“And we continue to expect subscription gross margin of 84%, free cash flow margin of 30%, and GAAP-diluted weighted average outstanding shares of 206 million.”

In context

“Gina Mastantuono (CFO): Thank you, Bill. Q3 marks another quarter of strong execution, as we once again significantly surpassed the high end of our topline growth and profitability guidance metrics. ServiceNow continues to demonstrate its resilience as the intelligent platform for end-to-end digital transformation. Customers are seeking enhanced productivity solutions in the current macroenvironment and ServiceNow is delivering. In Q3, subscription revenues of $2.216 billion, growing 24.5% year-over-year in constant-currency, exceeding the high end of our guidance range by over 100 basis points, amazing organic growth at massive scale. RPO ended the quarter at approximately $14.4 billion, representing 23.5% year-over-year constant-currency growth. Current RPO was approximately $7.43 billion, representing 24% year-over-year constant-currency growth, and a 250 basis point beat versus our guidance. As Bill highlighted, Federal has best net new ACV quarter ever, growing over 75% year-over-year. I want to give a quick shout-out to the Federal team, who has just been crushing it. Among the other industries, transportation and logistics was very strong, growing over 100% year-over-year, followed by education, which grew over 75%. Manufacturing and CMC also saw robust growth. We had some outstanding achievements from a workflow standpoint as well. I'm pleased to announce that Creator Workflows crossed 1 billion in ACV in Q3, a monumental milestone, and our Employee Pro SKU saw over 100% growth in net new ACV year-over-year. Retention remained exceptional with a renewal rate of 98% in Q3 reaffirming the essential role the Now Platform plays in our customers' operations. Our customer cohorts displayed solid expansion as the quarter closed with 1,789 customers contributing over 1 million in ACV, with 58% year-over-year growth in those contributing over $20 million. In Q3, we successfully closed 83 deals greater than 1 million in net new ACV, with 4 deals greater than 10 million. Notably, 18 of our top 20 net new ACV deals included eight or more products. By launching at the end of the quarter we have already closed four GenAI-related enterprise deals and we're seeing strong pipeline build for our plus SKUs. Turning to profitability, non-GAAP operating margin was 30%, over 250 basis points above our guidance, driven by disciplined spend management, and the top-line outperformance. Our free cash flow margin was 9%, up 300 basis points year-over-year. We ended the quarter with a robust balance sheet, including $7 billion in cash and investments. In Q3 we repurchased 0.5 million shares as part of our first-ever share repurchase program, with the primary objective of managing the impact of dilution. As of the end of the quarter, we have approximately $1.2 billion remaining of the original $1.5 billion authorization. Together, these results continue to demonstrate our ability to drive a strong balance of world-class growth, profitability and shareholder value. Moving to our guidance. We are raising the full-year outlook to reflect the strength of Q3. As we have done all year, we continue to prudently factor the macro cross-wins into our guidance. This includes incremental FX headwind from a strengthening US dollar. For 2023, we are raising our subscription revenues outlook by $48 million at the midpoint to a range of $8.635 billion to $8.640 billion, representing 25% year-over-year growth or 25% on a constant-currency basis. We're also raising our full year operating margin target from 26.5% to 27%. And we continue to expect subscription gross margin of 84%, free cash flow margin of 30%, and GAAP-diluted weighted average outstanding shares of 206 million. For Q4, we expect subscription revenues between $2.320 billion and $2.325 billion, representing 24.5% to 25% year-over-year growth or 23% to 23.5% on a constant currency basis. We expect cRPO growth of 20.5% or 21% on a constant currency basis. Notably, the strength of our federal business has resulted in a higher mix of 12-month contracts that will create a one point headwind to Q4 cRPO growth and remain a headwind into 2024. We expect that these contracts will renew in 2024 as ServiceNow's federal contract renewal rate is 99%. We expect an operating margin of 27.5% and we expect 206 million GAAP-diluted weighted average outstanding shares for the quarter. In conclusion, our team delivered an exceptional performance across the board. With a culture focused on customer success, our people have worked relentlessly to provide solutions to meet enterprises' needs, and it's showing in our robust results. Businesses are looking to consolidate vendors and standardize on a platform with a core set of products, so they can build a predictable and reliable roadmap to drive digital transformation. ServiceNow is that strategic platform. With the addition of our Vancouver release, and the capabilities presented by GenAI, the window of opportunity is even more expansive than ever before. The result is a more powerful and intelligent platform, that enables customers to ignite end-to-end action, across the enterprise in ways not seen before. It's an exciting opportunity to further improve productivity, employee satisfaction, optimize processes, reduce costs, and create organizational agility. The possibilities are endless. Bill and I extend our gratitude to all our employees worldwide for their unwavering dedication and commitment that puts us at the forefront of this opportunity, and further driving ServiceNow towards its ambition of becoming the defining enterprise software company of the 21st Century. With that, I'll open it up for Q&A.”