ServiceNow, Inc. (NOW) Earnings Call Transcript & Summary

All right. Good morning, good afternoon or good evening wherever you're calling in from today, and thank you for joining us. My name is Caleb Dixon. And today, we're going to be walking through some of the major updates that have come in the Vancouver release for our Employee Workflows products here at ServiceNow. [Operator Instructions] My colleague, Jacob, and I are going to be addressing those as we move along, and we'll have some time at the end of our session today for any Q&A if there's any lingering questions. So we'll begin today by talking just a little bit about the evolution of the ServiceNow approach to employee experience, and we'll address some of the Vancouver highlights that we'll be going through today. And the majority of our time will take place in our solution exploration, our demo, before we round things out with a brief recap and then that time for Q&A, like I mentioned. So at ServiceNow, we're really excited at the fact that each year, we have 2 major releases. And if we look at just the HRSD product, for example, we can see that these advances really accumulate over time. And even looking just since 2021, there have been some major leaps and bounds. And accumulating all of these releases together, each one really adds and enhances onto the next. And we really take our feedback from our customers really seriously and are really proud to incorporate your feedback into these future releases. One thing that has really been a topic of discussion among many of our customers as of late, it's been that of generative AI. It's been almost impossible to escape in the news lately and in topics of discussion even in our personal lives. And so we really wanted to be intentional about the ways that we incorporate generative AI into our solution, and we'll see the first glimpses of some of those advancements today. So this is going to begin to power capabilities, solutions and workflows to really make workflows smarter and faster for everyone in the organization. I really believe that this is not just going to be a matter of convenience, but it's really going to improve the quality of life of your employees as they look to get things done. And it's important to note that generative AI, like many of our developments, this is not a capability that's simply switched on overnight. But specifically in the AI space, we've made deliberate strategic moves over the last 6 years or so. So ServiceNow could be well positioned to be the most intelligent, intuitive low-code platform to transform how you and your people get work done. And so we're really at the inflection point here, where all these investments and this development has kind of reached a new chapter over the next generation of those experiences. And I really see this as this is really just day 1 as far as the generative AI experiences go. So we'll be really excited to share some of those with you today in our demo. We're taking in all of these advancements together into consideration. This is really all about experience as a driver of growth. We really believe that the employee experience is fundamental to growth as an organization and especially in this world of flexible, hybrid and remote work. So today, this brings us to our Vancouver release. And we know that Vancouver is a vibrant city known for its beauty, and it's the second-largest city in Canada. So this means that it's the second-largest hub in Canada for many of Canada's hockey fans. And so the home team of Vancouver are the Vancouver Canucks. And I've been thinking about how these hockey players in Vancouver, they have to be well equipped in order to perform at the highest ability like we can see here. You could give a hockey player a broomstick, but they really need a hockey stick because that's a tool that's been purpose built and honed in order to simplify the interaction between the player and the puck. So if everyone on the team has a great hockey stick, of course, the team can be more coordinated in a more sophisticated, strategic manner because that interaction between player and puck has been optimized. So this is really how I think about the employee experience taking place on ServiceNow, and this really transfers to some of our developments in this latest release. So we want to help you and your people gear up with the most comprehensive employee experience available today, and that's on the ServiceNow platform. So we'll walk through each of the advancements that have been made in all of these components here today. But before we gear up, there's an even more crucial topic that I want to unpack and address here, and I was talking about what's underneath the pads. So you may know that when playing hockey or really any sport, there's something more important than the gear you put on. And you can think that it can be something like your hockey IQ. So a true athlete has that contextual awareness and the ability to synthesize their training into a single moment. You can put pads on anybody, but it's what's underneath the pads that makes the difference in those moments that matter. So at ServiceNow, we've long been known for our Now Platform intelligence, allowing you to orchestrate and create automated multi-departmental workflows, helping you access knowledge and build unique experiences on the platform with low and no code. So today, we're moving into the next generation of that experience, that intelligence with Now Assist. Now Assist enables you to leverage the very best of these recent generative AI enhancements that have really taken the world by storm. And today, we're beginning with HRSD, where you'll see we're going to be able to utilize our very own in-house, domain-specific large language model. And these are capabilities that are going to expand to the entirety of the employee experience suite in the future. But today, we're beginning with HR Service Delivery, and we'll see that in action today. So we're going to begin from the top talking about some of our enhancements to HRSD. And so that's going to be our hockey stick and our hockey IQ for this Vancouver release. We'll focus on covering the high-level highlights of each solution that we see listed here. And if there's something that we don't get to, please put that in the chat if you have a question, and we can follow up with some details whether it's throughout the conversation today or at the end during our recap time. So at this time, we're going to move into our demo. And we welcome any questions or discussion that you may have as we get started here. So again, we're beginning with the perspective of our hockey stick and our hockey IQ today. And that's going to be from the perspective of Emily, and Emily is our employee. So as Emily logs into the Employee Center today, she knows that this is her digital hub, where she's provided with context aware, content banners, recommendations. There's already intelligence that Emily is able to benefit from on the Employee Center. This is her digital hub for everything she needs. And she knows that her digital hub looks different than that of her manager, for example, because Emily's receiving that personalized experience, and so is her manager. So that's a good thing that we can deliver that curated experience for folks in different roles, responsibilities within your organization. So as Emily logs in for the day, she has a question on her mind, and she's wondering about the parental leave policy. Now in the past, Emily might just type something in like parental leave. She might type in those 2 words and seek to find some knowledge articles to sift through. And she can kind of learn for herself and find the answer herself. But today, with our new advancements with Now Assist, Emily is going to ask this question in a natural way, asking specifically how to apply for parental leave. And of course, we'll be able to provide Emily with those knowledge articles, that documentation just like before. But today, with Now Assist, this is just like a high hockey IQ that has contextual awareness and is able to synthesize knowledge in this moment that matters. So Emily can reference the articles that have been provided just like normal, but today, we see powered by Now LLM, this is our domain-specific large language model that's been trained in-house on almost 20 years of industry and customer experience that we have at ServiceNow. So as you glance at this answer, you might recognize that this is not a cookie-cutter answer, but this is actually specific to Emily's question pertaining to how to apply for parental leave. And this answer in natural language was synthesized from the knowledge that we have on hand in our knowledge base here. So with the knowledge that you have in your own knowledge base in ServiceNow, this is really where the whole of that knowledge becomes greater than the sum of its parts because we're able to access it in a more intuitive, natural way than ever before. And of course, we have the source article listed here, and Emily can always view the source of the article. And so she can see where some of that information came from in that answer that was synthesized. But it's really convenient that she was able to get that really natural answer in natural language that we just saw. Now this is just one example of some of the personalized experiences that we're able to deliver with generative AI and Now Assist. Another example would be within the HR Agent Workspace perhaps for your HR agents. So as Harry is logging into the HR Agent Workspace, Harry also has to synthesize a lot of information in his day to day. Now he's not searching for a knowledge article, but perhaps he's reviewing this activity stream of this HR case that's been transferred to him. So Harry didn't get to see the beginning of this case. He's just picking it up because it was directed to him. And he wants a summary of what is this case about, what activity has occurred on the case thus far and what steps need to be taken to move this along. So now we have our new case summary feature, again, powered by Now Assist, we can see right here. So this is where Harry will be able to summarize some of the activity that's occurred on the case. The issue that's of mind that's -- this case is focused on is summarized for Harry. He can see the actions that have already been taken up to this point. And depending on what type of content is present here in the case, our summary could even perhaps suggest some action items that he could take from here. So that's just another way that we're able to really improve the experience and the quality of life of folks like Harry, where in the past that might have taken him 10 or 20 minutes just to get his head on straight to review all the notes and all the activity that's occurred on this case up until now, understanding it, digesting it and then deciding where to direct his focus, what steps to take next. So today, with a click, he was able to seamlessly experience our contextually aware hockey IQ, if you will, and that's our Now Assist. Now I saw a question that came in the chat, and he was asking about how does ServiceNow handle sensitive data. Now this is a great question, especially we know in the HR space with employee data. And I want to let you know that ServiceNow anonymizes and cleanses sensitive and personally identifying information whenever we're training our AI models on -- with customer data. So all personally identifying information and sensitive data is totally cleansed from those cases so that our AI models have become more precise, more refined into the future. And they can continue to be able to provide you that relevant answer the first time around. And if you're wondering about perhaps our integration with like OpenAI and Azure OpenAI, basically, the way that works is that you would be able to use your own license from OpenAI or Azure OpenAI. And that would integrate into ServiceNow. So since you would have a license with OpenAI, Azure OpenAI, you would be agreeing to their terms and conditions of that license. But with ServiceNow and with our own Now LLM and Now Assist that we see here, we'll cleanse your data of all personally identifying information and sensitive information. So that was a quick look at our hockey IQ. One more enhancement that I want to emphasize with our HRSD solution in Vancouver is that of our Journey Designer Admin Console. I'd like to think of this as our hockey stick. So we're speaking of these personalized purpose-built experiences, and a lot of our employees experience journeys throughout their life at a company. So whether that's an onboarding, an internal transfer, offboarding, we want to ensure that these experiences are curated for the particular journey, that they capture the values and the priorities that you want to convey from your organization from a culture standpoint, from the standpoint of curating belonging within your people. So in the past, Anna as an HR leader, she might have had to reach out to IT or maybe her ServiceNow admin in order to change a journey. So today, with the Journey Designer Admin Console, Anna can reconfigure employee journeys in a way that's accessible and approachable like we can see here. Right away, Anna is provided with some journey templates that she can utilize. And she has some recommendations like creating personalized message, attaching recommended learning, surveys, quick links and more. And in terms of some of the top journey configurations that we're seeing here at the top, we can see some of the elements of those journeys that are currently active and some that need to be completed in order to make sure that, that journey is a comprehensive experience for your employees. And so this is a totally codeless, more accessible fashion that Anna can curate and personalize these journeys. And Anna herself even has some assistance here on the right-hand side of the screen when it comes to getting started and helpful resources that will be able to guide her every step of the way. And we'll be updating these resources and even be able to link out to our community. So Anna could -- she could chat with other folks just like her who are personalizing journeys for folks in her organization. So that was a quick look at some of the enhancements that have come to HRSD beginning with our hockey IQ, and we saw Now Assist for HRSD in action. I wanted to mention that we also have some other capabilities for analysis. For example, we can automatically generate resolution notes. So just want to emphasize that this is a high-level walk through. Now when it comes to journeys that we're just thinking about with Anna, one of those journeys that we all go through, we all encounter as employees is that of career growth. So we have a major new advancement from our acquisition of Hitch, which is the leading skills intelligence and talent mobility platform. And this is a new product called Employee Growth and Development that you see listed here as our hockey helmet. So let's return to the perspective of Emily and take a look at Employee Growth and Development. So this is our hockey helmet. And this is a product that it's really geared towards allowing your employees to take control of their careers and take those -- the steps forward where Emily logs on, and she's interested in uploading her resume, perhaps attaching her LinkedIn profile here. And from our acquisition of Hitch and our skills taxonomy, we have a library of thousands and thousands of skills that can be automatically attributed to Emily's resume and LinkedIn profile that will be linked here. With those skills that are processed and live here within the Employee Growth and Development platform, this is where Emily will be able to better understand the skills that she has. Perhaps she can identify some future roles or skills that she would like to develop. And she can make tangible plans in order to make progress towards those goals. We can integrate with your learning management system, and we're able to deliver proactive [indiscernible] and recommendations here. Now as Emily has conversations with her manager, we'll be able to document those here. So whether it's a monthly or quarterly growth conversation with the manager, Emily will be able to bring up some of these topics that she's interested in developing in Employee Growth and Development space. Those will be documented in this conversation with her manager. So she'll have a record over time of these conversations she'd had and the skills that she is interested in developing. You can think of aspirations as some of those longer-term goals. So we have some recommendations that have been intelligently provided to Emily based on what she's provided us already. And you can provide some resources here as it pertains to your organization as well. So it gives Emily a really tangible way to make plans that are not just in the near term, in the 3-, 6-month or the 1-year term, but 5 years and beyond, some of those aspirations that she can develop growth plans oriented towards -- to our growth plans, orchestrate learning and growth activities that contribute to those outcomes in development. So this is another place where your employees can strengthen their skill profile and make that development really tangible and measurable. Like I mentioned, we have a whole space dedicated to documenting those meaningful growth conversations. And we can provide Emily with a look at learning opportunities that are relevant to the skills that she's working on, and it's all right here within the Career Hub. Now the Career Hub and Employee Growth and Development is our helmet because this allows you to future-proof your organization by supporting skill development. Again, this really creates that sense of belonging in the organization so that Emily can take ownership of her career. She can come into this space. And she can direct her attention and her focus where she'd like as she's interested in really progressing her career, having those meaningful conversations and being guided towards the proper training, all in one place so she can measure those steps she's taking towards that growth and eventually reach that aspiration and look back and see all the work that she did to get there. So this is really a mutually beneficial situation because Emily is able to go to one place, get the assistance that she needs. And you as an organization are able to incentivize your employees to continue to seek growth and to deepen and widen the skills that they have today. And with EGD, there's no need to rip and replace your current systems because you get to enjoy the best of your current investments all into one streamlined experience. And that's here with Employee Growth and Development and the Career Hub. And if you'd like a deeper dive into Employee Growth and Development, I believe we have an Employee Growth and Development Demo Center dedicated just to EGD that you can check the calendar for coming up to get a bit of a deeper dive into that product. So we saw with our hockey helmet today in Vancouver, the Career Hub is that new digital hub for everything in terms of growth, there's meaningful conversations and aspirations. And this is all built on that skills, intelligence, the skills taxonomy that we're able to apply from Hitch, our acquisition that we made a few years ago, which is that leading talent, skills intelligence and talent mobility platform. Now let's take a look at our hockey pads today, and that is -- that will focus on some of the improvements we've made to Legal Service Delivery. Now if you've utilized Legal Service Delivery, I think you'll be pleased to recognize that we have upgraded Legal Service Delivery in the Legal Counsel Center to be in line with the Next Experience UI. So this is the design language that you see across the entire platform. It's more easily personalizable. It allows your legal team to quickly categorize and prioritize requests that are coming in, and this is a space that you can really make your own. We have some improved visualizations and reporting KPIs so your legal team can act with confidence. And it's really just overall a more pleasant interface and a more simplified, straightforward experience. Another enhancement that we've made in the Legal Counsel Center experience has to do with contracts. So we made some enhancements to the legal contract experience, and that's with an integration with Microsoft Word and allowing you to utilize Microsoft Word templates. So today, with Vancouver, you'll be able to leverage Word to create new contracts, leveraging the templates that you might already have on hand. You can author and store those more repeatable contract templates with Word in ServiceNow. So as you update them in Word, they'll be available in ServiceNow. And you can even configure e-mail reminders to notify the team of expiring contracts. Now we're working on a request in the Legal Counsel Center. This is what the new interface will look like. You'll see that it's organized just like the previous interface was, but it's a bit more pleasant to look at and to use. Just like Harry's workspace, we see the compose lane. We have the ability to capture work notes, comments. And just like in the last Legal Counsel Center, you can integrate with your mail client here. So you can continue to e-mail outside counsel, add attachments in a way that's really familiar. And it allows Susan to continue to operate within a single interface, a single browser window like we see here today. We're still offering our Counsel Assist and have the ability to provide response templates. Again, it can be easily copied and pasted into the e-mail swim lane here. So Legal Counsel Center has a facelift. It's beautiful. It's more intuitive, more pleasant to use. And we have those enhancements for the integration with Microsoft Word so you can utilize those Word templates that you're already familiar with and you might already be using today. Those are our hockey pads because, of course, every organization needs a strong and reliable legal operation. And so in ServiceNow, we're here to simplify and consolidate those operations into one place. Now finally, the last major enhancement that we'll be reviewing is the Workplace Service Delivery enhancements. And those are our ice skates, and I think you'll see why here in a moment. So today, we're going to begin in Workplace Service Delivery and what's called Workplace Central. So this is the new landing page for Amelia. She is our workplace lead or facilities manager. And with Workplace Central, we're able to access workplace analytics around some of those key metrics. So here's space optimization. Amelia is able to apply filters by region, cost center and more. So she really has this information at a glance. She doesn't have to aggregate this information manually, but it's always up-to-date and provided for her right here. The same is true for lease administration in terms of any contracts that might be coming up soon -- or expiring soon, excuse me. Maintenance management has a similar dashboard. So we want to ensure that we're continually repairing those assets around the office or around our spaces rather than replacing so she can understand the health of maintenance at a glance. And I'm really excited about our Occupancy Dashboard. So our Occupancy Dashboard is leveraging our new Workplace Connectors. So this allows you to integrate with your badging systems in order to visualize your employee badging data. So rather than solely relying on reservation data in order to get an idea of headcount or something like space optimization, that serves a unique purpose. And it's really important that Amelia has those insights for how the space is being optimized, both Occupancy Dashboard -- this really gives you a much more precise understanding of headcount because we are in real time providing Amelia with insights and headcount. And that's getting pulled directly from your badging data. And again, Amelia has the ability to filter by region, cost center and more so she can apply these filters and get all kinds of insights right here. Now another major advancement we've made today is with Move Management. So we have a lot of customers who have been interested in having a consolidated streamlined experience for those longer-term projects and wanted a space for that, that could live right within Workplace Central. And so we've answered with Move Management as one step towards allowing you to have those longer-term projects managed here all in one place. So moves can be historically really complex, multi-departmental. Folks like IT and other stakeholders are involved. So this is going to allow you to have a visual move to planner experience to streamline those bulk moves. And whether you're managing large projects or just independent move requests that are coming in, those will all be intelligently filtered through here to Amelia. So if we wanted to take a look at a move request, that will look something like this. And this is where Amelia can understand the details of the request, where we are in the process, currently awaiting approval, should be able to view the associated approvers, could reach out to them and collaborate with other folks on the facilities team right here within this workspace. And then in terms of managing those large move projects, let's take a look at this department restructuring. So right away, Amelia's provided with this really nice calendar view of when folks are making moves and the status of those moves here in real time. And if you'd like to see a more traditional list format, that's, of course, available here. But the calendar format is really nice to see everything put out on a timeline. You can add new requests right here in the top right-hand corner and view the more traditional project details in a similar way as those requests that we were reviewing earlier. So with our Move Management module, we'll see that WSD is able to track when spaces have been allocated, and we'll be able to notify stakeholders with that information. And I wanted to let you know as well that these metrics and KPIs that we're able to monitor here on Amelia's dashboard, again, these are live and continually up-to-date. So as folks are able to make a progress on these large move projects, their associated tasks and requests, that information will be marked as such here for Amelia in the summary of all these KPIs associated with those moves. So that's why WSD and Vancouver, that is our ice skate, the ice skates that we're putting on because we're having a really simplified, streamlined move from one place to another. And if you've ever gone ice skating, you know that it's way faster than walking if you can do it well with grace. Sometimes, I'm not as graceful as I'd like to be on ice. But it's a lot of fun. And so that was a look at the Workplace Service Delivery enhancements on a high level. And today, again, I really want to thank you for your time and attention throughout the whole presentation today. And I just really want to emphasize that all of these enhancements are us inching towards really creating the most holistic, unified experience for your employees. And again, this is not just from your matter of convenience to have Emily's search result have that nice summary at the top with gen AI, but it actually allows her to get right to the heart of what she needs more quickly and act upon it and get right back to focusing on what really matters in her day. And that type of experience is what we want to distribute throughout all of the Employee Workflows suite here. And every enhancement that we make, we really appreciate that customer feedback and look forward to continuing to develop and build on these advancements as we move forward to Washington and beyond. So again, I'd like to thank you all for being here today. If there's any lingering questions, my colleague and I are going to remain here. So please put those in the chat if you have any questions. You can also reach out to myself or the Demo Center with any questions if there's anything we didn't quite get to today. Again, thank you. Please enjoy the rest of your day, and we hope to see you again soon.