“Finally, we expect 209 million GAAP diluted weighted average outstanding shares for the quarter.”

In context

“Gina Mastantuono (CFO): Thank you, Bill. Q2 was another fantastic quarter with tremendous beats across all of our top line and profitability metrics. ServiceNow's business remains resilient with net new ACV and Gen AI contributions exceeding expectations. Once again, the team demonstrated exceptional execution as we continue to see strong demand for the Now Platform and our NowAssist offerings. Q2 subscription revenues were $2.542 billion, growing 23% year-over-year in constant currency, exceeding the high end of our guidance range by 100 basis points. RPO ended the quarter at approximately $18.6 billion, representing 31.5% year-over-year constant currency growth. We continue to see average contract terms increase with TCV from five-plus year deals more than tripling year-over-year. Current RPO was $8.78 billion, representing 22.5% year-over-year constant currency growth, a 200 basis point beat versus our guidance, and a 150 basis point acceleration from Q1. From an industry perspective, U.S. Federal had a great quarter, accelerating both quarter-over-quarter and year-over-year with net new ACV up well over 50% from last Q2. Manufacturing and Energy and utilities were also areas of strength, growing net new ACV over 50% year-over-year. Healthcare & Life Sciences and Retail and Hospitality both had a great quarter, growing about 30% year-over-year. The Now Platform remains a mission-critical part of our customers' operations, reflected by a strong 98% renewal rate. The stickiness of our customer base has served as a solid foundation for us to continue to build upon. We closed 88 deals greater than $1 million in net new ACV in the quarter, representing 26% growth year-over-year. This includes six new logos, two of which were G2K customers. We continue to see robust large deal momentum in the quarter, closing 14 deals over $5 million in net new ACV and four deals over $10 million. Our focus on selling a comprehensive platform continues to drive more multiproduct deals, as 14 of our top 20 deals included eight or more products. We now have 1,988 customers paying us over $1 million in ACV. In addition, the number of customers paying us $20 million or more grew nearly 40% year-over-year. As Bill highlighted, our Gen AI net new ACV to date continues to trend ahead of any new product family launched for the comparable period. Our Plus SKU saw more than a 30% price uplift over Pro in Q2. Furthermore, since launch, we're seeing a greater than 3x increase in average deal size versus the comparable Pro upgrade. NowAssist co-generation capabilities within creative workflows remain a powerful productivity tool of choice as well, appearing in over 70% of our Gen AI deals. Best of all, customers are going live fast. We're learning with them, releasing innovations based on that feedback at a very fast clip to get them to value. In July, BT Group announced that its NowAssist pilot helped agents write case summaries and review complex nodes faster, cutting both times by 55%. This helped drive down the average time to resolve cases by a third. We are just scratching the surface of the opportunity, as the vast majority of Gen AI sales are direct. We're working to onboard partners, arming them with the tools to sell NowAssist and further extend our go-to-market reach. Turning to profitability. Non-GAAP operating margin was over 27%, approximately 250 basis points above our guidance, driven by OpEx efficiencies, top line outperformance, and timing of marketing spend. Our free cash flow margin was 14%. We ended the quarter with a robust balance sheet, including $8.9 billion in cash and investments. 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. Given our Q2 outperformance, we are raising our 2024 outlook. For 2024, we are raising our subscription revenues by $33 million at the midpoint of the range to more than offset an incremental $20 million FX headwinds. This raise yields a net increase of $13 million on a narrowed range of $10.575 billion to $10.585 billion representing 22% year-over-year growth on both a reported and constant currency basis. We're also raising our full-year operating margin target from 29% to 29.5%. We continue to expect subscription gross margin of 84.5%, free cash flow margin of 31%, and GAAP diluted weighted average outstanding shares of $208 million. For Q3, we expect subscription revenues between $2.660 billion and $2.665 billion, representing 20% to 20.5% year-over-year growth or 20.5% on a constant currency basis. We expect CRPO growth of 22.5% on a reported basis or 22% on a constant currency basis. We expect an operating margin of 29.5%. Finally, we expect 209 million GAAP diluted weighted average outstanding shares for the quarter. In summary, Q2 was a strong quarter, and we continue to see strength heading into the second half of the year. Our knowledge event in May was an incredible three days of inspiring keynotes, amazing demos, intriguing breakout sessions, and plenty of discussions around AI as it was woven into every aspect of the event. ServiceNow's focus on putting AI to work for people was a consistent theme for the over 20,000 participants, including 5 billion of pipeline in the room. The response from customers around our latest innovation has been incredible. As Bill mentioned, newly created pipeline after only 60 days was up 50% year-over-year and that has since grown over $1 billion. Our second half pipelines combined with our net new ACV outperformance in the first half of '24 gives us very good visibility into our top line guidance and further confidence in our journey to $15 billion plus in revenue. We are well on our way to becoming a defining enterprise software company in the 21st century. I'm extremely proud of our team's performance this quarter, and Bill and I can't thank our employees enough for their hard work and dedication. Bill and I couldn't be prouder of this incredible team. With that, I'll open it up to Q&A.”