations because you need different automations for different use cases. If you don't have workflow as the foundation, and all your automations are not on a single platform, you end up with islands of automation. Creator Workflows provides a single platform with workflow at the core, all of the automations on a single platform, and it's built for IT teams to both deliver faster and empower the business.
That is the core of our strategy to capture this $36 billion TAM. Back to CJ for Employee Workflows and NowX.
Thank you, Josh. That was fantastic. I'm really excited about App Engine Studio and what it will do for our customers in terms of application development. Now we are going to go in details about the opportunity we have with Employee Workflows. This is also a $20 billion TAM that is growing nicely. What has happened recently is that employee is now a C-suite agenda. As you have seen many blogs about future of work, hybrid work environment, what does it mean for employee? This specific trend is something that our solutions is perfectly aligned with. Second thing we see is that every single company or a customer is talking about, "Hey, what is the future of work? What is the role of employee?
How will employees continue to digitally engage and collaborate across channels when they are actually doing the work? Our employee workflow strategy elements are pretty simple. First of all, we want to deliver experiences across the enterprise. We want to meet the employees where they are and when they are dealing with whether IT or HR or Facilities or Legal or Procurement, we want to be there. For simple workflows, we are going to use artificial intelligence and self-service portals, virtual agent, and so on, so they can deal with high volume requests at a bank or a healthcare organization. For complex workflows, our products deliver streamlined experiences so that employees can engage enterprise-wide. We are also providing workplace services for future of work. Is the workplace ready? You know, can employees safely return to workplace? Can I mark which location I'm going to sit on?
How many folks are allowed in a particular conference room or a meeting? For the hybrid work of future, we now have capabilities across our Workplace Service Delivery module. We introduced in our Quebec release something really fundamental, that we want to capture the sentiment of the employee while they are in the journey, whether they could be onboarding, could be off-boarding, could be ramping up, and many other use cases you can think of. We want to capture that sentiment in the process so that the process or the workflow can be improved next time. Simplifying the experience is agenda for every CHRO that I speak to, and a lot of times, for every CEO.
Because employees always need help, whether they're working from home, whether they're working in the office or some form of hybrid environment, whether it's related to payroll, onboarding, IT issues, legal issues, or as we discussed, facilities issues. Our Employee Workflows make it simple for employees when they are dealing with the enterprise-level functionality across multiple departments. You know, what has been encouraging over the past few years, and we saw this acceleration last year, is that not only the product line is delivering phenomenal business results and growing nicely, 50% of Fortune 50 CHROs and 35% of Fortune 500 CHROs are relying on our Employee Workflows products. In 2020, exactly actually one year ago, we released our Safe Workplace apps, whether it's for frontliners, whether in healthcare organizations.
As customers were struggling on how to bring employees safely back or check vaccination status this year, those type of examples. We did 22 releases in last one year, every two weeks. You know the best part? When I speak to some of these largest customers, whether it could be bank or a ride-sharing company or a hospital in Massachusetts, 100 customers are now live on this product, and some of them went live in just matter of weeks.
There has been a lot of validation that when we are dealing with employees, and when I speak to whether it's a CEO, CHRO, or a CIO or a head of facilities under CFO, that enterprise service management for employees, the needs are real, and our solution is perfectly designed so that employees can be productive, could be onboarded, off-boarded, and all other critical journeys that they go through using our solution. I'm really proud to introduce NowX. In 2018 Financial Analyst Day, we introduced NowX as our incubation unit, which will create organic either products or foundational capabilities in the platform via small teams that are focused on building new things for our customers. In 2019, we introduced two products. In 2020, we actually introduced five products that are being used by 50 customers, and these are large customers.
We spend a lot of efforts in making sure there is a proper product market fit. We work with some of the customers at a very strategic level to ensure that we are delivering innovation not only for them, but the innovation that can scale. When I look at 2021, we will introduce additional two or three products that will act as a growth driver for years to come. I'm pretty confident that this year it will result in $100 million-plus of ACV through these NowX products. It's a great innovation unit. You know, I have some amazing leaders. Karel van der Poel leads that unit and is always focused on new innovation. When you look at their track record, you know, I shared with you the portfolio beforehand.
Whether you look at our IT Workflows and one of our fastest-growing products, which is GRC, they delivered BCM or business continuity management capabilities for our IT Workflows. For our Employee Workflows, this team delivered Legal Service Delivery, as well as they will be delivering Procurement Service Management this year. For Customer Workflows, they deliver Connected Operations and all industry solutions. For Creator Workflows, they deliver Process Mining, which became foundation for our ITSM Enterprise and CSM Enterprise. This team continues to deliver, continues to innovate. As you look here for our industry solutions which are completely built organically. It is not just a thin layer. There is actually a data model that supports these industries. There are workflows that support these industries. There are integrations that support these industries. On telecommunication, we have multiple products. We started with banking in 2020.
One of the largest customers use this product. 2021, we are introducing manufacturing and healthcare products. 2022, we will introduce two additional industries, all organic, all built by NowX, data model, workflows, and integration. With that, I want to show you the conversation I had with one of our largest and strategic customers, AT&T. I am delighted to welcome Jeremy Legg, Executive Vice President with AT&T Communications, to our financial analyst day. Jeremy, welcome to ServiceNow's Financial Analyst Day. Great to have you here.
Great. Thanks for having me. Looking forward to the conversation.
That's awesome. Jeremy, I'll get straight to it. What is your role with AT&T Communications in Jeff McElfresh's organization?
I'm the CTO of a group called AT&T Technology Services. In simpler terms, what that means is I run the infrastructure and the software side of AT&T, not the network side. There's a whole series of functions obviously that cut across both from a software perspective. This is things like cybersecurity, application development, public cloud, you know, as well as the chief data office function, in addition, a lot of our middleware. A lot of the things that make everything work that people don't necessarily notice.
Jeremy, I know you joined AT&T Communications, but you've been part of the broader umbrella for a while. You have massive transformation under progress with AT&T. Tell us, what are some of your top priorities for AT&T Communications?
There's a broader corporate initiative going on at AT&T around transforming, you know, not only our technology infrastructure, but business processes and other parts of the company. The technology piece is certainly one of the major pillars of that transformation. We're going through and revamping our back office, shutting down physical data centers, migrating infrastructure to the cloud, which is not uncommon for a lot of companies, but at AT&T, the scale of it makes it a lot different. We've got more than one or two servers, as you can imagine. The other thing we're trying to do is really transform the way we think about software. We wanna focus our internal software efforts on applications that touch our customers and differentiate our products with our customers.
We wanna leverage best-of-breed software, from, you know, folks like ServiceNow and others, where we know that you guys are gonna build that software better than we're gonna build it. That's why we're adopting, I don't wanna call ServiceNow a packaged software. It's a big piece of software, but it's a piece of software that's largely already built and best of breed.
That makes a lot of sense. I think what I'm hearing you say, you have a large technical and engineering teams, and you want to focus them on what matters the most for your customers rather than creating a functionality like a potentially IT service desk or an IT operations management or something of that nature. That makes a lot of sense. Jeremy, I know you have a history with ServiceNow, and prior to AT&T Communications, you have used ServiceNow, so what was your experience and what did you get out of using ServiceNow?
Sure. I, before I jumped over to the other side of the fence at AT&T in the communications company, I used to be the CTO of WarnerMedia. That was my first experience with ServiceNow. We largely used ServiceNow as part of our configuration management database, the CMDB, the mapping of our internal infrastructure, both across the network for our broadcast operations as well as, you know, many of our scaled internet properties. That's an essential tool. I kind of think of CMDBs as the bedrock of IT infrastructure 'cause you gotta know what's connected to your network. You gotta know what talks to what, and you gotta know where it is and who owns it.
That was a key piece of the technology that we rolled out at WarnerMedia, and then I brought that henceforth over to AT&T.
You have been a great champion inside of AT&T with ServiceNow. You have a phenomenal team. Both myself and my teams, extended teams, not only work on the technology side, but we have also started engaging with your network side to see if you can leverage ServiceNow there as well. When you step back and you know this broader transformation initiative you're driving with ServiceNow, what outcomes, either for your B2B customers or B2C customers, you expect once ServiceNow is part of your technology fabric?
Sure. I mean, a couple of different ways I'll answer that question. The first is, similar to WarnerMedia, but certainly a far greater scale, is the mapping of our infrastructure. At a place like AT&T, you know, there are millions of endpoints, you know, connected to the network as well as our IT infrastructure. How all of those things relate, talk to each other, where they are, who owns them, what software stack they're on, that's essential for us to operate the business. It's not that we don't have those systems today, but it is true that they're not all consolidated and in one place. That's what we really need to do at the CMDB level. As you move up the technology stack from there, we're looking at ticketing systems.
There are a variety of ticketing systems that we use across the enterprise to serve both our D2C customers as well as our B2B customers. We're trying to create single views of our customers, whether they be consumer or enterprise and business, so that we can better serve them. This is both, you know, impacting the way we think about field operations, how we think about customer service when a customer calls, and other operational metrics to make sure that we're closing out tickets as fast as we possibly can and solving customer problems.
You know, think of it as where's all the stuff. The ticketing is helping us figure out what's wrong with it when errors occur, because as perfect as I like to be, we still get errors. Then the third layer of that is serving our customers better. You really need all three of those in order to do that.
Jeremy, that makes a lot of sense. We, you know, we do feel every time I speak to your team and many team members, having that single ServiceNow Platform where all this data can be stored, and like you and I have discussed, scale is something unprecedented at AT&T. Both ServiceNow and AT&T teams are working together to ensure we can scale gracefully to AT&T's needs so that you can serve your customers better once you have proper repository of your assets that drives the actual actions for your customers. If they run into any challenges, as you say, we can provide a better customer service. If ServiceNow is the foundation to do that, we are really, really encouraged.
You know, I've seen progress across some of your business units of AT&T, and it's going really well, but we also have a lot of work to do. There are not many companies at the scale of AT&T. This is a partnership where we can co-innovate. You know, we have a telecommunications industry solution where we are actually partnering with your network operations team to see what is the art of possible here. Jeremy, thank you so much for taking your time. You're driving massive transformation. You know, when I ask your team, how do you describe Jeremy? They say, "He's a change agent, he's impatient, and he wants to execute on behalf of AT&T for their customers." We are here to support you, and whenever there are any challenges, we'll always work with your team to solve it for AT&T Communications.
Jeremy, thank you so much for spending time with us.
Great. Thank you, and thanks for the kind words, and look forward to getting this thing rolled out fully.
Thank you, Jeremy.
Thank you, CJ, and thank you, Jeremy, for sharing how AT&T will use the Now Platform to help in your technology transformation. We're honored to be on this journey with you. When you put together everything you've heard today, it culminates into a tremendous business model that drives a balance of durable growth and leverage at massive scale. You've seen it in our results. Over the past five years, we've grown revenues well in excess of 30% to over $4 billion. That's a CAGR of 37%, and that's all organic. We're the first SaaS company to achieve that scale without significant acquisitions, and we couldn't be prouder. It's a testament to the strength of our team's innovation and the power of the Now Platform that CJ highlighted earlier. Our strong CRPO trends provide further visibility into sustained high revenue growth into the near future.
Since rolling out the RPO metric in 2018, we've seen RPO grow at a 34% CAGR and CRPO at a 33% CAGR. We ended 2020 with $9 billion in RPO. We're well on our way to $10 billion in revenue. The strength of our top line is made possible because we have multiple levers to drive growth within our $175 billion total addressable market that continues to expand. To start with, we continue to land more new logos with the tremendous opportunity remaining in our current markets as well as new countries we enter. Next, we have a significant opportunity to continue to expand our relationships with our existing customers. First, we're growing our existing product deployments wall to wall across departments, divisions, and countries. Second, we're cross-selling our new products to complement the existing ones.
With the constant innovation that CJ is driving, we're adding new capabilities to new SKUs that allow us to upsell customers to higher value offerings. We're also introducing new solutions to new personas. For example, our HR product to CHROs, and more recently, our Legal Service Delivery product to GCs, which present new buying centers. As you can see, we have multiple drivers to fuel our organic growth engine, it starts with landing new customers. It's not just about volume. We've evolved our focus to landing the right customers who have a greater opportunity to expand with us. We're also landing new logos with products outside of IT, including CSM and HR. The expanded breadth of our product suite has allowed us to land bigger and bigger deals with new customers.
As a result, when you look back at the last five years, you've seen our average net new ACV per new customer increase by 70%. In fact, the number of products new customers are purchasing increased by roughly 30% over that same time frame. Once we land these new logos, we see tremendous amount of potential to expand those relationships. A large portion of our growth has and will continue to come from existing customers. Our older cohort of customers continue to drive strong growth. For example, a customer that spent $100,000 with us in 2010 is now spending over $1.4 million with us today. That's 14x, representing annual growth of over 130%. In 2020, our existing customer base drove 86% of our new business, up from 72% in 2016.
These customers we know and partner with, thus giving us great visibility into the pipeline. Customers see the value in our solutions, which help unlock productivity and improve employee and customer experiences. In 2020, we saw a net expansion of over 125%. Perhaps even more telling was that about 60% of our existing customer base expanded their contracts and spent incremental dollars with ServiceNow in 2020. A clear indication of the value we are delivering. We're doing a great job landing multi-product deals within that install base. These customers have seen the power of the Now Platform and continue to grow their usage. The more products they use, the more critical workflows they create on our platform, creating a stickier user base.
For example, we've seen our mix of customers that purchase three or more products increase from 63% of our total customer base in 2016 to nearly 87% in 2020. These customers consistently exhibit 99% renewal rates, creating a solid foundation for us to continue to build upon. As CJ talked about, with the introduction of our newer AI-powered experiences, including chatbots and process and workforce optimization, we've also created new premium SKUs that allow us to upsell existing customers to higher value offerings. Our ITSM Pro SKU is currently yielding a 25% realized price uplift versus our standard SKU. A healthy increase, 'cause we're able to drive tremendous value and productivity savings for our customers. We believe our ITSM and CSM Pro SKUs can penetrate 55% of our customer base.
With the recent launch of our Enterprise SKUs, unlock an additional 20% of that base. We view our relationships with customers as long-term partnerships as we innovate to provide solutions to address their evolving business needs. This customer-centric mindset of forging strong relationships with our customers has resulted in net expansion that has driven higher customer spend. The average size of our customers with greater than $1 million in ACV increased by 50% since 2016. We've seen our largest customers become even larger. Over the past five years, the number of customers with over $1 million in ACV has grown at a CAGR of 33%. We've seen 21 customers with over $5 million of ACV grow to 184, including nearly 50 over $10 million.
We even have multiple customers paying us north of $30 million in ACV with the potential to grow even further. Despite the strong expansion we've seen within our base, there's plenty of potential. Within our existing customers, we see the opportunity to grow our total ACV with our existing products by 5x. A 35x opportunity when we factor in new customers and white space opportunities within our total adjustable market. While we have 7,000 enterprise customers today, there are tens of thousands of enterprises with more than 1,000 employees for us to go after. We clearly have a lot of runway in front of us. To help facilitate this expansion, we've been evolving our pricing to optimize the buying process. Beginning in 2019, we began to invest in a specialized pricing function to do four things. One, simplify the buying for our customers.
Two, facilitate an ease expansion. Three, improve deal velocity. Four, build pricing models that will last as we scale. First, we focus on portfolio simplification. We've evolved our go-to market from selling point products to solution suites and outcomes. We've also reduced our license meters from over 20 to just four. Next, we've created the Now Buying Program, which simplifies pricing by moving away from fulfillers to unrestricted users. The Now Buying Program allows customers to expand faster, simplifies buying, provides greater usage flexibility, and improves value alignment. That value alignment ties to our third initiative, which is to ensure that our pricing structure is built to last. We wanna make sure our models can grow with us and match customer buying preferences. Overall, we're focused on driving a customer-centric approach to pricing to make it easy for customers to grow and achieve value with ServiceNow.
Initiatives like these to improve sales velocity helps drive a very efficient go-to-market motion. ServiceNow is focused on driving a balance of growth and profitability. We've always been disciplined with our investments in sales and marketing, and you can see that over the life of the company. At $1 billion, $2 billion, and $4 billion in revenue, you've seen a relatively steady and improving sales efficiency, which we measure as an incremental dollar of revenue divided by the incremental dollar of sales and marketing spend from the prior year. In 2020, our 3.6x sales efficiency is notably higher than the average of our cloud software peers at scale. We're able to do this because of the strength of the Now Platform, our innovation, and our investments. The expanded breadth of our product suite has allowed us to land larger deals with new customers.
Our investments in vertical solutions and go-to-market partners have allowed us to more quickly penetrate industries while delivering more value at higher price points. Our strong renewal rates and investments in inside sales have also helped to reduce our cost to book incremental dollars. This efficiency and discipline has allowed us to drive consistent margin expansion. 900 basis points since 2016, resulting in a 50% non-GAAP operating profit CAGR. Practicing what we preach, the Now Platform itself is responsible for notable contribution to our efficiency. Using the Now Platform internally, we've seen 65% of employee issues self-solved. 45% resolution of customer cases and $300 million of savings from employee productivity over the last three years. This has allowed us to shift investments to drive growth, reallocating 15% of IT spend from IT operations to IT innovation.
We've also driven consistent free cash flow leverage. In 2020, we delivered $1.5 billion in free cash flow on $4.5 billion of revenue while growing 32% organically. From 2016- 2020, that represents a 46% free cash flow CAGR. I wanna pause and let that sink in. Over 30% growth organically at massive scale while driving over 30% free cash flow margins. While smaller companies are talking about the rule of 40 or even the rule of 50, in 2020, we were operating above the rule of 60 with a much larger base. When you look at the sum of our revenue growth and free cash flow margin over time, you'll see that at every point in our journey to $4 billion in revenue, we've outperformed our software peers' average. That momentum continues into 2021.
Starting the year off with a very strong Q1, subscription revenue growth was 30% and CRPO 33% year-over-year. The guidance we provided for the full year calls for 27%-28% subscription revenue growth, along with 30% CRPO growth for Q2, which we believe is the best leading indicator for future top-line growth. I wanna take a quick moment for a sidebar here. We believe CRPO provides better visibility and is a more consistent indicator of business performance, normalizing the timing and duration noise that impacts quarterly billings. If you look at the graph on the left, you'll see that subscription revenue growth, the green line, tracks very closely to CRPO, the purple line.
On the contrary, subscription billings, the dotted line, has wide fluctuations and often requires adjustments for timing-related noise, such as customer co-terming, which can change the timing of renewals from one quarter to another. In addition, invoice durations, both short-term and multi-year, can cause fluctuations in growth rates. These changes are purely timing driven by customer requests and have nothing to do with the underlying health of our business. A perfect example of that is the $80 million of billings that we saw pulled forward into Q4 2020 from 2021 due to early customer payments of their second or third-year invoice. This resulted in us recognizing billings from these customers twice in 2020, both in Q1 and in Q4.
We believe these are one-time in nature and the result of customers having excess cash at the end of the year, given the incremental cost savings enterprises saw from COVID. Normalizing for that timing, you can see on the right, 2021 subscription billings guidance calls for 28% year-over-year or about 27% in constant currency. That's in line with where we started our guidance for last year pre-COVID and off of a larger base. Overall, the early payments had a 4 percentage point impact on our billings growth. You can see there's often a lot more behind a reported billings number, and understandably, it can become confusing. Looking at billings from a four-quarter rolling basis will help normalize for these large quarterly swings, as this metric is much more correlated to CRPO and revenue.
That's why you saw us introduce CRPO guidance this year, and why you'll see us focus more of our commentary on CRPO going forward. Turning back to the momentum we're seeing, it doesn't only drive the top line. We also continue to see strong cash flow generation, even as we invest in our powerful organic growth engine. For 2021, we're guiding 30% free cash flow margin, which, if you assume our professional services grows at a similar rate as our subscription revenues, implies $1.7 billion of free cash flow. A really impressive number that enables us to continue to reinvest for organic growth. Looking forward, our priority is to continue to invest for strong, sustainable growth. No other software company has achieved ServiceNow's size, growth, and profitability profile organically. We're focused on maintaining that leadership.
We're committed to driving continued high growth at scale, balancing that growth with steady margin expansion and making disciplined investments in key areas to ensure that we're well-positioned to take advantage and be a market leader in the digital transformation acceleration happening right now. Our guiding pillars are our North Stars. We strive to be the trusted innovator for the C-suite, engaging customers with a world-class go-to-market machine. We're investing in new and emerging markets and verticals to accelerate growth. We're force multiplying our reach and capabilities through partnerships. We're creating new product experiences that will make the world of work better for people. You heard it straight from CJ earlier, packaging AI, low-code capabilities, RPA, and process optimization into a solution set that is unmatched by any single peer. Finally, we're investing in our people. Teamwork makes the dream work.
We're focused on attracting, retaining, and developing great, and importantly, diverse talent. Putting that all together, looking out three years to 2024, what does ServiceNow look like? This is the money slide, guys. We expect to exceed our subscription revenue target of $10 billion in subscription revenue. We expect to expand operating margin by 300 basis points to 26.5% by 2024, delivering on our promise to expand profitability by an average 100 basis points per year into the future. We expect for the operating margin to flow through to free cash flow margin, in spite of the fact that we will expect to see an increase in U.S. taxes in 2024 as a result of fully utilizing our U.S. NOLs. Importantly, these targets are all organic and assume no material M&A.
We're also reducing our expectation for annual dilution to less than 2%, we expect a non-GAAP tax rate of 19%-20%. Fast-forward to 2024 when we're at over $10 billion in subscription revenue, what does ServiceNow look like then? Our net new ACV will continue to diversify across our strong product portfolio. In 2024, we expect about 35% of the business to come from Customer Workflows and Employee Workflows, and Creator Workflows driving at 20%. Our bookings will be more global, with 40% of our net new ACV coming from EMEA and APJ. We will have over 2,000 customers paying us over $1 million annually, including over 40 paying us more than $20 million a year. We aren't stopping at $10 billion. As Bill mentioned, we have bigger aspirations. We're focused on 15 in 5.
Over $15 billion in subscription revenues in five years, which sets a target year of 2026, and we aim to get there in the same disciplined way we're running our business today, driving a balance of growth and profitability. Importantly, we're going to get there doing the right thing, not only for our business, but for the common good. Today, I'm excited to share ServiceNow's global impact strategy, which includes our environment, social, and governance initiatives. The seismic events of the last year further emphasize the importance of sharing with all of our stakeholders, including investors, how we are addressing our responsibility and opportunity to play a key role in tackling urgent challenges so that we may positively impact our company as well as our broader society. Our overarching vision is to workflow a better world by focusing on deeply embedding ESG into the Now Platform.
We believe this is an area where we can truly differentiate ourselves. It's all about our products and how they can help our customers workflow ESG outcomes, thereby compounding our efforts and our impact. We will continue to develop new ESG solutions that address our customers' and partners' ESG goals. We also have three strategic pillars representing environmental, social, and governance initiatives. Sustaining our planet is our environment pillar. Here, we will focus on improving resource efficiency and reducing carbon emissions. We recently announced our plans to achieve 100% renewable energy and carbon neutrality by the end of this year. We're also committing to achieving net zero carbon before 2050. Creating equitable opportunity is the social pillar. This pillar is where all our material social issues sit. Talent, DEI, the future of work, digital divide, and community engagement.
Through this pillar, we will make work more equitable, accessible, and rewarding for all people. As a company, we continue our commitment to diversity, inclusion, and belonging, both internally through the acceleration of our diversity and inclusion efforts to increase representation and sustain pay equity, and externally to support communities and people of color. Lastly, acting with integrity is our governance pillar, with our priority being transparency, data security, and privacy. A key piece of this pillar is building trust with our stakeholders, not only through security and privacy, but also through publicly disclosing our strategy, goals, and year-over-year progress to our stakeholders. Our first ESG report was recently published on April 26th, along with our second fact sheet and the launch of our dot com landing page. This report is a great example of how we're going to be more transparent around our ESG strategy, initiatives, and outcomes.
I encourage you all to read it. ServiceNow is focused on making the world of work work better for people, along the way, we want to ensure we can help make the world work better too. With that, let's take a 10-minute break, and when we come back, we'll be set up for Q&A. Thanks.
[Break]
Thank you all for rejoining us for ServiceNow's Financial Analyst Day. We are ready now to take your questions.
Our first question is from Raimo Lenschow from Barclays. You are starting to play into large adjacent markets like RPA and Observability, but you are also partnering with a lot of the leaders in those spaces. How should we think about your ambitions in those spaces between market leadership versus playing specific roles in some parts of these markets?
Thank you, Raimo, for the question. First, think of us as a platform company. As we discussed in today's conversation, anything from collaboration to the systems of record participants, our customers are looking for a cross-platform integration engine, and that is ServiceNow. There's lots of islands of innovation out there. We're the one company that kinda pulls it all together. While CJ and the team build things like RPA and Process Mining and AI, and today you saw the DevOps move and other things, we still are cooperative with other market participants because that's what our customers want from us. Right, CJ?
Yeah. Correct, Bill. Here is how I would say from a technology standpoint, our platform was always used for automation. We have increased the innovation in automation technologies such as Bill said, Process Mining. Think about RPA is yet another automation technology which will become core in the platform. Some customers will choose to have a best of breed, and some customers will definitely take the platform approach to these automation technologies. That's super exciting for us, and we will add a lot of value to automation having RPA native in the platform.
Our next question is from Michael Turits, from KeyBanc. Increasingly, you seem to be going head-to-head with large application vendors like Salesforce, with your customer service offering, and now Salesforce with its ITSM offering in partnership with Tanium. How do you see yourselves competing not only with Salesforce, but also with others, CRM, HCM, and ERP vendors in the next few years? On top of that, the next question is, many have wondered for years whether your strategy will be going down the stack into ITOM. Is that the direction you're likely to go or more likely up the stack into collaboration?
Well, first, I'd like to say we don't need anybody to lose for us to win. We've been very disciplined on being a platform company, and everything emanates from that platform. Whether it's the IT, the employee experience, Customer Service Management, or now the Creator Workflows, we're in control of our own destiny. That's one of the big differences between us and others. Other application companies are in a head-to-head competition with their peer group, where it's kinda rip and replace and who wins. In our case, again, no one has to lose for us to win, and we're very friendly to the market participants 'cause that's what the customer wants from us. Right, CJ?
Yeah. You know, my specific approach on this is, you know, Tanium is a great partner. We have many integrations with Tanium on the security product side. For us, in ITOM, specifically, Michael, we have done agentless discovery for years since we started. We have also agent-based approach for whole visibility as well as optimization, and we will provide best-in-class workflow orchestration in addition to visibility, so our customers have their digital services always up and running and performing. On your question about ITOM going deeper in the stack, our goal always is to have as much insight as possible in the multi-cloud environment, and through people, process, and technology, have full orchestration done so that the CIOs and CTOs have a peace of mind in dealing with their digital services.
Our next question is from Kash Rangan from Goldman Sachs. What will Now do differently versus large software companies in scaling to $15 billion revenue from the standpoint of product development and go-to-market?
Well, Kash, thank you for the question. First of all, from $0- $5 billion in revenue, as you know, and $ billion-plus in 2024, which has been firmly recommitted today for the first time publicly, actually, we put a date on it, 2024, we intend to do that with the same playbook. Organic innovation. That is what this company is all about. That is a big difference from the other market participants. In fact, we were the first to get to 5, and we will be the first to get to 10 in the timeframe in which we articulated today. I also want to make it clear that we will be $15 billion-plus in revenues by 2026.
Again, we have a great engineering pride in this company, led by CJ and his outstanding team, and our go-to-market will be highly aligned with our engineering efforts. We'll go to market by geography, industry, buying center, and we're putting tremendous value wrappers around all of these relationships with customers to show only ServiceNow gets you to value as fast as we do. Only ServiceNow has a Now on Now practice with real practitioners, including industry luminary leaders in business transformation that we assign to our largest customer establishments to show them the practitioner's view on how to get there on the journey. Finally, when you look at the ecosystem, investing huge amounts of people and financial powder into the ServiceNow practice, it's pretty amazing.
We have more than seven of them now that have put up a $1 billion or more as their target for revenue on the ServiceNow platform over the next couple of years. We're excited.
Our next question is from Arjun Bhatia from William Blair. How are you prioritizing which vertical specific solutions to invest in? What makes a particular industry attractive to build specific solutions for? How does your go-to-market strategy need to adapt for industry selling?
Well, we like to start off with industries that have a very large TAM. For example, if you look at financial services and telco, the team did a great job at going deep in those industries, and we're executing that plan really, really well. We already have 1,100 manufacturing customers, but we are going for a deeper dive in manufacturing and healthcare, and there are many other industries on deck. There's basically, you know, three things that we look at: workflow, the database, and of course, CJ will give you some additional insight on the on-deck industries and what we're trying to do to add to that customer relationship.
Yeah, absolutely. As Bill said, of course, TAM, when we look at a particular industry, there are many, many opportunities for automation. How do we capture the TAM there is typically, as Bill was going, data model, workflows, and integrations. Once we provide that deep product and a set of products, we are seeing that it resonates really well with customers on the product market fit. We started with telco and banking in 2020. In 2021, we are going to expand to manufacturing as well as healthcare. In 2022, for the technology service providers as well as insurance industry.
Yep.
All of these industries are primed for workflow capabilities, and we believe that we have a right to play there and to win.
Well said.
Our next-
Bill, there was a go-to-market question from Arjun as well.
Arjun, on the go-to-market, again, what you're trying to do here is organize the company from engineering all the way through to the go-to-market sales, services, and partner ecosystem by industry. Everywhere we can get that critical mass, we do it. It's especially helpful, for example, in the Northeast corridor of the U.S. to organize in financial services. We'll do that everywhere we possibly can. It's important to mention in case, you know, you're interested, we also have set up an industry value team that matches these industries. All the way down to the business case pre- and post-sale, we have professionals that came from that industry and have deep domain expertise. We've also done a lot on the services side to organize by industry and also the value that we create for the customer, not just pre-sale, but also post-sale.
There's always this measurement of how the customer consumed our product, actually leveraged value from the product, because as we said in today's conversation, there's so much upsell and cross-sell with this great platform and the multi-product approach we're taking to the customer relationship.
Our next question is from Stefan Slowinski from Exane BNP Paribas. You are seeing particularly strong growth in EMEA, and you are now guiding for 40% of revenues to come from EMEA and APJ by 2024. Can you please give us some additional insight into what investments you are making, partnerships you are striking, and steps you are taking to drive that performance internationally? Will the growth drivers be different internationally?
Sure. I'll start, and then Gina, perhaps you can add something to this.
Sure.
You know, that's the amazing part of ServiceNow. We're really just getting warmed up on EMEA and APJ and even, South America. It's just gonna be an amazing growth story on a global basis. We start with leadership. We start with great customer relationships. We start with real alignment between engineering and the value we can deliver by industry on the sale, on post-sale, and the ecosystem. What we're seeing now is we're just attracting the very best talent in the business. That's one of the great opportunities we have. As we see the market just expanding, I mean, take Japan for example. Japan is very much an on-premise market. It needs now to move to the multi-cloud world.
We can be that absolute control tower for those movements and those workflows, and we see this already in EMEA with their growth rate, which is just incredible. Gina, you might wanna talk about the investments that you see and how we're gonna take it to the next level.
Yeah. I would just reiterate that it's a very similar playbook, the growth drivers internationally are gonna be very similar to what you've seen before and what you've heard Bill talk about. You know, from an investment in leadership, investment in partnerships, investment in go-to-market, it'll be very similar to what you've seen. As we scale, we'll continue to build a library of reference customers as the opportunities grow and continue to bring in experienced hires like Paul Smith in EMEA, and several new leaders throughout Europe and APJ. Regardless of the geography, we're very focused on scaling our go-to-market best practices, what you've seen us do so well in the U.S., outside of the U.S.
You know, one of the big things is, you know, these systems of record and these on-premise or hybrid clouds, I mean, they're really moving to the multi-cloud world, or they're moving to a SaaS platform like ours. What the customer wants is a system of action. They have to get work done collaboratively across teams in the enterprise. This is becoming the de facto standard workflow platform for the global economy.
I would just add also, you know, our industry partners will continue to play an integral part in our expansion globally as well as in the U.S.
Yeah. One thing, Gina, I would add is, you know, you have given us the investments over last couple of years, not only as we expanded into Korea, but also the regulated markets in Europe and the regulated markets in parts of APJ, which will allow us to open up the new TAMs and new customer base.
Our next question is from Sterling Auty of JPMorgan. With the acquisition of Lightstep, how far do you expect to drive into observability? Specifically, do you intend to be a full-featured provider of APM infrastructure and log management?
I'll take this, Bill, if that's okay.
Of course.
First of all, we are really excited about Lightstep team and what they have done. They have specifically addressed modern workloads and modern application stack for the DevOps and the SRE team as they benefit from the software development insights on what particularly changed in their environment, so that the end users get consistent performance and reliability from their applications. These modern workloads is something Lightstep is really good at. We are going to go after applications development team in our customer base, as well as site reliability engineering teams and the DevOps team for those modern workloads to provide metrics, traces, and logs in a single place, so they get insight and then drive action through our workflow. That is currently the focus. Once we do that really well, would we expand in other areas? We'll find out.
First, we want to address the modern workloads, and in a single place, provide all the context and all the insights rather than a siloed approach that is currently being offered by other vendors.
The one thing I would just say to build on CJ's commentary, we are the platform of platforms, and the relationships we have with other vendors in the marketplace will continue in earnest, because it's all about making sure that the customer gets what they bargained for with ServiceNow, which is an open, very friendly to the ecosystem ServiceNow.
Our next question is from Keith Weiss of Morgan Stanley. Can we dig into Lightstep? Interesting combination. What was in that technology you found interesting? Seems like a very tough one to merge into the Now Platform. Does this stay a separate stack?
Keith, first of all, we were really impressed by both the team and the technology, and the team has proven this technology at large customers such as a Spotify or a GitHub types of organization for modern applications. We were really impressed by what the team has done for these kind of customers. Second thing is, what did I find interesting with the team is having metrics, traces, and logs in one platform, so you get insight rather than going through a siloed approach and going through multiple tabs, multiple graphs. There is so much data, and you cannot really get insight into what changed. That's what we really liked in that platform. From keeping the stacks separate, initially, of course, we are gonna keep the stacks separate.
As I always shared with you, Keith, that our goal is never to expose any complexity of our platform or platform services to our customers. They will continue to get the value through a unified user experience, all the workflows working with each other, whether they are done with ServiceNow platform and Lightstep platform.
Our next question is from Kirk Materne from Evercore. Is there anything ServiceNow needs to do to expand its mind share with CEOs, not just CIOs at this point? How does that inform your hiring decisions on the sales side? What are you trying to do with your larger partners?
Absolutely, Kirk. Expanding with CEOs has been a mission-critical part of our journey for the last 18 plus months. I can give you a report out. We're doing just fine in that category. On a global basis, the Rolodex of CEOs, heads of state, and partners that are chairmen and CEOs of very, very large global firms, they're all in on ServiceNow. I do wanna underscore, however, it's also important that the relationship plan has really a LinkedIn approach to it across the enterprise. We expect the kind of people that we hire on the sales side to have that mission-critical discipline around the account relationship plan in all the personas. When you're a platform company that spans the enterprise and you rely on workflow collaboration across many CXO personas, you need people that understand how to have that conversation.
That also includes having that conversation, including partners. We'll do our own services, and we are right now reinventing just how valuable they are. We expect to be valued as a software company, not a services company, which means you want very large partners making large scale investments to expand our portfolio globally. I must say, it's going extremely well.
Our next question is from Keith Bachman at BMO. Up-sell is increasingly important for growth. Can you go over drivers for greater up-sell, including with Customer Workflows and Creator Workflows?
I mean, I think we're, Keith, on the same page here, right? Being a platform company demands every customer relationship really understands the full breadth and depth of what ServiceNow can do. I must say, you know, for the first six months, I was startled a little bit because we were clearly the standard for ITSM, ITAM, ITOM, all the operational things around DevOps and security that goes on. We were, as some people would say, the ERP of IT for many global companies, which is fantastic. We learned quickly that that transfers beautifully to the employee experience and having a one portal approach where all the services are there at a consumer grade UX level for the employees. I mean, think about the environment we're in these days. Some people, actually thousands of people, are getting hired without ever meeting their boss.
They get their phone, their computer, their networking gear, their customized training, all their cases are managed across all personas in an enterprise. The employee experience is massive, and we really wanna be in all those conversations. With Customer Service Management, CJ, I thought John Ball did a great job.
Yeah. Yeah.
Really talking about what we're doing and how we're reinventing the customer service and how it's managed. I love the Disney example. What a difference between having an online experience with virtual agents and really using workflow at sub-second speed to get to the right person with the right skill set, the right empowerment level to help the customer out. Now you're seeing business people and engineers coming together on app modernization. I have one financial services company that I'm working with. They have to modernize 5,000 apps. The business people are saying, "By the time you modernize those apps, I won't have a job. We have to get going right now." They're building low-code apps on the Now Platform and getting them out in days as opposed to months and years. How do you see it, CJ?
Yeah. I would say, you know, the biggest thing that we have seen, Bill, since we started Customer Service Management in 2016.
Right.
What I have seen from a growth perspective, most of these customers start small, and once they start getting value, you see them grow significantly over number of years. Every single account that we started working with beginning 2017, 2018, 2019 has grown significantly for Customer Workflows. Any customer service transformation is a multi-year transformation. I'm very optimistic on our existing customers.
Right.
how we are nicely expanding, and we are also getting many new customers who are ITSM customers, but now using CSM. Similarly, on Creator Workflows, with App Engine Studio and many other things we have done on the innovation side, customers are finally seeing that, okay, this is something I can build quickly app on as I digitize the processes. The platform gives me all the automation capabilities in one place, rather than, as you called it, islands of automation. Most importantly, in COVID and post-COVID, the digitization of processes is a C-suite agenda.
Right.
which makes businesses move fast.
Exactly. you know, one of the things we talked about in the last earnings, Gina, was Xerox.
Yeah.
I mean, here you have a situation where 80% of their maintenance service force are actually up for, you know, retirement. Now they're gonna reinvent the kind of folks that they hire. They're going to use virtual agents, machine learning, AI, and also all the predictive technologies to proactively and remotely manage service issues. They're gonna be able to train a whole new cadre of talent literally using virtual reality technology. It is the ServiceNow Platform that they believe can completely reinvent this services model. Again, this is customer services now, dealing with external things, dealing with things predictively, and using all of our modern architecture technologies to change the game. There's story upon story that are just like that.
I would just add, you're seeing this happening in our numbers, right? 2020 expansion rate 125%. You're seeing the number of customers with purchasing three or more products from us increasing exponentially every single year. The proof is in the numbers and you're seeing it. You see Creator at 20% of our net new in Q1, right? It's happening, and it's happening now.
Yeah. You know, from an investment perspective, these are multiple businesses that will be beyond billions as you look into the future of ServiceNow, which is why we are absolutely so confident in our business model and the leadership role that the ServiceNow platform plays in this economy.
Our next question is from Karl Keirstad from UBS. As we get comfortable with the out year revenue target, can you discuss the relationship between net new ACV today and revenue growth tomorrow? Specifically, could growth be at least stable, if not accelerate in 2022 on the back of the net new ACV acceleration in 2021?
Sure. You know, as we've talked about, you know, we're seeing net new ACV accelerate in 2021, but 2020, we definitely saw headwinds for COVID. Revenue follows that net new ACV. For 2021, this year, you're seeing the net new ACV headwinds that we saw in 2020 happening and hitting revenue this year. To the extent that net new ACV is accelerating in 2021, which it is, as we talked about, this will show up in 2022 revenue growth. We definitely feel that you'll see stable revenue growth as you move in to 2022 as net new ACV accelerates this year. Remember also that our base of renewals and backlog is really large.
As net new ACV becomes a smaller piece of that base, and that base keeps growing, net new ACV has to accelerate very significantly to make big moves in the revenue number. There's a lot of moving parts there, but we are really confident in our revenue growth projections that we gave you to $10 billion in 2024 and $15 billion in 2026.
Yes. I would say very, very confident. Also just on the deals and the deal flow, I think it's 20% of the deals that we get that are new deals actually make up 90% of the revenue. It's kinda like not all logos are created equal, right, CJ?
Yeah.
I mean, you get some of them that really turn into global sensations. We're being very deliberate about how we source the non-customers, how we bring them into the ServiceNow Platform, and how once they're in on the ServiceNow Platform, we extend that relationship with many use cases across the enterprise. I cannot find a customer, and I don't think anyone here can, that doesn't love the Now Platform, and that is a tremendous asset for the future of our projections. We really feel like the satisfied customer is our best sales force.
Yeah, just to clarify, Bill, that you were just talking about net new logos.
Yes
there, right?
Yeah.
while it's not 90%, it is a good portion of the share.
Yeah. Net new logos, choosing the right ones makes a huge difference.
Choosing the right ones makes a huge difference. Not all logos are created equal.
Correct.
We've been really focused on making sure that we're landing the right customers that are going to be able to expand with us and where we really can add value to them.
Right.
Our next question is from Matt Hedberg from RBC. It's amazing to hear the growth in large customers. With a potential $175 billion in TAM, what is the path to getting a $100 million ACV customer, including what their product usage looks like? Should it map to 45% IT Workflows, 35% Customer and Employee Workflows, and 20% Creator Workflows per your 2024 overall outlook?
I'll let Gina and CJ comment on this. Let me just say this, you know, it wasn't too many quarters ago when we talked about the Veterans Administration being our largest customer. By the next quarter, we had a new largest customer.
What you're seeing is our processes and our go-to-market machine has been amped up to a level where in each of the regions, we are measuring deals in the multiples of millions that we're working on. There's quite a tight process on how we manage that. We will definitely get to the $100 million ACV customer, and we'll get plenty of them that are probably one-fourth and one-half of that. That'll become more of a normal thing for ServiceNow as we go forward.
I would just add, it's all about the innovation, right? The new product innovation that CJ and his incredible team keep driving. You know, we will continue to see that will help us get there.
I would say Gina had a nice slide which shows the split of what we look like when we hit bigger numbers. That's directionally aligned with your question around how would the split. You know, IT is our core. We have typically always started with IT and expanded within the office of CIO or the CTO. Now as we are expanding into Customer Service, which is a large TAM, we see for those type of industries, you will see significant traction as a % of total. Gina's overall direction is the direction when we hit $100 million of ACV for the customer.
Our next question is from Samad Samana from Jefferies. How should we think about the rollout of ELAs and what that ultimately means for long-term unit economics? Are there any early data points for customers live on ELA contract where it shows a meaningful spending uplift? It's good to see the robust growth of the greater than $20 million annual spend customers through 2020, and the projection of greater than 40 of these in 2024. What portion of your base do you think could eventually spend at the level based on the current product portfolio?
I'll start with the ELAs. We're seeing great traction in the ELAs right now, and we absolutely think that from a long-term economic unit perspective, it will drive great continued economics for us. The early data points for customers on live ELAs are all positive. Less complexity, less confusion about how pricing ends up into billing, and we're definitely seeing a good spending uplift there. We feel really good about the ELAs. With respect to the growth that we've talked about, we talked about greater than 40 of the customers greater than $20 million by 2024. The growth rates that you'll see there will continue to trend up.
As Bill talked about earlier, a $100 million customer is not tomorrow, but it's around the corner, and we absolutely think the growth rates will continue to drive and grow.
I would just say 1 of the big changes is the conversation around pricing has been radically simplified. Thank you very much for the leadership team's work on that. The conversation we're having now is how quickly we can get the customer live and to value. That's the magic of ServiceNow. We do it in days and weeks, and maybe sometimes in a complex situation, months, when the competition's talking about years. The ROI is just an incredible payback for our customers, and that's really one of the attributes that's driving our behavior with customers. We're now talking about how much value will the customer derive in each of these cases for their internal customer or their external customer. It's not just about what they're investing in ServiceNow, it's what they're getting out of ServiceNow, and it's amazing.
I'm not seeing any business cases that aren't 5x and 6x in year one.
Our next question is from Gregg Moskowitz from Mizuho Securities. On Creator Workflows, you mentioned that this business has grown at more than 45% CAGR from 2016 to 2020. If I'm not mistaken, it seems that business has accelerated in 2020. First of all, is that correct? Secondly, can you expand on how the integration usage has grown by more than 500% in 2020 alone, and what this means for future platform adoption?
Here is what I would say. First of all, yes, we are seeing much higher adoption of Creator Workflows in our customer base as they are trying to digitize the processes. In 2020, because of COVID, we saw higher acceleration than before as they tried to digitize their processes using Creator Workflows, because that was done out of necessity for a lot of businesses and a lot of governments. We are very optimistic, and what Josh showed you with App Engine Studio, where a system analyst or a business analyst in line of business can create an app in hours or days, is driving this specific growth even in 2021. In terms of integration, we decided to build IntegrationHub organically.
I had the first presentation from the team in 2017, and in 2019 it was a full-blown product with many spokes for Microsoft Teams, Azure's, and others, and we continue to invest there. This simplicity in the platform, where when customer needs to integrate with multiple systems, including software from Microsoft, SAP, Oracle, and others, is what is driving the growth. It is just so easy, whether you're creating an app or whether you have a workflow or an API-level integration, IntegrationHub just enables that really, really well. Very, very optimistic on how that business is growing via our organic engine.
Our next question is from Alex Zukin at Wolfe Research. When you think about how much middle office spend is pulled by a dollar of front office digital transformation, what is the right way to think about that? Looking at the guidance for operating profit and FCF growth, given that 2020 was a very unique year for all companies, is there a way to think about the future CAGR if you actually normalize for 2020 being a more reasonable OPEX year?
You wanna take the first, Bill?
Yeah, sure.
No, no, you take the first.
Just to think about middle office spend being pulled forward with digital transformation, that's the whole idea, where you look at workflow automation. These companies have separate systems. They're very siloed. Their teams don't work very well to get the job done, not because they don't want to, but because the systems don't enable them to. And things are really trapped in the middle. More and more customers are looking for us to build great employee experiences, look at the experience from the employee's eyes, not management's. Great customer experiences look at everything from the outside in. What is it? $250 billion call center calls a year, 35% turnover in the call center operation. These soul-crushing jobs can be completely reinvented with ServiceNow. 90% of these calls can be deflected.
The humans can get involved where they should be. Look at all the cost that's trapped in these middle office operations. It is a huge factor. It's really like $8 out of $10 when you look at some of these business cases is wasted, and it can all be pulled forward in a business case, digital transformation from the customer or the employee in. Huge transformative change.
Alex, on your question with operating profit and free cash flow guidance, 2020, as you rightly call out, as we talked about, was a very unique year for us and most companies with respect to OpEx. We've been pretty clear that if not for COVID, it would have been 100 basis points growth in both operating margin and free cash flow margin. We've been even further clear that from today to 2024, we will continue to be accreting that margin by 100 basis points a year. I think that's pretty straightforward for the math there.
Our next question is from Shebly Seyrafi from FBN. Does your Lightstep acquisition signify a more aggressive posture toward M&A? Related to Lightstep, how do you expect to differentiate yourself versus other observability companies like Datadog, Elastic, Dynatrace, and others?
Bill, I will address the second. You can address the first one.
You got it.
I would say, you know, we have always been a platform company and love our ecosystem of our technology partners, whether it's Dynatrace, Datadog, and others. Our ITOM event management product takes feed from multiple products, and that business has been growing nicely and will continue to always be great partners of Datadog, Elastic, Dynatrace, and many others. Specifically on Lightstep, our goal has been for these distributed modern application workloads. How can we provide insights via platform that gives you clear actions based on metrics, traces, and logs is the problem we are focused on, and what specifically change for those large distributed architectures. I love what the team has focused on so far.
They've rolled out the product in early part of this year, a brand-new product, and we'll see how we can have that specific product in our install base for customers who have modern application workloads. Great partners, technology partners with Dynatrace, Datadog, and others. For modern distributed application, Lightstep is gonna be a great technology via insight and ServiceNow workloads.
As it relates to the acquisition strategy of ServiceNow, no, our posture has not changed towards M&A. We are an organic growth company. We have never had to buy revenue. We have many ideas on new products. NowX is one great example where we're looking to launch two new products a year, and the pipeline is incredibly rich on our own ideas, our own innovation. That's one of the big things. We're actually creating new markets. We're creating green shoots of growth. We are not needing others to lose for us to win because what we do is different than all of them. You know, we were the first company to $5 billion on an organic basis.
We'll be the first company of all the major enterprise software companies out there to $10 billion on an organic basis, and we will not need large-scale M&A to get us there. In fact, when I upped the ante today to $15 billion by 2026 as a management team, we had in mind an organic growth strategy. The playbook that you've grown accustomed to, that you trust from ServiceNow remains the playbook. Now, having all that information, I hope makes the investment community feel very comfortable in management's diligence around M&A and how that compares to our organic growth strategy.
At the same time, in my remarks today, I also mentioned to you that if you look into the future, we're a company with a great margin profile, a great free cash flow profile, and a great revenue growth profile, and we'll build an ever-increasing and powerful balance sheet that also can create tremendous shareholder value in the future years. That's our strategy. We're sticking to it, and there's no large acquisitions that are on the drawing board at ServiceNow.
Our next question is from Brad Sills of Bank of America. With the NowX platform, it seems like where we might see the next category of packaged application coming from. Are there any repeatable applications that could perhaps turn into separate application like HR onboarding or Field Service Management?
Hey, Brad. You know, we started NowX in 2018, as you know, and our focus always has been either a new platform capability, like we just introduced Process Mining or process optimization, which became part of ITSM Enterprise and CSM Enterprise that just got launched in March. You know, what encourages me a lot is that that type of capability allowed us to have three customers north of $1 million of ACV for ITSM Enterprise. NowX sometimes will develop a particular capability in the platform itself. They have also done things such as Business Continuity Management, which became part of our risk portfolio. As you have seen, all the industry applications are coming from our NowX team done organically. They understand our platform. We have a great set of leaders who create, as Bill said, data model, workflow, and integration for those industries.
They are absolutely working on new applications, which we will announce once they are out, because that's the whole idea of incubation. They will have new applications that will come out, which will be additive to the roadmap I shared.
Our next question comes from Derrick Wood from TD Cowen. I don't think we heard much about security operations. Has this market focus changed? If so, what's the reason? If not, how should we think about the longer-term strategy around security use cases? On another topic, can you describe what the Enterprise SKU is, how it compares to the Pro SKU, and what the ASP uplift is at this tier?
Correct. Gina, I'll address the first, and you can do the second one.
Perfect.
On the first one, I am pleased to report that our security operations, which is made up of Security Incident Response and Vulnerability Response, has crossed $100 million or more of ACV. This product line is doing really well as we started 2021. I am very optimistic on how it is going to continue to grow through 2021. Security used to be a pillar in itself, Derrick, back in 2017 and 2018. It just made sense that it is overall part of our IT portfolio. Hence you don't see us calling out security workflows separately. It is just core part of IT portfolio. Product is doing really well.
Some of the largest financial services, banking customers, healthcare customers, governments use us for Security Incident Response or for Vulnerability Response. It has a nice trajectory as we move forward. It is core part of our IT workflow solution.
On the second question, with respect to the enterprise SKU and how it compares to pro SKU and what the uplift is. Enterprise SKUs was just launched in Quebec very recently, so we don't have a whole lot of data on the uplift. The pro SKU, if you remember, was seeing consistently about a 25% uplift in pricing and expect a similar uplift for enterprise, but we'll update you as we kinda get more learnings about that. We talked about also in my presentation earlier the fact that we expect pro to, from a penetration perspective, get upwards of about 55%, with enterprise really being able to go to 20% over time. With those uplifts and that growth, you see that there's really a significant amount of headroom still left within ITSM as well as in CSM.
If you talk about what's different about enterprise, it's about Process Mining that you heard CJ talk about. It's about Process Optimization and Workforce Optimization. If you think about your people and your employees being, you know, your most valuable asset, how do you ensure that they are optimized and working as efficiently and effectively as can be? How can we really early on deflect any process bottlenecks, identify them early, fix them, remediate them, and drive them to remediation quicker? That's really the differentiation with our enterprise SKU.
Yeah. Derrick, one thing I would just add to Gina's point is that we definitely in our ITSM customer base see opportunities both as Gina laid out for Pro as well as Enterprise. Enterprise was just shipped in March. Also think about when you look at our products such as CSM or our HR Service Delivery product, that has still only scratched surface in our ITSM install base. Like I said before, we start small with CSM. We grow significantly within the install base. HR is still not very penetrated with ITSM. Besides our Pro and Enterprise create a growth driver for us, just selling HR and CSM in our ITSM install base is also a massive growth driver.
Absolutely.
We have time for one last question. This is from Tyler Radke of Citi. On the increased push into verticals, do you need to hire more specialized salespeople to make this happen? How do you anticipate working with some of the more well-known vertical software companies like Veeva and Guidewire?
I'll start off on hiring more specialized salespeople. Absolutely. If you're going into a specific industry, CJ discussed the industries we're in and the ones we're going into, it always helps to have the deep domain expertise in that industry. Gina's done a great job working with the whole team to make sure we have adequate investment to go after industry verticals. When we declare we're going deep, we can go deep. Again, I reiterate, it's the presale, it's the sale, it's the post-sale, it's the alignment to the ecosystem and, of course, always being aligned to engineering. The full value chain. The nice part about where we're at is anywhere we invest, we get an amazing return on that investment, and it happens really fast. Other vertical players, CJ?
I would say, of course, we are usually an end because we are a system of action. If you look at Guidewire in P&C industry, we try to provide workflow capabilities besides it being a system of record for claims processing. Our goal is always whether it's Veeva or Guidewire or any specific industry vertical, as we dip into insurance industry in 2022, we will make sure that we really work well like we have done with systems of record for those industries.
What's interesting too, you know, even where we're not deeply embedded on a vertical industry basis, we're doing business with all of these insurance companies now. They have huge issues that they're trying to work through on that system of action level. I can think of one we just talked to last week, and the CEO basically told me, he said, "This is unbelievable. This is the answer to so many of my problems." We went from the call center to agent productivity to alignment with the customer, to eliminating all these steps in the work process in the middle office and getting everything streamlined on a common platform.
Again, these islands of innovation at some level kind of fall apart on their own weight, and that's why they wanna go with the Now Platform, and that's why we're very open to participate and help other companies, because if they do important things and they adopt us as the workflow automation standard, everybody wins, mostly the customer. That's what we'll continue to do. Be always on the side of the customer and the customer satisfaction and referenceability. Thanks for the question, Tyler.
Thank you for your questions. We will now turn it over to Bill for closing remarks.
I really wanna thank Gina and CJ. It's a pleasure to always be with you guys.
Always
but also especially today. You know, Friday, I really enjoyed, CJ, your terrific interview and also the alignment with John and Josh and all the teams in engineering and just that pride of engineering that you have built into the company. It's truly outstanding, and it's an honor to have such a great team to work with. I really believe, I just think the best is yet to come. Gina, I have to say, you know, what you pointed out on CRPO versus billings and clarifying that one issue that I think is very tough to do on a conference call with shareholders. Showing the sustenance in our billings and in our CRPO and in our amazing revenue growth story.
Yeah
Margin expansion, free cash flow expansion, we haven't backed off of one single thing. I'd like to now summarize by saying $10 billion by 2024, $15 billion by 2026. We're going to use the same playbook that you've grown to trust and know from ServiceNow. The balance sheet's gonna keep building and getting stronger. That fortress will be working for you, and that's a really, really strong statement. We love our customers. We think that they like us, too, and we're really doing a good job with the partner ecosystem, expanding in industries, in geographies, and personas on a global basis. We're ready to roll. I do wanna make one thing clear about ServiceNow. We stood up to the COVID challenge last March.
We came out with emergency response, return to work safely, then vaccine management, where we turned vaccines into vaccinations for millions and millions of people. We actually might have done such a good job of it that some people might think in a post-COVID world, would that slow our growth? Not at all. In fact, the core business model will benefit from what we learned on the digital selling process. As we expand and open up these global economies, our normal playbook kicks into high gear as well. The combination of those forces will equal a higher growth, even more successful ServiceNow. We did not need COVID for our growth story. It was something that our brand stood up to because we knew that our higher purpose was to make the world of work work better for people.
Count on us to be a high-growth company with terrific margins, terrific free cash flow, very satisfied customers, a happy ecosystem, and we're gonna work so hard for our investors to make sure that they get great returns on their investment in ServiceNow. Thank you all very much.