Good afternoon. My name is Julianne, and I will be your conference operator today. At this time, I would like to welcome everyone to ServiceNow's Third Quarter 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question-and-answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. To withdraw your question, please press star one again. Thank you. Lisa Banks, Senior Vice President of Finance at ServiceNow, you may begin your conference. Good afternoon, and thank you for joining us for ServiceNow's Third Quarter 2021 Earnings Conference Call. Joining me are Bill McDermott, our President and Chief Executive Officer, and Gina Mastantuono, our Chief Financial Officer. During today's call, we will review our third quarter 2021 financial results and discuss our financial guidance for the fourth quarter of 2021 and full year 2021. Before we get started, we want to emphasize that some of the information discussed on this call, such as our guidance, is based on information as of today and contains forward-looking statements that involve risks, uncertainties, and assumptions, including those related to the continued impact of COVID-19 on our business and global economic conditions. We undertake no duty or obligation to update such forward-looking statements as a result of new information or future events. Please refer to today's earnings press release and our SEC filings, including our most recent 10-Q and our fiscal year 2020 10-K for the factors that may cause actual results to differ materially from those set forth in such forward-looking statements. We'd also like to point out that we present non-GAAP measures in addition to, and not as a substitute for, financial measures calculated in accordance with GAAP. Unless otherwise noted, all financial measures we will discuss today are non-GAAP, except for revenues, remaining performance obligations, or RPO, and current RPO, or CRPO. To see the reconciliation between these non-GAAP and GAAP measures, please refer to today's earnings press release and accompanying investor presentation, which are both posted on our website at investors.servicenow.com. A replay of today's call will also be posted on our website. With that, I would now like to turn the call over to Bill. Thank you very much, Lisa, and good afternoon, everyone. Welcome to our Q3 earnings call. While a beat and raise headline from ServiceNow is familiar, it is no less extraordinary. Our team delivered another outstanding quarter, yet again, significantly exceeding the high end of our guidance across all metrics. Subscription revenues were up 31% organically. This is unprecedented in our industry. CRPO was up 32%. Subscription billings were up 28%. Operating margin was 26%. We again have raised our guidance for the full year, strengthening our clear path to $15 billion plus in revenue by 2026. I was introduced as ServiceNow CEO more than two years ago. We've all seen a lot since then. What we've never seen is such consistent innovation and execution at global scale. Thanks to our customers, employees, and partners, we're well on our way to becoming the defining enterprise software company of the 21st century, and we're only getting started. Before Gina gives you a complete report, let's talk about this dramatic structural incline at ServiceNow. The pace of digital investment is accelerating. IDC has consistently sized this opportunity at 7.8 trillion over a four-year period. With this massive addressable market, ServiceNow is at the intersection of two generational opportunities. First, the need for a new technology foundation is supercharging our close partnership with CIOs. A recent Wall Street Journal report highlighted the role of CIOs as the architects of digital business. Ongoing advances in public cloud and machine learning are forging a new era of software innovation. Technology teams want a fully integrated software cycle, planning, development, deployment, operations, and service. ServiceNow is leading this 20th to 21st century migration for our customers. The Now Platform, with its immense versatility and scalability, has become the control tower for digital transformation. The second dimension fueling ServiceNow is the reordering of the enterprise application platforms for hyper-automation. Leaders today recognize their technology architecture is their business architecture. Over several decades, enterprises invested trillions into on-premise and first generation SaaS applications. These applications satisfied the business process needs of the 20th century. Today, new business models require a fully connected value chain. Legacy environments are not adaptive enough to enable this change. As a pioneer of modern digital workflows, ServiceNow is leading the renaissance. The Now Platform connects different applications and data sources to create intuitive mobile experiences, all at a consumer grade. We don't ask businesses to bet everything on a single system or collaboration tool. We give choice, which not only unlocks value from our platform, but from other platform investments as well. ServiceNow also empowers anyone to build applications on our platform. In its low-code development technologies report, Gartner estimates that 70% of new applications developed by 2025 will use low-code or no-code technologies. Gartner also named ServiceNow as a leader in its Magic Quadrant. These tailwinds are driving fast organic growth across our entire solutions portfolio. The number of deals greater than $1 million was 63, up 50% year-over-year, signaling substantial adoption of our platform strategy. In Q3, IT workflows remained very strong. ITSM was in 18 of our top 20 deals, while IT Operations Management had 10 deals over $1 million. For example, the U.S. Internal Revenue Service is in a multi-year digital transformation effort. In Q3, they chose ServiceNow to consolidate 12 complex systems into a single platform to support the agency's mission-critical operations. Demand for our entire IT portfolio is strong. With the launch of Lightstep Incident Response in Q3, we're unlocking a new wave of product-led growth in application monitoring and observability. Employee workflows also had a fantastic quarter with HR in 13 of our top 20 deals. In Q3, NTT DATA will leverage the Now Platform to create an employee experience portal, enhancing productivity for hybrid work and managing vaccine administration for its entire workforce. Momentum continues for customer workflows with CSM in 12 of our top 20 deals and eight deals over $1 million. Industry vertical solutions are leading the way with major brands. Verizon is adopting our telco solution, American Century, our financial services solution, and Sunbelt Rentals, our healthcare solution. Creator Workflows, which helps businesses build their own applications, was exceptional in Q3 in 18 of our top 20 deals. We're partnering with Stanley Black & Decker to bring ServiceNow's new manufacturing vertical solution with App Engine to change how they serve their customers. Together, we're maximizing facility uptime and delivering great experiences for distributors, dealers, and end consumers. Fujitsu will also expand its use of the Now Platform to drive its own digital transformation. We couldn't be prouder that Uber, Honeywell, Telia, and many others all chose ServiceNow in Q3. This is a complete performance for the company. Strong growth across the Americas, EMEA, and Asia Pacific, Japan. As we look to a strong finish in 2021 and beyond, here are a few of the many factors giving us great confidence in this business. First, while the war for talent is raging out there, we're highly encouraged by the colleagues choosing ServiceNow in record numbers. Our new joiners, together with our amazing global workforce, are building a uniquely inclusive, driven, and happy culture. We're also seeing major developments in our partner ecosystem. Just three weeks ago, we announced a new partnership with Celonis. Celonis will deliver process mining insights. ServiceNow will build better workflows. Our customers will gain from the integrated approach. We also deepened our long-standing partnership with Microsoft. ServiceNow's Employee Center can now be directly embedded in Microsoft Teams, reaching 250 million monthly users. Together with our expanding partner community, we will reduce complexity to make work better for people. Finally, innovation without disruption is a hallmark of our best-in-class engineering tradition. When we say without disruption, we mean invisible, a seamless upgrade experience for our customers. In our Now Platform Rome release, we delivered countless new features to customers, including Mobile App Builder, an Automation Discovery tool, Employee Journey Management, and new customer service playbooks. Every business leader in the world is looking at the future of work. These new features give the Now Platform even more capability to build that hybrid future. I'll defer to a comment made by industry analyst Josh Bersin, who said, our Rome Platform release, "This company seems to be able to build and deploy enterprise software faster than almost any I've ever seen, and that's why they're a juggernaut." End quote. Josh, naturally, I agree. In closing, the company is firing on all cylinders. The quarter speaks for itself. We beat again, we raised again. The secular tailwinds are at our back. Our customer base is expanding just as our customer NPS is increasing. Our partner ecosystem is fired up. We accelerated our timeline to be net zero. We help businesses drive their own ESG initiatives on our platform with a major release. The list goes on and on. Overall, our message to the market couldn't be any clearer. Whatever systems, challenges, or opportunities you have, however fast you need to move, you have a trusted innovator in ServiceNow. We wanna make the world work better for everyone, and we'll never lose our focus on the privilege that comes with saying the world works with ServiceNow. I look forward to your questions. Gina, over to you. Thank you, Bill. Q3 was another fantastic quarter with continued outperformance across all of our growth and profitability guidance metrics. Demand was strong globally across all three of our geos. The consistency of our results quarter after quarter exemplifies the strength of our product portfolio and the team's focus on building deep customer relationships. Q3 subscription revenues of $1.43 billion, $22 million above the high end of our guidance range and growing 31% year-over-year, inclusive of 100 basis points tailwind from FX. RPO ended the quarter at approximately $9.7 billion, representing 34% year-over-year growth. Current RPO was approximately $5 billion, representing 32% year-over-year growth and a two-point beat versus our guidance. Currency did not have an impact on year-over-year growth. Q3 subscription billings were $1.38 billion, representing 28% year-over-year growth and a $55 million beat versus the high end of our guidance. FX and duration were a 150 basis points tailwind year over year. We saw broad-based strength across the industries we serve, with transportation and logistics and business services seeing particularly robust net new ACV growth. Our renewal rate was a healthy 98% in Q3, a testament to the value ServiceNow delivers to our customers. We view our relationships with customers as long-term partnerships, and we continually innovate to provide new solutions to address their evolving business needs. That land and expand motion has manifested into a base of 1,266 customers, paying us over $1 million in ACV, up 25% year over year. As the breadth of our portfolio and the addressable opportunities have expanded, so too have our deal sizes. We closed 63 deals greater than $1 million net new ACV in the quarter, up over 50% year-over-year. In Q3, all of our top 20 deals included four or more products. Turning to profitability, operating margin was 26%, three points above our guidance, primarily driven by the strong revenue beat. We also saw savings from the delay in return to work and lower travel. Our free cash flow margin was 15%. Together, these results show the power of our business model and our ability to drive a balance of growth and profitability. We're delivering great experiences that drive powerful employee engagement, fierce customer loyalty, and significant productivity gains. By delivering more intelligent automation that provides even better experiences, we are well-positioned as the workflow standard on our journey to becoming a $15 billion plus revenue company. Turning to guidance, we're raising our guidance for the full year. We're raising our subscription revenues outlook by $32 million at the midpoint to a range of $5.565 billion-$5.57 billion, representing 30% year-over-year growth, including 200 basis points of FX tailwind. We are raising our subscription billings outlook by $61 million at the midpoint to a range of $6.379 billion-$6.384 billion, representing 28% year-over-year growth. Excluding the early customer payments in 2020, our normalized subscription billings growth outlook would be 32% year-over-year at the midpoint. Growth includes a net tailwind from FX and duration of 200 basis points. We continue to expect 2021 subscription growth margin of 85%, and we're raising our full-year 2021 operating margin from 24.5% to 25%. This reflects the increase in our top-line growth and savings from the delay in return to work and lower travel. We're also raising our full-year 2021 free cash flow margin by 50 basis points from 31% to 31.5%. We expect a diluted weighted average outstanding shares of 202 million. For Q4, we expect subscription revenues between $1.515 billion and $1.52 billion, representing 28% year-over-year growth, including a negligible impact from FX. We expect CRPO growth of 27% year-over-year. This includes a 150 basis points FX headwind due to sharp movements recently in the euro and pound. On a constant currency basis, we expect CRPO growth to be 28.5%. We expect subscription billings between $2.305 billion and $2.31 billion, representing 26% year-over-year growth. Excluding the early customer payments in Q4 2020, our normalized subscription billings growth outlook would be 32% year-over-year at the midpoint. Growth includes a net headwind from FX and duration of 50 basis points. We expect an operating margin of 22%, which includes accelerated demand generation spend in the quarter to set us up for a strong start in 2022. We expect 203 million diluted weighted outstanding shares for the quarter. In summary, the pace of digital investment is accelerating and ServiceNow is rising up to seize the opportunities before us. The team has never been more engaged and focused on serving the enormous needs of our customers. As ServiceNow becomes the defining enterprise software company of 21 st century, we are also remaining steadfast in our goal to create positive impact in the world. I'm happy to announce that in September, we committed to reaching our net zero emissions goal by 2030, two decades earlier than our previous goal. We've never been prouder of our employees and their continued focus on serving our customers, partners, and communities as we make not only work, work better, but the world work better too. Our hungry and humble culture is stronger than ever. We can't thank our employees enough for their hard work and dedication. With that, I'll open it up for Q&A. Thank you. If you'd like to ask a question at this time, please press star followed by the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Management asks that you please limit yourself to one question and one follow-up. Thank you. Your first question will come from Kash Rangan from Goldman Sachs. Please go ahead. Your line is open. Hi. Thank you very much, Bill and Gina. Outstanding quarter. Bill, I wanted to just get your high-level thoughts coming as we did after a spectacular quarter and listening to your compadre, Satya Nadella, on his call yesterday. He talked about tech as a percentage of global GDP going from 5%-10%. I think he said that before, which leaves us with the inescapable conclusion that tech density, enterprise tech density is just going higher. It's not the world from 10 years back. There were a couple of ERP systems, and that's it. Now, it's thousands and thousands of SaaS applications and whatnot. Where does that leave ServiceNow in terms of business prospects for spreading horizontally, vertically with your ITOM, ITSM, and the workflow engine, obviously, given that enterprise tech density is just set to go from higher to even higher levels? One for you, Gina. When we look at this year, this year has been fascinating. Net new business has been accelerating for a few quarters. I know that you've not given us thoughts on 2022 yet, but how do you feel qualitatively stepping into 2022 with a renewal base that looks very solid? Your net new business trends are getting better. Curious to get your thoughts. Thank you so much. Well, Kash, thank you very much for your kind remarks. You called the progress of our share price early on in the year. Congratulations to you. You had it nailed. A couple of things, Kash. If you look at the geographies around the world, every single geography not only beat expectations, but they actually beat their internal plan handily. Every geography is expanding with ServiceNow at a record clip. If you look at our expansion in industry, we saw growth across all of our industry categories this quarter. It's amazing. Industries that were COVID impacted, like transportation, logistics, business services, telecom, media, technology, financial services, government, education, every single one of them was an unbelievable success story this quarter. We have expanded dramatically in manufacturing, healthcare, life sciences, telecommunications, and banking, just to name a few. Think geo, think industry. Also, think persona. This employee workflow business of ours is unstoppable because the employee experience is unstoppable, especially in a labor market that requires talent. As you pointed out, Satya's remarks are absolutely right. The GDP growth in tech is inescapable because it's the only way out in a hybrid world to manage a competitive company, especially when you're competing for talent, and you have to give them a great experience. Example, onboarding experience, connecting all of their training tools, really making them a part of the culture when they might not even be in your buildings. Customer workflows, you know, we announced a partnership with Twilio, you know, dealing with WhatsApp and various messaging techniques because all the old school ways are going away quickly. With our CSM, our employee workflows, the experiences we're giving to people, it's just unreal. Don't forget the Creator Workflows. 500 million net new applications will be developed in the next two plus years, and that'll be developed for companies by companies in their own technology departments, and there's not enough engineers to do that in the world. The Now Platform is a growth sensation. All of these forces are coming together at once, and that is why I could not be more confident in the bullish stance on ServiceNow, not just in the short term. We run our business with clear messaging, clear facts. We can see the pipeline way into 2022, and in some cases beyond. It is a fantastic situation right now, Kash. Kash, on your question with respect to 2022, obviously, it's a bit early to talk guidance, but you are 100% correct, right? Our renewal base is very strong. We've seen very strong net new ACV acceleration throughout the year, as I've been talking about. We feel really bullish on the opportunities ahead of us in 2022. The one thing that I would note is that FX has turned against us a little bit, as we head into 2022. I'm sure you would have all seen, especially with respect to the euro, the dollar increasing. We have a bit of a headwind on FX as we look into 2022, but feel really good about the underlying health of the business, our renewals, our net new ACV. We're poised to have a strong 2022. Very gratifying. Brilliant. Thank you so much. Thank you, Kash. Your next question comes from Karl Keirstead from UBS. Please go ahead. Your line is open. Thank you. Hey, Gina. Three months ago on the 2Q call, you prepped us in terms of the back half seasonality into thinking 3Q would be a little bit sub-seasonal, 4Q stronger as you were seeing that deal skew. In fact, you put up numbers where the 3Q actual and the 4Q billings guide of 26% are roughly even. I'm just curious whether since you made that call, that seasonality 3Q, 4Q has changed and whether it played out in the way that you expected. Thank you. Thanks for the question. I really appreciate it. Listen, I think we are really proud of the Q3 beat that we saw. Bill talked about all geos operating and on all cylinders, and that's across the geographies, across all of the product portfolios. We were really pleased with the beat that we saw in Q3. We absolutely continue to see more business back half weighted to Q4. That is going to be a trend that we continue to see. When you look at our Q4 results and our Q4 guide, you have to remember last year Q4, we had that $80 million of early payments that were brought forward that really drove a higher gro wth number in Q4. If you normalize that, it's why I called out pretty transparently in the script, if you normalize for that, we're seeing 32% growth in Q4 billing. A really strong guide given our scale and our base. Got it. That's clear. Thanks, Gina. Great. Thank you. Your next question comes from Kirk Materne from Evercore ISI. Please go ahead. Your line is open. Yeah. Thanks very much, and congrats on the quarter. Bill, can you just talk a little bit about the federal business this quarter and sort of the opportunities for that, you know, going into the fourth quarter, maybe next year? And then Gina, just one follow-up to Karl's question on the fourth quarter guide. I realize that seasonality is getting more compounded. There's a lot of co-term activity that goes on around the fourth quarter. I guess people are wondering why maybe the guidance wasn't upsized a little bit relative to, you know, where it was implied going into it. I was just kind of curious. I realize there's a lot of permutations that go into the fourth quarter just given the size of it. was there anything else that, you know, maybe making you be a little bit more conservative just in terms of visibility into add-on deals and things like that? Thanks. Kirk, thank you very much for your question. We had a very, very strong federal quarter. 15 deals over $1 million, 14 federal agencies are now paying us more than $10 million. Key strategic wins included the IRS, which I talked about already, but it's certainly not limited to that. It's pretty amazing how the government is rethinking strategies in terms of communication and providing services digitally to the citizens, which is incredible because as you know, that's all about the user experience, and it's a workflow challenge. For example, look at how difficult it was for the government to get money out to small businesses during COVID. There are also some big opportunities with new initiatives in the administration, including resiliency, business continuity, outages, terrorism, COVID, cybersecurity on top of many lists. The White House actually put out an executive order on improving the nation's cybersecurity after recent ransomware attacks. That's all workflow related, leveraging existing systems that don't talk to each other very well. You're certainly not gonna rip and replace them, right? That's where the Now Platform comes in. Just think about vaccine management. It remains one of the greatest workflow challenges the government faces, and boosters now will likely need to be readministered on a regular basis. This again is a workflow challenge to distribute, administer, and monitor vaccines. We're in the mix on all of that. What we're seeing is the connection of federal, state, and cities that are all implementing the Now Platform to engage with citizens. They're using products like Customer Service Management to help digitize these workflows that can no longer be processed in person because the offices are still closed due to the pandemic. Overall, take this as a strong, aggressive, bullish, confident reply that the public sector is embracing the Now Platform as its transformational opportunity at federal, state, local, university, and all public entities that are quickly embracing us because our net promoter score is so high, and at word of mouth, they're saying, "This is the way to go. Go Now." O n your follow-up question with respect to Q4, I talked a bit about the normalized billings, right? That's 32% for Q4. We actually have a 50 basis points FX headwind in Q4 of this year versus we had a 150 basis points tailwind in Q3. We really are moving in the right direction. What I would also call out is last year, Q4, saw tremendous growth even when you normalize for those $80 million in collections. We are basically at 32% growth in Q4 this year normalized on top of a 32% growth last year. Strong growth upon strong growth. I will say also that not only did we raise the guide for Q4 by our Q3 beat, but we increased it by another $13 million in billings. We are seeing headwinds in Q4 for FX, but excluding that constant currency, constant duration growth is really strong. Thank you. Thank you. Your next question comes from Brad Sills from Bank of America Securities. Please go ahead. Your line is open. Oh, great. Thanks guys for taking my question here. Wanted to ask about the Celonis partnership. It seems interesting, natural interplay with some of the AI, you know, features in the enterprise editions. Where do you see that partnership providing the biggest boost when you look across the stack at ServiceNow? Yeah. Brad, thank you very much. I mean, the quick answer, right, is the Creator Workflow platform. What you're seeing out there is many businesses really have not maximized the value of their digital investments because they lack insight into the inefficiency of their processes, and that's what's holding back their business operations. If you wanna move the needle, organizations are gonna need to understand how work gets done across people, processes, and systems. What's happening here is ServiceNow and Celonis will help customers map those elements in real time and then build digital workflows to more efficiently automate work. We're gonna create a seamless product experience for customers that's gonna make it easy and simple for them to get insight into their processes. Across multiple enterprise systems, you'll be able to use Celonis' EMS platform and convert that insight, the X-ray, into action, automation, and remediation on the ServiceNow workflow platform. Think about bringing together process mining, automation, machine learning, RPA, and low-code app development into a seamless combined product experience that customers will be enabled to quickly and continuously improve the flow of work. Shorter answer is the Creator Workflows platform. What's happening is Celonis gets the X-ray, especially in the non-ServiceNow environments, and then we use all the power of the Now Platform, including process mining in the ServiceNow environments, to give them a fast automation platform to make that business process hum and really drive business outcome. I think this one is gonna be really exciting, and I thank my good partners Alex and Bastian and Martin. I know our engineers are very committed to each other, and we're gonna nail it. That's great to hear. Thanks so much, Bill. One more, if I may, just on that same topic there. With Creator, the progress you're seeing this quarter, 18 of the top 20 deals, are there any patterns you're seeing emerge in terms of, you know, common applications that are perhaps repeatable through the SI channel or just any color on where you're seeing traction there on the application side? Thank you so much. Yeah. It's amazing. You know, we literally had a review of this business just yesterday, and our outstanding leader just took us through it. What he's basically saying is the Now Platform is integrated with all systems of record, right? Customers can build applications fast, and we really are the platform of all the other platforms. I've been saying platform of platforms for a long time, and I wanna make it clear, like we respect all those other platforms, all those other excellent brands. Our job is to make all of them even better by moving into the action layer or the hyper-automation layer on the Now Platform. A trend we're seeing is the younger generation of workers, they're not gonna submit tickets. They want action. Enterprises are creating these centers of excellence, and they're letting citizen developers build the solution to solve for the business challenges. I believe that hyper-automation is a key differentiator. Because we have this one platform that does it all, RPA, low-code, process mining, all on a single platform, and now with Celonis, we get process mining in the non-ServiceNow environments. We bring everything together so customers can completely rethink their business model. Example I gave in the script is Stanley Black & Decker. You know, they're combining their new manufacturing vertical solution with the App Engine to build over 70 custom applications. This is all being done on the Now low-code application platform. Fujitsu also is an example where they're using App Engine to drive digital transformation and sustainability across the company, moving the green line, not just the top and bottom line. That's great to hear, Bill. Thank you so much. Thank you very much for the question. Appreciate it, Brad. Your next question comes from Samad Samana from Jefferies. Please go ahead. Your line is open. Hi, good evening. Thanks for taking my questions. Congrats on the great quarter. Bill, maybe one for you. You've talked a lot about hiring and continuing to sustain growth. I noticed as I look at hiring in your professional services department, you've already added more people in 2021 than you did, I think, in the last two years combined. I'm just curious, should we see that as a leading indicator of projects that are firing up or ServiceNow taking a more active role in helping their own customers implement new deals? Just how should we think about that? You should think of ServiceNow as a growth company, as a company that is firing on all cylinders, and as a company that is attracting the best talent in the industry, and that's really a sustaining part of our success. You know, I'll give you an example. You take somebody like Erica Volini, who joined from Deloitte. She had a fantastic career at Deloitte, and she wanted to come in and help us transform the service experience for our customers. We're collapsing the pre- and post-sale conversation. Everything here is about business impact, and we're rethinking the whole services model. That's why our customer satisfaction and our net promoter score is soaring. Not just our retention, we're focused on the in-process measures. That's why Jon Sigler came to us after a great career at Apple, Microsoft, and Salesforce, and said he believed that the Now Platform was the future of business. What we have been able to do is hire thousands of people, even in a pandemic, because the Now Platform enables us to create these seamless hiring, onboarding, immediately skilling people up to our culture and their training needs, and then managing them in a hybrid world in a way that gives them the experience of our culture. The word gets out there quickly. We are literally harder to get into than Stanford statistically, even as you see thousands joining. We are not opportunity-constrained, and that's what I've been saying the whole time. Why are we organically growing? Why are we committed to our engineering? Why are we fiercely committed to our market leadership? Because we can be. This is the platform of this generation, and we're investing primarily in great engineers and great go-to-market, especially quota-bearing, where we can deliver for our shareholders, our customers, and our partners. The other thing I wanna underscore is we have really expanded the ecosystem. As you even see us hiring thousands, just think, the ecosystem is hiring even more thousands on thousands to get around this Now Platform and get their piece of the action in geos, in industries, and personas. This is a growth story. Bill, not only do we see it as a growth story, but one of the best growth stories. Aw, thank you. Gina, just a quick follow-up for you, if I can squeeze it in. Just as I think about, y ou know, some of the new customers signed in 4Q of last year, there's still a lot of uncertainty in the market. Are you seeing those customers expand at a higher rate or maybe being easier to upsell as you get, as you lap the cohorts maybe that were signed up late last year as new adds, just as we get more certainty and what looks to be a stronger macro environment? Yeah, I mean, we're really pleased with our new logos, both from Q4 of last year and throughout 2021. We're seeing strong growth even in Q3, with six new customers greater than $1 million. They're across industries. Just in Q3 alone, that's banking, retail, manufacturing, and energy, just to name a few. We're absolutely seeing our deal sizes grow, right? New customers, average deal size grow quarter on quarter and year- on- year. We're seeing healthy growth abroad in EMEA and APJ as well. We're really focused on evolving our land to the right new customers, IT continues to be a high percentage of those new logos, but we're actually seeing a much higher percentage also of lands occurring with CSM, App Engine, and HR. Those cohorts are growing very well. Our expansion rate is doing very well, and just really firing on all cylinders across all three of our geographies. Great. Thank you for taking my questions. Of course. Your next question comes from Keith Weiss from Morgan Stanley. Please go ahead, your line is open. Thank you for taking the question. Gina, a question for you. Just trying to kind of understand the very varying trajectories of kind of what you're describing in terms of billings growth. It sounds like it's accelerating into Q4. Granted, there's a lot of normalizations in here, and I think this is where the answer is to get to that 32% normalized billings growth in Q4 versus the current RPO growth, which you guided to a pretty sharp deceleration, I think going from like 32% growth to 28.5% on a constant currency basis. Are there any kind of factors that we should be aware of in terms of adjustments or sort of changing contract dynamics that would cause that variance in the trajectories? Yeah, it's a great question. Rightfully so, you took into account the FX is impacting our CRPO. Most of the remaining CRPO growth deceleration is actually due to seasonality within our renewal cohort. Our typical customer contract terms, as you know, is around 36 months on average. We have a large cohort coming up for renewal in 2022. This is starting to flow out of Q4 of this year, right? Which because it won't include the future renewals until they r enew within 2022. That deceleration is really what's driving that. It's the seasonality of the cohort that's driving that deceleration. Once that cohort renews in 2022, and with 98% renewal rates across the board, right? We feel really good and strong about our renewal base. That will have a stabilizing impact to CRPO growth in 2022. Got it. That makes a ton of sense. Thanks so much. Welcome. Your next question comes from Alex Zukin from Wolfe Research. Please go ahead, your line is open. Hey, thanks so much, guys, and congratulations again. Bill, maybe just the first one for you around your, I know you've beat this drum quite a bit for the first three quarters, but I wanna ask it again. As we look to 2022, your approach towards and thinking about organic versus inorganic growth, obviously the organic growth and the profile of the company has been, you know, second to none to date. How are you thinking about the road to $15 billion plus as you sit here today within that construct? And a quick follow for Gina. Alex, it's a great question. I could not possibly be more confident in our ability to achieve the $15 billion plus on an organic basis by 2026, which is exactly what I said at the investor day. I also underscore the fact that we recognize that our balance sheet is extremely strong and will be even stronger as we move into the future. We continue to source, look at, consider all options that would benefit shareholder value creation without ever passing on any tech debt to customers, as many others have done. Just know that everything is always on the table, but at this time there are no substantial acquisitions on the table, not a single one. We could not be more confident in our organic growth. In fact, that's where we're looking at our investments, and we're prioritizing them because we're certainly not opportunity constrained, Alex. The company is in fantastic shape. That's awesome. Gina, maybe one for you. We've talked a lot about growth and confidence and growth both into Q4 and even beyond. I wanted to ask you a question about margins. Some of your peers have talked about, you know, models coming out of the pandemic that are more efficient learnings that maybe not every salesperson has to get on a plane and there's more productivity to be had, you know, all in a remote world and construct. While others have talked about investing, you know, more aggressively for growth and doubling down and seeing some of the tailwinds from the pandemic savings, you know, potentially revert next year. Where does ServiceNow fit in from a margin conversation standpoint as we start to think about a, you know, more normalizing environment, hopefully? Absolutely. It's a great question. Thank you so much, Alex. So, first of all, 100%, I've noticed that many of our learnings from working remotely will absolutely have lasting effects on our overall efficiency. But I've been pretty transparent throughout the year that it does give us the ability and the agility to redeploy savings elsewhere, right? Bill just talked about organic growth, right? We are at an inflection point where we have no lack of opportunity, and we are first and foremost a growth company, and we will absolutely invest behind that. That being said, at our financial analyst day in May, I talked about committing to 26.5% margin by 2024. We absolutely remain committed to that and on that trajectory. I don't think that increase is gonna be linear, right? As we think about offices reopening and travel becoming more consistent and in-person events happening more, we definitely don't believe that it's gonna be a linear path to 26.5%. I'm not actually in a position at this point to guide to 2022, but we are 100% committed to over that three-year period getting to 26.5%. Because we absolutely believe that we'll have savings that we'll be able to take from these learnings and efficiencies from the pandemic and redeploy them on growth opportunities that we see absolutely in front of us today. Perfect. Thank you. Your next question comes from Tyler Radke from Citi. Please go ahead. Your line is open. Yeah. Thanks for taking my question. I noticed that the million-dollar customers were up pretty nicely year-over-year here in Q3. I was wondering kind of the drivers of that. Was there some one-offs, and should we expect that type of strength in kind of million-dollar customer adds heading into your seasonally strongest quarter? Yes, you should expect it to continue, Tyler. The reality is we've become a platform company. You know, I came in a couple of years ago now, and we've really seen the transformation of the company to full-scale enterprise software company. We took the strength that we had in IT, and we have made it really our hallmark because it's very clear now in this world, as the world is dealing with digital transformation, everybody understands that the technology architecture is the business architecture. That has given us enormous responsibility, but also permission to expand the perimeter into the employee experience, into Customer Service Management, including direct to consumer, Field Service Management. This creates a workflow business, which is just an absolute sensation, ties together so many of these just disjointed processes, systems, and silos in enterprises today and really puts together an enterprise software market-leading approach from ServiceNow. Think of us as an enterprise player on a platform that is unstoppable. Great. Bill, you mentioned earlier that transportation and logistics were particularly strong on net new ACV. We're just curious kinda on the angle of supply chain constraints that a lot of industries are facing. Are you finding that that's kind of a catalyst for you know conversation around you know digitizing and kinda creating more efficient workloads? Just help us understand the balance of that versus you know potential you know challenges closing deals just given the supply chain constraints. Thanks. Actually, it's a great question, Tyler, because I know in some industries they talk about the supply chain dilemma and, you know, boats off the port with a lot of things in them. This is actually an opportunity for us because what's happening now is companies have to reorient their business models. They have to think about their extended supply chain. They have to rewire who their partners are actually going to be and who they're not going to be, how they're gonna source things from different places in the world that they've never even worked with before. This is all gonna create the extended supply chain opportunity for the Now Platform. You might have noticed, for example, we acquired Gekkobrain, which is a small company in Denmark because we are in so many different ERP-related conversations where we're helping our great ERP friends. Instead of doing mass customization through consultants that would take years and years, with the Now Platform, you can do it in days. This is creating a groundswell of opportunity on the ERP level, on the supply chain level, on the finance level, on the procurement level. It's just unbelievable. I mean, I've never seen an opportunity like this in my entire career. All right, thank you. Thank you very much. Your next question comes from Sterling Auty from JPMorgan. Please go ahead, your line is open. Yeah, thanks. Hi, guys. Just one question from my side. Bill, I just wonder if you can give us an update in terms of the experience you saw in the quarter around the customer service use case. Separately, when you look at the observability process or progress that you're making, if you could just give us an update on kinda where you stand and kinda moving into that market segment. Yes. Thank you very much, Sterling. I really appreciate it. Let me start with Lightstep, first of all, 'cause I wanna give a big shout-out to Ben and his great team. We love Ben, we love his team, and they're just gonna be a sensation here. We're continually impressed by the depth of engineering talent at Lightstep and the observability solution. We're still in the early innings of integrating the business, as you know, but we've had strong upsells from existing customers, and we're seeing that as a testament to how they value Lightstep's product, and it's already delivering to organizations. It's currently being sold on a standalone basis, but we expect that to be going to market solidly with ServiceNow at an enterprise level in 2022. We're also doing some product direct sales with the Lightstep product in the internet channel, and I think that is also a potential elixir that markets may not be expecting from ServiceNow. It's kind of a new play in the playbook, and we're pretty excited about it. On CSM, I'm really excited about our leadership in CSM. We have a fantastic leader in CSM with industry-renowned experience, and we're winning in verticals everywhere, whether it's financial services, telecom, healthcare, and life sciences. It's pretty incredible. What you're seeing here, and I actually went through this business review yesterday as well, you're seeing CSM completely rethink direct to consumer, you're rethinking Customer Service Management, and you're thinking about messaging, you're thinking about WhatsApp differently, you're thinking about Twilio and ServiceNow embedding these really swift solutions to the customer experience. Think about Field Service Management. Think about the connected experience for the ultimate consumer. Yes, other CRM companies have done a very good job on the engagement layer. Unfortunately, the customer experience doesn't end with the engagement layer, it begins with the engagement layer. The operations layer of the company and the back office IT capability of the company has to be tethered to that engagement layer, which is giving us net new opportunities, including IoT opportunities with field service and fleets of products, fleets of trucks, fleets of cars, EV marketplaces, that we've never seen the likes of. You combine that with the Creator Workflows, where it's kinda like, "Hey, I can have it my way. You mean I can customize that?" Yeah. Guess what? When you do the upgrade with ServiceNow, you don't have to get the consulting team in to rethink the whole implementation. With us, it's invisible. It's like driving a Tesla. You press a button, the next day you have a new Tesla. That's what ServiceNow is doing. Incredible innovation. That sounds good. Thank you. You're most welcome. Thank you for the question. Your next question comes from Raimo Lenschow from Barclays. Please go ahead, your line is open. Hey, thanks. Congrats from me as well. Bill, you now are in new areas with RPA and observability, you know, from the acquisitions a few months ago. What has been the customer feedback? Since you announced Celonis as well, how do you kind of draw the line between partnership versus doing yourselves, and how is that playing out so far? Thank you. Yeah. Well, thank you very much, Raimo. Again, as I said, ServiceNow's platform has process mining. We have RPA, we have machine learning, we have AIOps, we have all the predictive technologies based on the moves we made, as you know, built in. There are non-ServiceNow environments, especially if you think about large scale ERP environments, as just one example, where business processes are fragmented, there are multiple instances of multiple participants, and the customer really needs an x-ray. You know, what's going on around here? We combine that knowledge of all the non-ServiceNow environments that require process mining x-ray with what we do ourselves to get a force multiplier effect. As a result, Celonis is it. There's no doubt the gold standard for workflow automation in the enterprise is ServiceNow. Why would we wanna spend our time building the gold standard? We partner with you. We move the X-ray into the action layer, and together we offer the customer something they never got before, a great X-ray and an unbelievable immediate value to action process on the Now Platform. I really think this is a perfect example of trust being the ultimate human currency. I would have never done the partnership with Alex and Bastian and Martin and their terrific team, I might add, in Munich, Germany, one of my great friends in the world knows how much I love Germany as a second home. It's really fun to work with them. They all went to the Technical University of Munich, by the way, where I have great relationships. Just think about all the customers in Germany that are gonna be like, "Wow, I'm trying to modernize my architecture. Can you give me an X-ray? You can move all the innovation onto an action layer, and then I can start to drive business outcomes in days, weeks, and months, as opposed to multiple years. I think I'd sign now." Super. Thank you. Thank you very much, Raimo. Your next question comes from Matt Hedberg from RBC Capital Markets. Please go ahead, your line is open. Great. Congrats from me as well, guys. I guess whether it could be for either Bill or Gina, you know, you mentioned, you know, the I guess it was an early question from Alex on sort of the future of work. I'm just really curious, what is ServiceNow's philosophy on the future of work? I guess, Bill, I'm wondering, you know, as reps, sales reps get out on the road and there's more in-person conferences, industry conferences, do you suspect that that could help improve pipelines even further than more of a remote selling process? Yeah, Matt, there's no doubt it's all upside, right? 'Cause what you're seeing now is a purely digital motion to the marketplace. The great news is CEOs, management teams, and leaders of all kinds, and companies both in the public and the private sector, have accepted this new way of communication, which I believe has expedited collaboration and it has expedited decision-making because you don't have the clunkiness and the clumsiness of the heavy travel to get something done in a few minutes as opposed to a few weeks, especially in a global company, is a blessing. However, there is nothing that will ever replace humans being in the same room, ideating, collaborating, dreaming, thinking about the next frontier, and that's why it's all upside for us, because we're gonna combine everything we're doing now in the playbook with the direct motions, and we're gonna leverage the hybrid world both for ourselves, our customers, and our partners. I actually think the tailwind going into an economy that's opening up is probably underestimated by everybody on the call today. Great. Super helpful. Looking forward to that as we look to 2022. Congrats, guys. Thank you very much, Matt. We have time for one last question. It'll come from Arjun Bhatia from William Blair. Please go ahead, your line is open. Perfect. Thank you, and I'll add my congrats on the quarter. Bill, in your prepared remarks, you talked about companies consolidating, your customers consolidating legacy systems on ServiceNow. I'm curious whether you're starting to get to the point where within the systems that you're replacing, we're starting to see some maybe more modern SaaS applications that are being removed and folded into the Now deployment as well. Or are we still at this phase where there's still so much work to be done on legacy on-prem systems that you're not seeing those modern applications kind of fold into your platform? It's a really good question, Arjun. What I'm saying is there's still a massive set of customers out there with legacy, and what you're also seeing, and Gina, as an example, is our internal champion on ESG. She works beautifully with the engineering team when we announced one of the greatest ESG in a box solutions in the world. Actually, I think it's the only one in the world. What's amazing is there's all these islands of automation. Everybody's doing something good that's a modern system or a modern product or a modern tool. That's fine, but it doesn't necessarily unify on a common architecture where there is security, there's enterprise coherence, there's business operations, there's one end-to-end process that includes all the people, all the processes, and all the technology, and that's where the Now Platform comes in. It's especially true in the world of 20th-century architectures because even if you move them to a cloud, just think about the cost, the time, the risk. The companies that are dealing with do or die moments today, they just don't wanna wait. To have an action platform that can absolutely simulate the perfect enterprise at record speed, and I might add with a gorgeous consumer-grade UX, is a sensational business case. That's why you're seeing the deals get bigger, you've seen us go into a platform company model, and you now see that ServiceNow is a clear sensation. It's because we're giving the customer what they want. What I also learned, and I think it's an important attribute of our engineering culture and our great engineering leader and all of his leaders, we always say here at ServiceNow that our strategy is informed by our customers' strategy and deeply understanding their issues and their opportunities. We're so quick to be able to innovate and get new releases out to market at excellent quality, and then even the ones that we didn't get out in the release can be handled by the Creator Workflows platform. We also built something inside of ServiceNow called NowX, where we have a series of on-deck organic innovations that are going to hit the market and take it by storm. I had an earlier question on supply chain. That's one of the major areas where we're focused on. There's such an opportunity with legacy. There's still such an opportunity to unify these enterprises on common platforms. There's such an opportunity for hyperautomation to automate what people thought they already automated, that I just can't see any constraint to the growth agenda of ServiceNow. Perfect. Thank you very much. Thank you very much. Appreciate it. We are out of time for questions today. This will conclude today's conference call. Thank you for your participation. You may now disconnect.