“Finally, we expect GAAP diluted weighted average outstanding shares of 203 million.”

In context

“Gina Mastantuono (Chief Financial Officer): Thank you, Bill. Q3 was a fantastic quarter of execution. The team delivered strong results, beating all of our constant currency growth and operating margin guidance metrics, an outstanding performance across the board. Investments in digital transformation are a necessity, and ServiceNow remains a strategic priority. CEOs recognize that the Now Platform can deliver the workflow needs for their digital-first initiative while driving quick time to value and hard dollar savings. These outcomes are imperative in the current macro environment and while we continue to see robust demand for our products. In Q3, subscription revenues were $1.742 billion, growing 28.5% year-over-year in constant currency, exceeding the high end of our guidance range by 100 basis points. RPO ended the quarter at approximately $11.4 billion, representing 24.5% year-over-year constant currency growth. Current RPO was approximately $5.87 billion, representing 25% year-over-year constant currency growth, a 150 basis points beat versus our FX-adjusted guidance. 50 basis points of the beat was driven by early renewals from Q4 as the team looks to get ahead of our large renewal cohort. Our renewal rate was a best-in-class 98%, continuing to demonstrate the stickiness of our business as the Now Platform remains a mission-critical part of our customers' operations. We finished the quarter with 1,530 customers paying us over $1 million in ACV, up 22% year-over-year. The number of customers paying us over $10 million in ACV grew 60% year-over-year as our cohort expansion remained healthy. From an industry perspective, net new ACV growth was led by retail and hospitality, up nearly 50%, followed by strength in education. Manufacturing had a good quarter as well, led by a large 8-digit deal, and technology, media, and telecom continue to show durability. Federal had its best quarter ever, including an over $20 million net new ACV win. We closed 69 deals greater than $1 million in net new ACV in the quarter, including five with new logos. What's more, each of those five deals were led by a different product. That diversification showcases the breadth of our product portfolio and increasing customer awareness of ServiceNow's capabilities as a platform, which includes 11 organic businesses with over $200 million in ACV. In fact, 18 of our top 20 deals contained five or more products. Turning to profitability. Operating margin was 26%, 1 point above our guidance, driven by our top line beat and operating efficiencies. Our free cash flow margin was 6%. We ended the quarter with a healthy balance sheet, including $5.5 billion in cash and investments. Together, these results continue to demonstrate our ability to drive a strong balance of world-class growth and profitability. Before I move to guidance, I want to give a brief update on the macro. Our ability to outperform in Q3 is a testament to the strong execution of the ServiceNow teams. Account executives are staying close to the customer, constantly checking in and proactively assembling the necessary materials to get deals across the line. We will operate with the same rigor in Q4 and are confident that we're factoring in the macro trends into our guidance. Consistent with the market on a year-over-year basis, the strengthening of the U.S. dollar also resulted in incremental FX headwind. We now expect a $290 million headwind to 2022 subscription revenue, a $330 million headwind to Q4 cRPO, 100 basis points headwind to operating margin, and an approximate $160 million or 100 basis point headwind to free cash flow margin for 2022. With that in mind, let's turn to our 2022 outlook. We're revising our subscription revenues range to between $6.865 billion and $6.870 billion, representing a raise to our year-over-year constant currency growth outlook to 28.5% excluding a 550 basis point FX headwind. We continue to expect subscription gross margin of 86%, up 100 basis points year-over-year. We continue to expect an operating margin of 25%, consistent with our original guidance at the beginning of the year as we are offsetting incremental FX headwinds with operational efficiencies and disciplined spend management. We now expect free cash flow margin of 29%, reflecting the incremental FX headwinds I previously noted. Despite the $160 million impact of FX, we will generate over $2.1 billion of free cash flow, demonstrating the incredible resilience of our business model. Finally, we expect GAAP diluted weighted average outstanding shares of 203 million. For Q4, we expect subscription revenues between $1.834 billion and $1.839 billion, representing 26% to 27% year-over-year growth on a constant currency basis, excluding a 600 basis point FX headwind. We expect cRPO growth of 26% on a constant currency basis, excluding 600 basis points of FX headwind. We expect an operating margin of 26%, and we expect 204 million GAAP diluted weighted average outstanding shares for the quarter. In summary, we had a fantastic Q3. I'm so proud of our people for being focused, disciplined, and committed to helping our customers succeed. Bill and I would like to thank all of our employees around the globe for their continued hard work and dedication. Our business is resilient, our teams are delivering, and we're as confident as ever about the future. We have the platform enterprises need to reinvent their business models and adapt to the new economy so they can innovate to win and come out of this moment stronger than ever. We continue to see a robust pipeline and are maintaining our investments in growth hires as the opportunity in front of us remains large. We're well on our way to becoming the defining enterprise software company of the 21st century. With that, I'll open it up for Q&A.”