“Finally, we expect GAAP diluted weighted average outstanding shares of 210 million.”

In context

“Gina Mastantuono (CFO): Thank you, Bill. Q2 was a spectacular quarter across the board. We significantly beat the high end of our guidance across all top line and profitability metrics. Among many highlights, strong adoption of our Now Assist products continued to outperform expectations in the quarter once again. AI efficiencies internally were also a meaningful tailwind to margin expansion. Let's get into the details. Q2 subscription revenues of $3.113 billion grew 21.5% year-over-year in constant currency, which is 200 basis points above the high end of our guidance range driven by strong execution and some early on-prem renewals. RPO ended the quarter at approximately $23.9 billion, representing 25.5% year-over-year constant currency growth. Current RPO was $10.92 billion, representing 21.5% year-over-year constant currency growth, a 200 basis point beat versus our guidance. From an industry perspective, transportation and logistics delivered a standout performance, with net new ACV over 100% year-over-year. The technology, media, and telecom sectors had a fantastic quarter, growing over 70% year-over-year. Retail and hospitality, as well as energy and utilities, also saw strength, each growing over 50% year-over-year. Once again, we achieved a robust 98% renewal rate showcasing ServiceNow's strategic importance as the AI platform for business transformation. We ended Q2 with 528 customers generating over $5 million in ACV. What's more? The number of customers contributing $20 million or more increased by over 30% year-over-year. We closed 89 deals greater than $1 million in net new ACV in the quarter, including 11 deals over $5 million. In Q2, all top 20 deals included 5 or more products, illustrating the power of our platform. Our continued focus on winning the right new logos also bore fruit in Q2. We landed 11 deals over $1 million in net new ACV, including 2 over $5 million, growing average new logo ACV over 100% year-over-year. Within CRM, our push into the front office gained further momentum in the quarter. The addition of Logik.ai is already driving explosive growth in CPQ with 9 deals closed in June alone. Our Now Assist net new ACV to date continues to trend very well, beating expectations once again, fueled by an increase in both deal volume and size quarter-over-quarter. Our unique platform approach to AI clearly resonates with customers. Our newest plus SKUs have products that are off to a stellar start. ITAM Now Assist's net new ACV serves nearly 6x quarter-over-quarter, with average deal sizes more than tripling. Now Assist for SecOps and risk combined for net new ACV more than double quarter-over-quarter. Our flagship products are also delivering exceptional results. ITSM Plus and CSM Plus deal values quadrupled year-over-year, while ITOM Plus tripled and HRSD Plus doubled. In Creator Now Assist, average deal sizes also quadrupled year-over-year. Turning to profitability, non-GAAP operating margin was 29.5%, over 250 basis points above our guidance, driven by our top line outperformance, AI OpEx efficiencies, and the timing of marketing spending. By utilizing our own AI innovations in-house through Now-on-Now, we leverage tools like CodeAssist and CodeGeneration to unlock significant capacity for our engineers. Our free cash margin was 16.5%, up 300 basis points year-over-year. We ended the quarter with a robust balance sheet, including $10.8 billion in cash and investments. In Q2, we bought back approximately 381,000 shares as part of our share repurchase program, aiming to manage the impact of dilution. As of the end of the quarter, we had approximately $2.6 billion of authorization remaining. Together, these results continue to demonstrate our ability to drive a strong balance of world-class growth, profitability, and shareholder value. Moving to our outlook: as I mentioned last quarter, U.S. federal agencies are navigating changes from tightening budgets to evolving mission demand. The team executed very well against that backdrop, as market conditions played out as we anticipated in Q2. We remain confident that our guidance appropriately reflects these trends heading into Q3 and continues to position us for success for the remainder of the year. I'd also note that my commentary for both 2025 and Q3 does not include any contribution from Moveworks, which we expect to close in the second half of 2025 or early 2026. With that in mind, for 2025, we are raising our subscription revenues by $125 million at the midpoint to $12.775 billion to $12.795 billion, representing 20% year-over-year growth or 19.5% to 20% on a constant currency basis. We continue to expect subscription gross margin of 83.5%, operating margin of 30.5%, and free cash flow margin of 32%. Finally, we expect GAAP diluted weighted average outstanding shares of 210 million. For Q3, we expect subscription revenues between $3.260 billion and $3.265 billion, representing 20% to 20.5% year-over-year growth or 19.5% on a constant currency basis. We expect CRPO year-over-year growth of 18.5% or 18% on a constant currency basis. As a reminder, this includes a 200 basis points headwind due to our larger-than-average customer cohort that renewed in Q4. We expect an operating margin of 30.5%. Finally, we expect 210 million GAAP diluted weighted average outstanding shares for the quarter. In conclusion, Q2 was another fantastic quarter fueled by solid execution and resilient demand. With a robust pipeline and expanding market opportunities, we are well-positioned as we enter the second half of the year. For countless ServiceNow customers and partners, Knowledge 2025 cemented ServiceNow's leadership in enterprise AI. The newly created pipeline is up over $1.2 billion already. This solid pipeline and the momentum we have exiting the first half of the year put us well on our way to reaching our $15 billion-plus subscription revenue target for 2026, along with $1 billion in Now Assist ACV. This quarter's performance is a testament to the talent and dedication of our team. Bill and I are truly thankful for the relentless effort our employees put in every day. We couldn't be more honored to lead such an exceptional group. With that, I'll open it up for Q&A.”