Hey, John. How are you, buddy? Good to see you. Excellent. Thank you, everyone, for joining us. My name is Keith Weiss. I run the U.S. Software Research Franchise here at Morgan Stanley, and I'm very pleased to have with us my first session of the conference, ServiceNow CEO Bill McDermott. Bill, thank you so much for joining us. Thanks, man. Good to be with you. Great having you. So one of the things I've always loved about ServiceNow is the core story of ServiceNow has remained the same from when I first met Fred Luddy 20 years ago. It's about automating workflows for the enterprise, and the job of subsequent CEOs has been sort of convincing investors of how broad that opportunity was. It's not just the IT Department. It's the overall enterprise. Now, as we come into this sort of agentic computing future, the AI future, the ability to automate those workflows has just really expanded, so I was hoping to get your view. Since when you started at ServiceNow, you've done an amazing job of showing CEOs what could be done with the ServiceNow platform. How does that expand now? How does that change, and how does your sort of mission at ServiceNow expand with the technology? Thank you, Keith. First and foremost, I have to give the credit to Fred Luddy. He, after all, invented the company, and he also brought with it a great culture, and I think we often underestimate the long shadow of a great founder and the culture that goes along with that founder, and we've tried to jealously guard that at ServiceNow, and ServiceNow has only had good CEOs. Frank Slootman did a very good job. John Donahoe did a very good job, and I've been very fortunate to follow in their footsteps because they did a very good job, so I came into a situation where we weren't doing a cleanup routine. We already had the makings of the powerhouse that you see today. We had a dominant position in the IT category of digital transformation, IT Service Management. We brought on asset management, operations management, security, governance, compliance, things that really matter depending on what industry you're serving. We extended that to the employee experience. You can't talk to a CEO, I just did, that has a company that's happy using their finance or their HR system. Doesn't mean they're not good systems. They are good systems. These companies got big and they're successful. But the usability factor has become such an important part of the enterprise, especially with people working from every place, and so recruiting, hiring, onboarding, providing all the services to the employee in beautiful mobile business experiences, including offboarding, by the way, is mission critical, and then you think about the customer service and how you manage that process. We have the only platform in the world now where you can sell, fulfill, and service on one common platform. You think about the engineers out there, especially in an AI-driven world. Now, 60% of the setup work that they used to hate doing is now done with AI because you're using natural language text to set up the automation of building applications. All of this and much more is happening on one platform in multiple industries using the dynamic power of GenAI to fundamentally transform the way companies work. That took ServiceNow from a TAM. When Fred Luddy started the company, he was told by a very reputable independent research company that it was a $1.5 billion TAM. Now the TAM is $0.5 trillion because we just added on an amazing new part of the story, which is the workflow data fabric part of the story. We invented the world's fastest, most magnificent database that now supports the ServiceNow system. And so you can connect to any data source. It could be Snowflake. It could be Databricks. It could be any one of the hyperscalers. And they're all good. Azure is great. GCP is great. AWS is great. And all these companies all have LLMs that are also compelling. But what makes us different is that we have this all in one out-of-the-box value proposition in one AI platform that is fundamentally transforming business. So Keith, we came a long way. And I really feel like we're just getting started. Excellent, so when we ask in our most recent survey, we asked a question about agentic computing and which vendors are best positioned to sort of provide that into the enterprise. Number one was Microsoft. Number two was ServiceNow and far ahead of any other application vendor but I think this speaks a lot to the positioning of ServiceNow as that workflow automation tool. But we do hear every company talking about agents, every company talking about being a system of record for agents or deploying agents or somehow having agents. How does ServiceNow sort of rise above that noise to prove kind of where the value proposition is really going to lie? Why ServiceNow is the right platform for doing this across the company? How do you guys get more than your fair share, if you will, of this agentic computing future? I think we had an unfair advantage to begin with. I'm here six years now. I don't know where that went or sure when quickly. But we started building large language models six years ago with Jensen Huang at the great NVIDIA company. And we built a platform that had agentic AI built into the platform. So our platform has a Pro Plus version that we have been selling for over five years now that has, some people say, domain-specific language models. Some people call them smaller language models. But what we do know for sure is that it sells. And basically, why does it sell? It sells because with a domain-specific platform, there's zero latency. You're working with the customer's data, so it's rocket fast. It is cheap to run. It is not GPU hungry. And it's absolutely secure. All of those things have been foundations of our AI journey. And now what differentiates us is we're in the world of agentic AI. And there was once a time when I was on this stage where I was telling you we were the platform of all the platforms. And now I'm telling you we're the agent of all the agents. Because not only will we have agents in all the departments in every corner of an enterprise, but we will also integrate and manage all the other agents. 85% of the digital transformation projects in the world fail to deliver a positive ROI. That's a business fact. So imagine this. Why does 85% of the projects in digital transformation not deliver positive ROI? One simple reason, integration. One system doesn't talk to another system. One release level does not accommodate another release level. And there are multiple instances across the world in large companies from the same vendor. And then you bolt on more vendors. And some are in the cloud, and some are on-premise, and some have a new release, and some don't. And in all cases, this integration chaos, this hornet's nest has brought down companies and the value they've invested in IT, and the CEOs have had it. So when ServiceNow shows up, we are the control tower for AI transformation, or as Jensen Huang would say, the AI operating system for the enterprise. Either way you want to retain it, that's what we are. We have our agents. Our agents integrate with all the other agents. Our platform doesn't care if SAP is in someone else's cloud and the SAP cloud. It's an on-premise SAP. It's a cloud SAP. It's a Workday. It's a Salesforce. It doesn't matter because we integrate with all of them. And the data from those systems seamlessly connects into the ServiceNow automation layer. And now you can run your business processes seamlessly on ServiceNow. Order to cash, procure to pay, reinvent billing, rethink field service, customer service, get the employee experience under control. Why is it that an employee can't come to work and look at one beautiful UX? Why is it that they can't ask the system any question and get an immediate answer just the way you yesterday when you were looking at the Oscars wondering who competed with The French Connection and Gene Hackman in 1972 could get an instantaneous answer? And although Gene's a great actor, you could say, well, The French Connection probably won because he didn't have great competition that year. You did this. You know you did it. We all did it. Why can't the enterprise be that simple? The fact of the matter is now it can be. As Da Vinci once said, the ultimate form of sophistication is simplicity itself. Simple has shown up. It's ServiceNow. Our number one goal is to get to the C-suite because once the corner office gets enlightened to the art of the possible, they stop going on forced marches and they start thinking about reinventing business models, accommodating new ways to sell and service to the customer. We use ServiceNow at ServiceNow. We drink our own champagne. We actually call this Now on Now. Already, we've freed up nearly $400 million in value just using our own AI. We're deflecting 80% of the cases that humans used to have to deal with. We're doing fun things also like converting leads to actually qualified sales at 16× greater efficiency. It's not just a support and service, but we're also talking about revenue growth concepts. A lot of things are going to change in the enterprise. And we're going to move up the leaderboard very fast as we go past $20 billion and $30 billion in the future. Got it, so I want to dig into some of the areas that investors are concerned about as we go forward in this opportunity, and one of them is the pricing mechanisms, right? Shifting from what has been traditionally a very seat-based pricing model, now we're looking at more outcome-based scenarios and outcome-based pricing. The bottom line question that people want to understand is does ServiceNow stand to benefit? Does the net equation of perhaps fewer seats because we're automating these functionalities, does that get made up by the consumption elements over time? This is the perfect question. We have always had metered-based pricing at ServiceNow, and a lot of other enterprise companies have too, where you subscribe to a certain number of seats, but when you use certain features, certain functionalities, or you go over certain use limits, you pay more. It's fair. The customer understands that because they want predictability in a seat-based pricing model, but at the same time, they don't want to pay for things that they're not using or deriving value from. Also fair, so now with AI, you're going to get the best of both worlds, but you're going to get a huge leverage point from ServiceNow. Allow me to explain. The game plan was simple. Move out on Pro Plus and include the agents. So the customer, as we release these gorgeous quarterly releases, this month we'll release Yokohama, which is easily our most advanced AI release of all. And each one of them is a sensation, but this one's massive. You get it. If you subscribe to Pro Plus, we give you the agents. So there's no barrier to entry anymore on proof that the agents are doing this and that because there's so many pretenders out there. The customer is just whipsawed by it all. So we just give it to you. And you can immediately begin experimenting with the use cases out of the box with these agents. And then you can, with our Agent Studio, begin customizing your specific use of the agents for your company and your industry for the domain in which you're using the agent. And then you mass scale. So we give you the agent in the Pro Plus, which is an up-sell for us. We make money on that. And then as you think about these digital tokens, think about ServiceNow's unique financial capacity to grow beyond all the other ones. Sometimes we'll be interfacing with 20, 30, 50, hundreds of systems as we interact with all these other systems in the flow of work and these business processes. You will be consuming the tokens that you were granted free of charge as part of the Pro Plus version. So the more you use it and the more it accommodates interactions with multiple systems across your business or your network, the more we will make on the consumption-based pricing model. And not a single customer will argue with that because if you're solving big problems and they are consuming the value from the AI, they are happy to pay a meter-based price for that. One of the things I find interesting about this is we're the only company in the world that can do this. And so if you're looking for that rare gem among a lot of stories, this would be the rare gem because it's the only one that integrates all the other systems. It's the only one that automates work across every corner of your office. And it's the only one that has an unfair advantage of understanding all your assets, all the operations in billions of workflows that have now become knowledge repositories of action in the enterprise. And so I can typically go into a major customer, could be Germany, could be someplace in Asia, could be South America or the US, where they'll have 200 instances of an ERP system. Not unusual at all. Sounds wild, I know. They'll have an HR system for every 1,000 employees. Sounds crazy, but it's true. They'll have hundreds of instances of a CRM system that by definition grew through acquisition. So mathematically, it's an n squared cubed and so on problem to solve. We're the only one that can solve it. So why do I say that should be the reason to lean in and feel very bullish on ServiceNow is because as that consumption curve kicks in back end to 2025 and beyond, you're into a juggernaut here. And Lord only knows how big this thing gets. And I didn't even get into the data story on how that is going to materialize in substantial new growth that couldn't have possibly been factored into any real guide because we're just getting rolling on it. But when I saw a major CPG company CEO tell me, Bill, my people tell me that you're able to perform analytic equations and set up dashboards for me 27 times faster than anything they've ever seen in any benchmark, and that the database was three and a half times faster than the world's greatest database. Are you a data company now? Am I? Am I a business process company? Am I an automation company? Am I an AI company? Am I a GenAI company? Do I specialize in one industry or multiple industries? Are we in the U.S.? Are we all over the world? The answer is we're everywhere. And so as we go through the years with this strategy, I just have never seen a growth opportunity or anything like this in my professional career, which is why I'm more fired up now than I was when I was 21. Excellent. So I want to just pull on that thread there when it comes to almost a first principles question about software and software pricing. So what you're describing is ServiceNow as a central node in this network within the organization of where all these processes get automated and where all these processes persist, right? And you guys have this great position to be able to automate all those processes. One of the things that has concerned investors, and we could DeepSeek as a most recent example of it, is the price curve coming down, right? The token pricing 10× more efficient every year, not just DeepSeek from everyone. And what investors are worried about is, is the pricing dynamic going to come down faster than the units or the consumption is going to come up? But from my perspective, that's not really how software has ever been priced. So can you talk to us about the conversation that you're having with the customer? Are they asking you about token pricing? Or are they asking you about the value proposition and the productivity gained? And they'll pay their fair share of that productivity gain. Efficiency and productivity is the calling card of the day. It's not just DOGE. It's also in the private enterprise. Somehow, I think government sets the tone for commercial behavior, so this idea of efficiency and productivity is on everybody's mind in every company, no matter where you are in the world. The other thing that's quite interesting in terms of delivering that value to the customer: the more the LLMs become commoditized, and the lower the price point goes on the LLMs, the better our value proposition becomes. Because now you're not only leveraging the ServiceNow specific domain LLMs and use cases, but now we seamlessly integrate into all the LLM models in the world, so the customer is going to be able to integrate that with their own data to achieve dynamism in the way the enterprise runs that's never been done before. Already, the LLM pricing is going down substantially. I think someone recently told me that's running one of those companies that it's one sixteenth of the price it was last year. So this is beautiful for us because we're not competing on the price of LLMs. I'm still running a traditional SaaS company, but at the same time, tokenizing the consumption value of Gen AI and the LLM integration is simply going to make that use case more and more valuable as we bring more and more data and know-how into the equation of the enterprise. One of the examples I really like, we all have a pocket full of credit cards, and we all have problems with disputes. It could be a bad charge. It could be a stolen credit card. It could be trying to sort through a mess. Visa, run by Ryan, he's doing well. He's more than $500 billion. He knows what he's doing. He chooses ServiceNow to manage the disputes for Visa. But he thinks big. And he's like, Well, wait a minute now. Some of the best banks in the world sponsor my Visa card, and they put their brand on it. And some of those big banks write off literally hundreds of millions of dollars in disputes just to keep a guy like you happy, Keith, because they don't want you to leave. And so now he can use the ServiceNow platform as a pan-enterprise play. Think of it as a B2B2C as he helps other major customers of his resolve the disputes in the value chain. So I think one of the big concepts that's going to come based on AI is inter-enterprise computing and inter-enterprise business networks. And a platform like this was built for that. And I know about that because I did that once before. But the platform that I did that with once before had a very specific thing that it did. This does many, many things really well. So I think that'll be another big, big part of the growth story. Excellent. You mentioned DOGE and the push for efficiency within the federal government. The federal government has been a great area of growth for ServiceNow, particularly over the past two years. You guys have gotten great entree into that federal government, and now investors are worried that at least in the very near term, could that be a headwind, right? The focus on headcount reduction, the focus on efficiency, does that create near-term headwinds for ServiceNow, even though it could present longer-term opportunities as they try to build back more productively? Yeah. I haven't seen any evidence of the headwind, but we did say on earnings that it could be because when you have a new administration, it's not unusual, especially with the focus on efficiency and driving that value for the citizens of the U.S. and dealing with the deficit challenges and so forth, that it could be a timing situation. So we're very transparent on that, but I haven't seen evidence of that yet, and I actually see a tremendous amount of evidence, and we've gotten this feedback incidentally, that our platform maps beautifully to attacking the cost, the assets not being fully utilized, the mission of sending people back to the office. Think about this for a minute. We do want people to be productive, but we also want them to be happy because that's when they do their best work. The average person in an enterprise today swivel chairs in between 17 different application experiences a day. Based on independent research, not mine, that is at least 30% of their productivity that gets drained out just because of the inefficiency of enterprise application software. Now, just think about that in the government and think about seven decades of complexity, six and five decades easily that have each of these agencies literally searching for answers on how to combat this. One agency, for example, was one of those that had 85 HR systems for 85,000 people. And I basically told the head of the agency, You know, man, you probably could have cooled it out a little bit after 1984. And so he basically said, look, I don't have enough years to rip and replace this stuff and start over. I said, neither do I. All you got to do is integrate into ServiceNow, and we'll start turning the oxygen off on the ones that don't matter, and you'll get your mission achieved. And then you'll have other cases where they'll be like, h ey, I got to be much more efficient, much more effective, and I don't have the visibility with my financial systems, and people may not actually even know how to use them. And what I'm trying to do is get some inter-department cooperation. Because everything that's noticed in one area has to have an action where people do something with the information. So workflow automation is the biggest idea if you want to be more efficient and more effective because we route work, we categorize the work, which is super important, and we see all the patterns, and we can start to predict what the next best action is with AI. You're not only going to get really much, much more fast. You're not going to only get better actions out of the systems that you have now, but in a lot of cases, you don't have to go on a forced march to upgrade the old system to some new version because if you upgrade the old system to the new version, even if you get a couple of new agents with it, it's only going to actually make that more complex, not less complex. So people are waking up to say, hey, why don't I just save money on those core systems of record and let them do what they were built to do and automate above them and around them with AI to get better action and get more value realized out of the investments we had and the ones we intend to make? So I actually think this is a breakthrough. And all you need to do, Keith, is get in front of somebody that understands tech, somebody that's been in a commercial enterprise and felt the pain, or some well-meaning government leader that's just tired of not being super successful with the money that they invested in. With the visibility that's on things now, I think it's our game to win. Outstanding. One of the metrics, just one of the product innovations that's front of mind for a lot of investors is Now Assist and the Pro Plus SKU. You guys had a tremendous product cycle with the Pro SKU over the past six years. Over the past year, now we're doubling down, if you will, Pro Plus and the Now Assist SKU. 150% sequential deal growth into Q4, so seeing really good momentum. Can you give us an update? Where are we on kind of overall penetration of Now Assist? And is this product cycle going to match kind of what we saw from the Pro SKU over the past five years? Yeah. I think, first of all, this is the fastest-growing product category ServiceNow has ever had. We already have 1,000 customers live on it. We're growing at 150%, QoQ, and we're just getting started. So the penetration rate on Pro Plus alone, especially when you think about the expansion of the ServiceNow platform, when you thought of it as an IT platform that became an employee experience, that became a customer experience, it became an engineering, and became all the use cases across all the business processes in all the industries, I mean, it's almost exponential to think about how underpenetrated we are. We are just getting started. And as it relates to the AI journey, this is brand new. And so we expect to continue to grow that at a massive clip. And we haven't even kicked in the consumption meter. I reminded some of my colleagues, I started at Xerox Corporation when Xerox Corporation was the fastest company in the world to have hit $1 billion in revenues for a commercial entity. This was a while ago, and I was with Xerox in its heyday. What was interesting about Xerox's go-to-market strategy back then was that the CEO of the company realized that because it was such an innovative technology in the 1960s, it may have been hard to sell the box for a very expensive price. But it was pretty easy to sell the copy on a per-copy charge, meaning using a meter. In our case, we have our cake and eat it too. You're paying for the user and all the experiences that they'll have. But now, as we derive value from the system, you're hiring our system to do a job. We also have a meter-based concept that will kick in, and the customer is fired up with that. They're okay with that because they basically get like a year's worth or six months' worth based on how much they use it, and then when they go above that, they realize, I'm only paying more because I'm getting more value, and all these things are mathematically proven. We have a very, very tight design thinking and value engineer procedure for the customer so they can see the math behind it, and they can participate in the math too because they're being asked to sign up for less cost, more revenue, and so we help them arrange that, so I would just say that we're just in the earliest of innings. And of all the worries that you might have, the least worried you should be is for GenAI at ServiceNow and the ability of ServiceNow to monetize not only the platform on Pro Plus. There's still lots left there, but also the consumption-based models that are in front of us. And I suspect some customers might even say, hey, let me just move my chips into the center of the table, and let's just work it out of all chips in and figure out how we get there later. So I think the large deal equation will just increase as more and more innovation hits the table. We have many customers now that pay us over $100 million a year. When I first started here in 2019, I don't think a single person in this audience would have said that. But now that's commonplace. And maybe in the last minute we have, I think one of the central parts of pushing all the chips into the table is the underlying data. And you talked about the workflow data fabric. We've talked about the importance of data in driving all these models, driving all these processes. Can you talk to us a little bit about that? It's a new offering, workflow data fabric. And how are you convincing customers that ServiceNow is your data management provider? ServiceNow is the center of gravity where this data should be consolidated. Yeah, it's true. I mean, at ServiceNow, we have a system of record that's a financial system. We have a system of record that's an HR system. We have a system of record that's a CRM system. We have a system of record that's involved in marketing. And we have 27,000 employees that have no idea we have that. The only thing they see is one gorgeous UX, one experience that's all through ServiceNow. So that's what they live with. That's why we run the best gross margin, the best op margin operation in the cloud of any company out there because of that. And so as you think about the data part of this, you can now, because of RaptorDB, you can ingest any data from any source into ServiceNow you want. And we've been above those systems of record, just like we are at ServiceNow, for many, many years. And so now with RaptorDB, if you want to run everything in ServiceNow, you can. But I learned one thing for sure. Customers love choice. So if you don't want to, you don't have to. We can still be the workflow automation leader. We can still connect into all of your data sources, both structured and unstructured, and we'll make a zero copy. So Snowflake works with us. Databricks works with us. All the hyperscalers work with us. So as we automate work and the way it flows, we'll have what we have in ServiceNow. You'll have what you have in other data sources, structured and unstructured. We make a zero copy, and we complete the transaction at record speed. But what they also want, and I just left the CEO, they want dashboards. This guy's telling me, I don't have any visibility. I can't see my customer. I'm not sure how productive my employees are or how happy they are. I really don't have visibility into new ways to do better billing. I don't have a feel for my field service tech and how I can make them more productive using the power of AI. A nd so all of these things are going to drive automation. All of these things are going to drive more and more data into ServiceNow. But ServiceNow doesn't care where the data comes from. We only care that the CEO and the management team achieve the mission. And I think that's a big differentiator. So for example, you talked earlier about different companies like Microsoft. Microsoft and AI Copilot is teamed up with ServiceNow. We don't speak unwell of market-leading champions. We team up with them. We're teamed up with Snowflake and Databricks and all these outstanding, outstanding hyperscaler cloud companies and all these outstanding large language models. And as for the systems of record, I mean, my recommendation would be team up with ServiceNow because it's going to make your system of record, most of them have been around more than five decades. It's going to make it much more relevant. And the reason that I chose defining enterprise software company of the 21st century is because all the other SaaS companies that are in our space were 20th century. So we had new ideas and we're still fresh with our ideas and we're on the move. But we work with everybody. If everybody worked with ServiceNow that's in the system of record business, their win rates would go way up and they'd get more revenue just because the customers would be happier. I think that more and more will start to do that because the hyperscalers do that. The data players do that. I don't know what the system of record companies are so nervous about. Outstanding. Unfortunately, Bill, that takes us to the end of our time slot. But thank you for joining us and amazing story at ServiceNow. Keith, thank you very much for having me. Thank you, everybody. Appreciate you. Thank you.