Release Date: April 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: At what point does AI get more broadly adopted, at least from a sales cycle standpoint, that despite the tough economic environment, you can actually draw in more potential prospects into the category because of the cost savings here?
A: (William R. McDermott - Chairman & CEO) Process optimization is the single biggest GenAI use case in the enterprise. Every workflow in every enterprise will be rethought with GenAI. This includes the sales process, employee onboarding, and agent productivity, where real-time data can significantly enhance customer satisfaction and efficiency.
Q: Can you comment on the environment that you're seeing? Was it still the case in Q1 that after a rough year, it started to stabilize?
A: (Chirantan Jitendra Desai - President & COO) The environment remains the same as last year, requiring many approvals for purchases. However, ServiceNow's promise of efficiency and automation, combined with in-platform generative AI, is resonating well across industries and geographies, aiding in execution within this environment.
Q: Given your comments on Pro Plus net new ACV growth, are you seeing faster Pro Plus deal cycles relative to what you saw when the Pro was first launched?
A: (Gina M. Mastantuono - CFO) Yes, Pro Plus adoption is faster than Pro, and the realized pricing has been very much in line with initial expectations. Customers are leaning into GenAI, with significant deals over $1 million already seeing monetization.
Q: Real nice results on RPO. What's driving the significant outperformance there versus cRPO?
A: (Gina M. Mastantuono - CFO) RPO growth was 27% year-over-year in constant currency, a 300 basis point improvement versus last year. This longer-term backlog indicates a strong mid- and long-term opportunity for ServiceNow, with average duration growing and representing the largest it's been in a Q1 since 2019.
Q: How are you seeing the momentum just in terms of Standard to Pro migrations?
A: (Chirantan Jitendra Desai - President & COO) The adoption of Pro and Pro Plus is growing nicely. For example, a bank purchased both Pro and Pro Plus together after seeing the capabilities of Pro Plus. This indicates a strong interest and adoption rate, not just in upgrading but in adopting newer, more advanced offerings simultaneously.
Q: How important is it to have and release your own LLM, like StarCoder?
A: (Chirantan Jitendra Desai - President & COO) It is extremely important to have use case-specific LLMs. These models are smaller, more accurate, cost-efficient, and perform better, which is crucial for the specific use cases ServiceNow addresses. This strategy allows for higher throughput and better value for customers while ensuring data security and efficiency.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
