Thank you. Thank you. Welcome to our first big fireside keynote. Gina, great to have you here.
Great to be here. Thank you so much.
I was like, I saw your LinkedIn post and I kind of was, I had to hit the gym, so I feel bad there. But.
Stamina. We need stamina in these times.
Yeah, I know. I know.
For sure.
In these times, yeah, yeah. If you think about it, I wanted to start big picture. The beginning of the year was very volatile for everyone, stock market, probably kind of vendors as well. How did the situation evolve for you this year? What are you seeing?
Yeah, you know, I got this question earlier from one of our investors, and if you actually go back to the same, this same conference last year in December.
In here.
Right here. We talked about the environment feeling a little bit better, right? Like a little bit of uncertainty behind us.
Yeah.
And then Q1 came and it was a little bit different pretty quickly. The great thing I think is that our business, especially if you exclude the Fed piece, was extremely resilient and demand was strong and growth was really good. Obviously with DOGE, we definitely had some headwinds for Fed, but we're really excited about the fact that Q3, which is the biggest Fed quarter out there, we had incredible growth at 30%, biggest Fed quarter ever. And so I'd say this time now going into 2026. Well, I think that conversations with customers, and if you look at any IT spending reports into 2026, it looks healthy and looks good. But I would just say that I, I'm just so excited and pleased with the performance and the execution that our team has had quarter after quarter, even despite some pretty uncertain times, this year.
What are you seeing on the customer side in terms of their kind of behavior or kind of thinking about maneuvering these volatile times? Like, you know, what are the customer conversations like?
Yeah. First and foremost, no surprise. It's all about AI.
Yeah.
I figured that's like two minutes into the conversation where I said the word AI, right?
Yeah.
So, conversations are broad, and they are really focused on how AI is going to help, drive growth, productivity, and efficiency across the board. And so, the conversations we're having with customers is all about how they're quickly moving from experimentation phase into full-scale deployment. I think there was a lot of experimentation, especially on build, and there's a lot of focus now on software providers that are the trusted partners of the IT organization and really the ability to, if you think about what ServiceNow is able to provide with our AI Control Tower.
Mm-hmm.
The ability to manage, govern, secure all assets, including agentic AI assets, all in one place, whether they're building their own, they're using third parties to build and manage that holistically. Because the conversations about AI are obviously, everyone's having them, but in the enterprise especially, the focus in the C-suite is all how to do this in a secure, governed way.
Yeah.
Because at the end of the day, AI is only as strong as the governance around it in the enterprise. It's just so very important.
Yeah. Yeah. Okay. Perfect. Yeah. And I wanted to get back to AI a little bit later, but like.
Oh.
Just finishing up, sorry, on one point in terms of what we're seeing here, like federal this year, you mentioned DOGE a little bit.
Yeah.
Then we had the shutdown. Thankfully for you guys, that was, you know, after the end of the quarter. But like on the one hand, obviously it created kind of volatility, but on the other hand, if the government goes and wants to be more efficient, et cetera, that should play into your playbook.
Absolutely.
How has that federal thinking evolved for you this year?
Absolutely. So certainly short-term headwinds just because things were slow, right?
Mm-hmm.
Things were slowing down. But as you saw coming into Q3, once things opened up, our growth continues to be extremely strong. And the reason for that is exactly what you're saying, Raimo. The administration's focus on transparency, accountability, and cost savings is exactly where the ServiceNow Platform has helped government agencies transform in the past.
Mm-hmm.
And so the ability for us to go more broadly and deeper into the public sector in federal space, especially, the opportunity is enormous.
Mm-hmm.
The agreement we reached with GSA back in Q3 also opens doors much more broadly. And so from a mid and long-term opportunity perspective, our federal business is, I think, one of our key drivers for continued incremental growth. And even more broadly, what we've been able to do with public sector and federal government, we can do much more broadly, public sector around the world.
Yeah.
Everything we've done, we can replicate for public agencies outside the U.S., as well as state and local, which for us has also been pretty strong throughout the year. To your point, we're so well positioned to help federal agencies. A lot of the work that we're doing there is displacing very old homegrown systems that really need to be modernized and automated. We play, and the platform plays so well into exactly what these government agencies are trying to do with their technology stack.
Is there also an argument that AI, like with AI coming, you can't do AI with these very, very old systems? So it's kind of more of a driver that you kind of realize, shoot, I kind of maybe that 30-year-old system finally needs to be replaced?
That's exactly right.
Yeah.
You're not gonna get the AI productivities on old systems like that.
Yeah.
Actually, we saw in Fed specifically a lot of very fast POVs turn into deals.
Yeah.
Like within weeks. And so AI is definitely, I think, going to be a catalyst for even more opportunity in the federal space, as it is more broadly in the private sector as well.
Yeah, talking about private sector, are you kind of eating your own dog food? Like, how's AI within ServiceNow?
I like to say we're drinking our own champagne.
Oh, sorry. Yeah, yeah, yeah.
Eating my own dog food because our platform is like champagne and not dog food.
Yeah. Yeah.
But yes. So we absolutely, we call it Now on Now.
Mm-hmm.
It's a huge part of how we think about the platform internally. We're Customer Zero for almost every single product we launch. We've talked about Now on Now and our own AI productivity driving $350 million worth of productivity efficiencies. Now, a bulk of that we reinvested back into the business, into innovation.
Mm-hmm.
But about $100 million annualized, we flowed through to the bottom line this year alone because we were able to reduce our headcount growth plans.
Yeah.
So we don't have to do big mass layoffs, but we are able to really think strategically about our headcount bets going forward. And so we were able to actually drive $100 million to the bottom line this year. And those AI efficiencies keep growing. And so we will continue to drink our own champagne and deploy our platform broadly across the enterprise. And we're seeing it all over the place. Think about autonomous IT. So 90% of our IT requests are fulfilled self-service.
Oh, wow. Okay.
Customer Service .
Yeah.
Significant improvements, plus CSATs going up all at the same time.
Mm-hmm.
HR employee self-service going up significantly as a result. And so, expectations for the ability to leverage AI continually within helps us with our ability to accrete margins. We were able to raise our margins for this year.
Yeah.
Pretty significantly on a free cash flow side as well. And so there's inherent leverage in our platform to start because we are one platform, one unified architecture. And then AI just really enables even more leverage. And so the question always is how much we're gonna redeploy back into the business to drive future growth. That's always first and foremost, our priority. But we also have the ability to do both and sustainably grow our margins while at the same time really driving best in class top line growth.
Because you're probably involved in this, in on the project, like that to me it sounds like a multi-year journey. Because if I think about like backwards when we are using AI, it's like, yeah, there's something and it's like, oh yeah, this is actually working. But if you think like bigger picture, this, you know, this is not just a one-off margin improvement. This looks like multi-year, correct?
Oh, this is definitely multi-year. This is an AI journey and we are in very, very early innings.
Yeah.
We talked about the fact that our AI revenue surpassed $500 million this year alone, well on our way to $1 billion next year, which was the target that we put out back in May.
Yeah.
But this is very early innings. And, you know, talking with our customers, including Barclays, it is a multi-year journey and we're just getting started.
Yeah.
The innovation that continues to be fueled internally, I think is just phenomenal. And it's all about how we're able to help our customers really drive significant incremental value, both on growth as well as productivity and efficiency gains.
And then what do you see in terms of customer adoption? Because, like, and you know, you started out with the Pro Plus SKU. So if I'm a customer, I could say, well, I bought Pro Plus, I have AI, but that's on paper. That's not really adoption. Like, what are you seeing there in terms of customer behavior?
Yeah. So implementations are going faster. Deployments are going faster. We've seen 55 times increase in consumption from May till now.
Oh, wow.
Which is faster than we anticipated. And so we're seeing really strong traction. And what that means is that customers are deploying and they are building more and more agents on the platform.
Mm-hmm.
And so the consumption trends that we've seen over the past several months continue to be strong. And so the more customers are using and deploying, the more value they're getting, the more they'll continue to deploy.
Yeah.
And so it's a virtuous circle, that we're really excited about.
How do you think about that consumption showing up as consumption? Because, like, you know, if I'm, I guess, a customer Pro Plus, I get token, I get to consumption initially.
Yeah.
And then if I use more, then I need to come back to prove that point that SaaS is alive and kicking, you know, for the whole industry.
Yeah.
You know, people wanna see consumption growth. Like.
Yeah.
Where are we on that journey?
Yes. So as I said, we've seen consumption growing 55X from May till now. So we are, we're doing extremely well on that consumptive journey. But yes, you're right. We have a hybrid model from a monetization perspective.
Yeah.
And so that initial subscription, consistently we're seeing 30% pricing uplifts. And we've talked about that for a while. We're consistently seeing that. So with that initial subscription, obviously we're giving them a decent amount of consumption.
Mm-hmm.
I've talked about the fact that given the initial consumption allocations, we wouldn't expect to see the incremental consumption kicking in until back half 2026 into 2027.
Yeah.
What I'd say is that 55 times is stronger and faster than we initially anticipated. But you know, our base guide back in May that we talked about for 2026 was $15 billion in revenue for 2026. And so for the consumption to start to materially impact that number, that won't happen until back half 2026 into 2027. But that hockey stick and what that looks like in the future as AI becomes more ubiquitous and more agentic workflows are built, and think about it, we have trillions of workflows built today on the ServiceNow platform.
Mm-hmm.
Trillions. You identify all of that compute and that capacity need really is exponential and can be a really strong hockey stick as you think about growth 2027 and beyond. So we're excited. We're keeping a strong eye on that, and it looks very, very healthy.
Then, two questions, two quick questions around that. If you think about it, if we talk to customers, a lot of them start small, you know, and they were like, okay, well, like, you know, let's not go crazy on the use case in itself because I'm nervous that it starts to hallucinate and things like that. Do you see that? How quickly are they kind of moving on from that? Second quick question was like on the use cases, does it kind of mirror what you see internally in terms of what are the people using it for?
Yeah. So we're absolutely seeing it mirror internally. You would imagine our core is IT, right?
Mm-hmm.
That's our core. IT service desk is a huge area where customers are focused. We secure all the assets, right? Our CMDB has the visibility to all the IT assets. Now you layer on AI, it's just a huge value add for customers. You'll continue to see it there. Customer service continues to be a pretty remarkable area for us. HR actually was a bit surprising, but if you think about probably not so surprising.
Mm-hmm.
Because it's a safe place to start internally with employees versus externally with customers. But we're seeing those use cases really across the board, across the product portfolio.
Yeah.
Then you add in AI Control Tower, which we talked about briefly, and the real need for customers as they're deploying AI more broadly to think about governing and securing it, that AI Control Tower and the ability, by the way, to connect and monitor the agents irrespective of what platform it's built on.
Mm-hmm.
I think is a very compelling value. Our customers love this, and we actually surpassed our full year expectations in one quarter.
Oh, wow.
So we're really seeing some strong traction there. Very exciting times. To your question on small deployments getting bigger, we're absolutely seeing that.
Yeah.
We're seeing folks, really leaning in and understanding that the real value is when you go more broad as opposed to starting small.
Just to save you a question for the earnings calls for the next few quarters, do you know you have that slide where you look at the ITSM versus CRM versus HR versus platform?
Yep.
Conceptually, because you have such a big base on ITSM, if I do more agentic, could we have a scenario that that kind of segment actually grows because growth grows faster, because there's just so much upsell cross-sell that you can do there. And so, you know, as we get the slides, it's not like, oh my God, like something is wrong with CRM or HR. It's like ITSM has such a big upsell opportunity. Like how do you think about that?
I think you've seen that in the past, right? So, there’s always been the constant question about our core. Are we so penetrating?
Yeah, exactly. Yeah.
Is it gonna continue to grow? While we are certainly more penetrated in core IT than in the other areas, there's so much room for continued growth, especially in an AI-enabled world.
Mm-hmm.
But it doesn't sit alone with IT. I think if you just think about platform innovation, if you think about CRM, we've talked about our acquisition of Logik.io and really moving into modern CPQ is opening the door quite broadly into front office for us. And then employee, the acquisition of Moveworks, which we're super excited about, really leans into that employee experience.
Mm-hmm.
I actually think that we have multiple growth vectors across the product portfolio and the ability to have products, strong products that really go across the enterprise. It's a really compelling value proposition and differentiation, right? We have the platform that goes north to south in the tech stack, integrating with any platform, enabled with Zero Copy to touch the data and get the data and then action it across the enterprise, whether you're IT, Customer Service , HR, legal, finance.
Yeah.
Procurement, you name it. It's a real compelling differentiation for us. And then you add the agentic world. Agents are only as good as the data they have access to and the ability to cross-platform. 'Cause I don't know about your companies, but my companies, most of my processes are very cross-functional.
Yeah.
So that ability for agents to manage and to seamlessly hand off complex tasks and complex business processes in an enterprise is a compelling differentiation that ServiceNow has.
Yeah.
to be the AI operating system for the enterprise.
And on that note, you mentioned a couple of acquisitions that helped you. Like you had one recently. I'm trying to pronounce it, Veza, Veza?
Veza.
Veza. Like, how does that, how does that fit in? Like, where, where did that bring?
Yeah. It brings the critical ability to control human, machine, and agentic assets within an organization.
Mm-hmm.
And it gives, it allows authorization abilities. So a lot of the identity providers are very focused on authentication.
Yeah.
Think about it. They let you get in the front door, but authorization is what allows you to unlock each of the individual doors in the house, right? And so in an agentic world, these agents, because you don't know who's gonna be calling up the agent, right? So from an identity perspective, if I just have an agent that's Gina's agent doing my stuff, identity and authentication is enough. But when you have agents doing multiple tasks that many different people are calling on them, you need to understand authorization and that authorization is constantly changing.
Oh, yeah, yeah. Okay.
So the ability, right, for Veza to really help in that authorization as well as authentication in an agentic world is really compelling. It really just adds to the ServiceNow security foundation and opens up, I think, some really cool opportunities in the security space going forward.
Yeah. So it's interesting to see because it looks like, you know, as you evolve, you realize, okay, this is a good piece of technology. So should we think about like that, for the future M&A as well as like you identify, you know, Moveworks was a good asset, Veza is a good asset, et cetera?
I, well, hopefully I'm getting good assets.
Oh, yeah.
Thank you. Yes. So I think you're absolutely right. So we continue to do these, these tuck-in capabilities with great assets, with great technology. Oh, by the way, great talent has always been a key focus for us as we think about M&A. Yes, they're getting slightly bigger in size, but so are we.
Yeah, yeah, yeah.
And so our hurdle rates remain high. And the ability for us to really think organically first, but also add tuck-ins of incredible technology and capabilities and talent will always be part of how we think about things. But remember, hurdle rates are high and you'll expect us to be as disciplined as always.
Yeah.
In how we think about M&A.
And then, last question on AI. The one more fundamental question is, is AI going to reshape kind of how we think about the different subsegments of SaaS, for example? So I hear you guys talking a lot more about CRM than like a few years ago. There could be maturity, but it could also be with AI, you can kind of do things differently. Can you speak to that? Like how do, how do you see that?
I think it's a little bit of both.
Yeah.
It's certainly a maturity perspective, right? Our organic innovation in the space, we released Sales and Order Management two years ago, getting great traction. Our services side of the business has always been strong. We talked about our CRM business surpassing $1.5 billion a while ago now, right? And so it's a pretty large business to start from. If you think about the ability of AI to really help drive real value in the CRM space, I think there's been a lot of frustration with siloed systems not speaking to each other.
Yeah.
Really the value provided. If you think about AI first, modern CRM where you can do all on one platform, you can sell, you can, and in that selling process, you can configure price and quote, which arguably is probably the most complex of the processes within the front office, so you can sell, you can fulfill, you can service all on one platform. Really complex workflows has been, I think, a really compelling value add and customers have been pulling us into that space, more broadly over the past several years, and so.
Yeah.
We've seen some really great traction, some really great wins. And our CPQ acquisition of Logik.io, which is that incredible modern CPQ system, the pipeline that we have on that business, so shortly after the acquisition has been fantastic. And it really is a great front door into front office.
Yeah.
So we're excited about that.
Yeah. Okay. Perfect. Just to wrap up the, on the growth side a little bit, how do you think about that growth envelope for, for ServiceNow? Because like if you, not, not, not because that sounds negative, but the, if you think about like you've been growing 20%, plus, you're kind of the only company at that scale that still achieves that. Like, but as you think longer term, and I don't want guidance from you for next year, but if you think about that growth envelope, like how do you, how do you kind of see, see ServiceNow evolve from here?
Yeah. So I won't guide, but what I'll tell you is that what we've just talked about over the last 25.
Yeah, exactly. Yeah.
Momentum, I think, really shows you the opportunity for continued really best-in-class strong growth. If you think about growth vectors, we talked about federal and public sector more broadly. We talked about AI and what that means from a consumption perspective, 2027 and beyond with that hockey stick.
Yeah.
We talked about continued innovation in AI, meaning that the core has the ability to continue to grow. We've talked about CRM. If you just think about geographies, we remain very under-penetrated internationally and we have extremely strong leadership now in place across the board. So expectations internationally for continued growth remain strong.
Mm-hmm.
Even in the U.S., we talked about globally, back. I don't know if it was this past May or the May before. If you just take our sweet spot of customers, so $100 million in revenue, 1,000 customers, 1,000 employees or more, there's 50,000 of them excluding China, which we're not focused on right now.
Yeah.
Versus the 8,500 we have today, there's a lot of white space still for growth that we've gotta continue to go after. So I think the expectations and the opportunity for continued best-in-class growth, I think remains obvious and clear.
That sounds really exciting. It must be like one way to test that always with the CFO on stage is to ask, okay, how much do you approve for capacity expansion? You know, and if you increase your capacity, it's like, okay, you put your money, you know, wherever you're talking. I'm kind of, can I still ask that question or is AI actually changing that to some degree because you might not need as many people? Like how do you think about that?
You certainly won't need as many people in certain functions.
Yeah, yeah, yeah.
Right? I don't think that in enterprise sales, you're gonna, AI's really, really gonna change the dynamics dramatically on sales productivity for feet on the street, quota-bearing sales.
Yeah.
However, sales operations overlays, marketing operations, finance, legal, HR, R&D with coding, there's lots of leverage that we can continue to see. So I, from an overall headcount growth perspective, I think you'll, AI will definitely change the dynamics, which means that we'll have more opportunity to both reinvest back into R&D for more growth.
Mm-hmm.
As well as add to the bottom line. But as importantly, I think it will, we will not be stopping our headcount growth in the areas that really are gonna continue to drive growth. And that's the feet on the street, quota-bearing sales, innovation coming out of our R&D organization.
Mm-hmm.
But I do think AI does help with a leverage perspective across the board, in all the other places that we talked about.
Yeah. I remember in previous years when I had you on stage. I kind of got like a, okay, I want to grow my sales force. You're probably not gonna give me a number, but so that's still that dynamic. Like the question where that comes up then is like, as you save some more, could you kind of over-index, you know, on capacity?
Certainly my sales leaders would say that.
Yeah, yeah. Oh, you can't say it here then. Yeah. Okay.
You would absolutely expect that one of the continued areas of investment would be in that feet on the street, quota bearing sales to continue to accelerate growth. In certain international markets where we've been under-indexed, there's a large opportunity to really lean in there.
Is it worth it because there was so much volatility this year because there's a lead time, obviously, on investment? Where are you on that journey for next year? Like,
We are well on our way.
Okay.
We still have. I think we have significant open headroom that we expect to close by the end of the year, but we're well on our way.
Yeah.
Remember when you see my headcount numbers, there's a lot in those numbers that are not feet on the street, quota-bearing sales folks.
Yeah.
There's lots of operations roles. There's lots of, you know, partner type of roles that are not necessarily quarter-bearing. And so while total headcount growth has slowed down, the focus on feet on the street has not.
Yeah. Okay. And then last question, from me, and then I need to let you go. Now let's bring that all together. Like growth looks really interesting, margin kind of, you can do some stuff. How does that all kind of translate into cash? Because cash, you've done kind of like an upgrade on the guidance,
We've got four years of cash flow accretion in one quarter.
Yeah.
So hopefully, hopefully investors are happy with that. But I think that's part of exactly what you're seeing, right? You're seeing the efficiencies, you're seeing us investing back into the business while at the same time continuing to drive margins up. The question is always how much of that incremental we're gonna invest back into the business. First and foremost, we're a growth company, so we're always gonna lean more heavily towards growth. But I think based on what you've heard me say today, there's lots of opportunity to continue to invest back in while at the same time accreting both free cash flow and operating margins for sure. So more to come in January and certainly in May at Financial Analyst Day. We'll update the numbers a bit for you there.
Yeah, yeah, yeah. No pressure for the IR team. No. Yeah. Okay.
No pressure at all.
All right. Perfect. That's a great closing statement. Thank you.
Thank you so much.
Thank you. Good to have you again.
Thank you.
Thank you.