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ServiceNow, Inc.

NOW

Wall street consensus:

Ticker:

​Recent Conference Call

### ServiceNow, Inc. NYSE:NOW FY 2023 Earnings Call Summary

#### Insightful Quote:
**Gina M. Mastantuono, Chief Financial Officer**: "Subscription revenues were $2.365 billion, growing 25.5% year-over-year in constant currency, exceeding the high end of our guidance range by 200 basis points."

#### Key Quarterly Business Trends:
1. **Rapid Adoption of Generative AI**: There's a notable hunger for generative AI solutions, with ServiceNow's new generative AI offerings outperforming any previous product launches in terms of net new annual contract value (ACV) contribution. This—coupled with strategic alliances with companies like Visa and expansions in agreements with AWS—underscores ServiceNow's significant competitive advantage in the AI transformation wave.

2. **Exceptional Public Sector Growth**: ServiceNow's ongoing strength in Q4 within the public sector, marked by key wins such as the U.S. Army and Australian Department of Defense, highlights the company's indispensability in digital transformation endeavors within government agencies, reinforcing the long-term growth outlook in this sector.

3. **Growth in New Customer Segments**: ServiceNow reported remarkable new logo wins, including a record-setting deal with a global financial services firm, showcasing the platform's expanding appeal across industries looking to radically transform their operations with AI and digital workflows. This diversification of the customer base signals a broadening market for ServiceNow's offerings and underscores the universal applicability of its solutions.

#### Critical Analyst Questions and Management Responses:

1. **Sales Cycle Impact of Generative AI**:
- **Concern**: Analysts sought to understand how the introduction of generative AI products has influenced sales cycles and customer adoption rates.
- **Response (William R. McDermott, CEO)**: The CEO noted a significant interest from CXOs in incorporating generative AI into their operations, leading to faster sales cycles for these products compared to previous offerings. The unique value proposition of improving operational efficiency and productivity with AI has been readily accepted, with no notable price sensitivity.

2. **Public Sector Expansion and AI Adoption**:
- **Concern**: There were questions about the sustained growth in the public sector and potential adoption rates of AI solutions here.
- **Response (Chirantan Jitendra Desai, COO)**: The COO elaborated on the continuous acceleration in the public sector, attributing it to ServiceNow's strategic relevance and confirming early AI adoption in some government operations, indicating a growing interest that could expand further in 2024.

3. **Expansion and New Logo Acquisition Strategy**:
- **Concern**: Analysts questioned the strategy behind the recent surge in new logo acquisitions and future expansion plans.
- **Response (Chirantan Jitendra Desai, COO)**: Desai highlighted the targeted approach towards high-quality new logos in industries like financial services, manufacturing, and government sectors, indicating a focused strategy

Key Questions to follow

AI Q&A
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