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

Good afternoon, everybody. Thanks for joining us on day 2 of Citi's Tech Conference. My name is Tyler Radke. I co-head the U.S. software sector here. I feel like this is our afternoon keynote. I don't know if it is officially, but great to have the big room for a really exciting discussion. We have ServiceNow's CFO, Gina Mastantuono. I think last time you were here, I totally butchered your name. So second time, better. Maybe third time, the charm.

You're getting better. You're getting better.

Gina, I appreciate you making the trip out here, especially which I know is a very busy week. We were catching up earlier about a lot of the product launches that I'm sure we'll get into. But thought it would be great, just kick us off. There's a lot of folks in the room. What does ServiceNow do at a very high level? And then we can dive right in.

Well, thank you for that. Thank you, all, for being here. So ServiceNow, what we like to say is we are the AI platform for business transformation. And so we are the single pane of glass that can sit on top of any system of record within the organization, be the system of record for IT, for example, but sit on top of every system of record, be that single pane of glass where you can drive workflows and system of action. So think about -- on my cell phone, I go in ServiceNow every single day, and I do anything -- approvals. I do all my HR work. I never actually see my systems of record. I hide all the complexity, and I just kick off workflows and do action and do my approvals and do anything that I really need to do business. And so that's who we are, and really excited to be here.

Awesome. Great overview. So let's dive into kind of the recent trends that you've seen in the business. So you're coming off a really strong Q2 beat-and-raise quarter. Unfortunately, I can't say that about the rest of -- a lot of my software coverage. Companies are still blaming deal slippage, macro uncertainty and everything like that. What do you think is driving the divergence between the strong results at ServiceNow and everything else that investors see in the software market, which is pretty choppy?

Yes. I think -- so I think the competitive differentiation that ServiceNow has is this one platform. It's this a unique platform that is 1 data model, 1 architecture across the enterprise. And so you can use it whether you are requesting something from IT, from HR, from legal, from customer service. And we are this one platform that not only can take the data, but then can use the data to understand what you're trying to solve for and take it all the way through resolution. So we're perfectly positioned for this convergence that we're seeing with cloud computing, AI and workflow automation. And it's really about helping get customers to value, helping customers solve the biggest problems that they have, whether it's mid, back or front office. And I think that the continued innovation that we have coming out of the platform, the continued execution from our best-in-class go-to-market, and I think just in general, the incredible culture that we have, $10.5 billion in revenue, best-in-class margins and incredible growth even at this scale, I think that's a function of this incredible culture that we've built. That, even at this level, one of our launches is all about being hungry and humble, and we just want it more.

Great. There's been some discussion among investors that there's almost this bifurcation of IT budgets. You have your AI stuff and your non-AI stuff. There's concerns that the non-AI stuff, especially for software companies, is sort of getting deprioritized and squeezed even more. Be curious your perspective of that. Do you feel like you're maybe seeing that but able to tap into more of that AI budget that would explain the resiliency? Any color you could provide just because you're dealing with some of the biggest IT buyers out there in the world.

Yes. I mean, I think it's a couple of things, right? So if you look at any of the reports out there, of CIO surveys, I don't know if you do one, but many of the banks do them, software spend is on the rise. IT spend is on rise. A lot of that is going to go into AI. I like to think of it more like on run the business and then grow the business. Like what are we really thinking about how AI is going to transform really technology in the enterprise? And we've talked a lot about the fact that we believe that AI truly will revolutionize how work gets done in enterprise. And so we've been investing in AI for years and years. We didn't just jump on the bandwagon. And I think it's why we've been able to capture our first-mover advantage, and really have products in market where customers are seeing real return on investment really quickly. And you'll continue to see us evolve that. We talked earlier on September 10, next peak, is our big Xanadu release, and it's our biggest AI release ever. And so stay tuned. Please all take a look at what comes out next week. I think you'll be pleasantly surprised at the continued evolution of innovation that keeps coming on our platform. And I think it's what positions us really, really well to continue to take that wallet share no matter where it's coming from, whether it's other places within IT or other places within the P&L.

Yes. Getting almost to the end of the alphabet with this release.

I know. We're going to have to start all over again. A funny thing on the airport on the way here, I don't know about you, but I heard the song Xanadu for the first time in, I think, 20 years. And I was like, "Oh, my gosh, it's a sign."

So going back to the macro environment, our city U.S. economists actually forecast a recession happening sometime in the second half of the year. Would just be curious how you're thinking about the macro environment into the second half of the year. If we do see a recession, how do you feel that your guidance would hold up any areas that you think are more resilient or more cyclical?

Yes. So from a demand environment perspective, we haven't seen any shift, right? So not better, not worse than what we've seen in the first half. What I'd say from a pipeline perspective, remains really strong for the second half. I talked about back in earnings, the fact that our second half pipe was in really good shape. Coverage ratio is strong, maturities, better than same time last year as well. We also talked about knowledge, which is our big user conference, which just happened in May. 60% More pipeline generated coming out of this knowledge than the prior knowledge 60 days out. And what I'd say also is that we've increased our processes on pulling that pipe through the funnel faster and better. So from a demand and pipeline perspective, back half, I feel really good. If and when there were to be a recession, what I'd say is that ServiceNow has been in all-weather before. So even just go back to COVID in 2020, we continue to do well because we are all about driving value for our customers. How do our customers get more productivity, more efficiency, more cost savings? And so we tend to actually do well despite a recession. Now that doesn't mean that I don't keep my eyes open and make sure that not only are we an incredible $10 billion-plus revenue company, but that we remain agile. And so if things do shift, we have, I think, been pretty remarkably able to shift priorities, scaling back on headcount growth, making sure we didn't have to do layoffs when the last macro happened. So we're always keeping an eye out to make sure that we can shift priorities and be agile in how we think about growth. But we've been and continue to make sure that we are really spending time with our customers understanding what problems they're trying to solve, so we can help solve them.

Got it. The pipeline looks strong, you're not seeing any signs of...

So far so good.

Good to hear. Wanted to shift gears to everyone's favorite topic, generative AI. But maybe at a high level, again, a lot of folks in the room may have different understandings of the depth of the platform, can you just talk about what ServiceNow's Gen AI strategy is and how you go to market?

Yes. So first off, it's all about really making sure that we're driving innovation in the platform. And the incredible thing about the fact that we are this one platform across the enterprise, all of our products are built on that same architecture, that same platform. All our R&D dollars go into innovation on the platform -- throughout the platform and throughout the product portfolio. So when we talk about our AI strategy, it's all about how do we get our customers to value fast? How do we get them getting the data, and again, sitting on top of any system of record, ingesting the data, putting it in one platform and then having these models really drive better, faster execution? How do we get to resolution faster? How do we deflect customer service inquiries at a higher rate? How do we summarize cases even faster? We were the first in market with our products back in Q3 of last year, September 30, we really launched. I mean literally sold on the last day of the month. What I'd say is that the product portfolio and our AI products are the fastest growing of any of our product set in history. It continues. We're only 3 quarters in, but that trend line remains really strong. And as we think about continued innovation, the only thing that I'll tell you is that it's evolving so fast that the innovation -- the strategy we have today, all I can tell you is we'll continue to evolve and shift, right? And so we're really focused on giving customers the most flexibility. Our strategy is using domain-specific large language models that really take the data from within the ServiceNow platform. It keeps it within that platform, within the customer's instance. So the data is not going anywhere else. So from a privacy perspective and a security perspective, our customers really love that strategy, but at the same time, allowing flexibility so that if the customer is building their own models on a specific set of data, that it can connect to it if they want to. If they want to connect to OpenAI or Google or Lambda, they can do that. It's all about flexibility in how our customers are formulating their GenAI strategy. And so it's about really driving that incredible productivity, that incredible efficiencies as we think out. But the one thing I can tell you is customers are absolutely leaning in right now to building out their AI strategies. And it's not -- today, a lot of it's about cost savings and productivity. Tomorrow, it's going to be about how AI is really reinventing how they're doing business. And I think it's a really exciting time.

Yes. And you talked a lot about flexibility and integration with open source models, which is super important. But you've also done a pretty good job of packaging some interesting new SKUs with ITSM Pro Plus. I think has seen some pretty incredible adoption. You also have HRSD and some tools to help developers be more productive. Could you just talk about how the demand for some of these GenAI SKUs is tracking relative to your expectations? And any numbers or a way of framing that just for the audience?

Yes. So just so everyone understands that our Pro Plus SKUs are our Gen AI SKUs. And so we have launched them for ITSM, which is our IT products, our HR service desk, our customer service decks as well as our creator workflows, which are all the developer tools. And what I'd say is that seeing really incredible traction across the board, ITSM is our most penetrated market in IT. And so you'd expect that to be kind of leading the pack, and it is. What I'd say is that adoption curve rates are steeper and better than what we had originally expected. And we compare it to our initial Pro SKU or our initial AI products we launched back in 2018. And so I'm always looking at that trend and adoption curve versus the Pro SKU that -- faster than any quite honestly, of any of our product launches ever. And what I really like also is not only is it ITSM, so HRSD, so our HR services, HR leaders are leaning into Gen AI like no other technology before. So that's super interesting. And I think if you think about the power of what AI can do in the context of an HR or organization, it's pretty powerful. So seeing really strong traction there, customer service, as you imagine, every company is thinking about how AI is going to help drive a better customer experience. And so we're seeing that as well. And then creator, how do we get these developers coding more productive? We're seeing upwards of 50% acceptance rates on GenAI generated code, meaning it can go right into production without anyone having to touch it. They're reviewing it and looking at it, but that's pretty incredible so early on. And so the ability to really help drive greater deflection rates increased productivity for developers. And for so long, we were talking about there's not enough developers in the world anymore because every business is becoming an IT business, right? So it's not just the tech companies that need developers. It's the banks, it's the retailers. It's the manufacturers. And so to make them more productive, Gen AI is really, I think, going to shift the ball. And so we're seeing great traction across the board. We talked about expectations of about a 30% realized price uplift. We're continuing to see that 3 quarters out. So, so far, we feel really good about the traction. And again, our next big launch is just next week. So stay tuned and definitely keep your eyes open for it.

Yes, we will. And it sounds like a lot of different use cases, not just IT, but also the developer's HR, customer service, I mean, kind of process.

Whole many use cases, oh my goodness, we have implemented internally about 15 to 20. I think we're probably up to 20 now use cases internally, and we're generating these early days upwards of $10 million to $12 million of annualized savings just from the productivity and efficiency gains of Now Assist internally. We're always products 0. We call it Now and Now. Even with the finance, we got -- you can imagine with software revenue recognition is quite complex from a contractual term perspective. And so my revenue team is getting queries from the sales organization, hundreds a quarter, hundreds a quarter. Well, we're at so many of that is routine and we can really automate that using AI. Well, what does that mean? Not only am I getting productivity on my finance team, but my sales guys are getting the answers quicker. That means that they can spend more time with customers. So I love that use case. So it's really across the board. There's so much opportunity for how AI can really transform, how companies are working internally.

Maybe next is the Investor Relations chatbot for all the questions.

Yes. Well, imagine, imagine that, right, because I get a lot of the same ones over and over.

Right, right. But we still want you to come back next year.

I'm always going to come back.

Okay. All right. Appreciate it. Appreciate it. So I guess as you think about that 30% price -- realized price uplift, which is significant, especially at your scale, that is still a considerable discount to the list price. So how do you think about the sustainability of that 30%, especially as you -- it sounds like a lot of really exciting future releases around the corner with Xanadu?

So I'll go back to -- I talked about that original AI launch in our Pro SKUs back in 2018. We talked about the price uplift back then. List price is 50%, and the expectation would we realize about 25%. 5 years in, we're still seeing that 25% price uplift. So I get this question all the time, is that 30% sustainable? I mean I just go back to history, and I would say, yes, especially since the Gen AI capabilities are even more and can drive even more productivity and efficiency. So I feel good about the expectations of being able to maintain that realized pricing.

Right. Maintain or potentially...

Increase. Well, listen, it's all about value. We've been super focused on value selling for a long, long time. How do we make are we getting customers to value quickly? And how can we demonstrate the ROI? It helps them with customers 0. So I can show them internally exactly the value that we're getting. I talked to folks earlier today about the fact that our entire executive team spends a ton of time with customers every single day. And so the fact that we can demonstrate the value that we're seeing internally and then demonstrated for them really helps drive that. And so when we went to price the Pro Plus SKUs, we did the exact same thing we did when we launched the Pro SKUs. We looked at the value expectation, and we're giving the customers like 90% of the value and keeping 10%. When you have that conversation with customers, they're willing to pay that. I'll take 90 and give you 10. So we'll continue that.

Right. Great. As I think about your long-term subscription targets that you recently laid out, they imply roughly a 20% growth CAGR, which is really impressive considering the scale of your company. There's not too many companies in software growing at that rate. It also doesn't leave a lot of room for growth to slow. So how do you sort of get comfortable around those long-range targets? How do you sort of get comfortable that customers are going to continue to increase their contracts year after year?

Well, I think a couple of things. So I'll go back to the continued innovation that comes out of the platform. So we have upwards of 13, 14 products now that are more than $200 million in revenue. That's a public company, right? We've got 15 of them that we've built organically internally, right? So that breadth of that product portfolio, you see our customers that have been with us over 10 years are still growing. 10 years on, are still growing at a CAGR of over 20%. Why is that? It's the breadth of the product portfolio and that incredible innovation. And so you'll continue to see us innovate. You'll continue to see us leaning in on the go-to-market side. Even with respect to penetration, right, so in the U.S. -- like we are in 80% of the Fortune 500, but only 50% of the Global 2000. So there's lots of room, even within our most mature markets, to continue to expand with new logos as well as 85% of our new business comes from existing customers. So what does that mean? That means that I have really strong visibility into pipeline, into growth. And so all of those reasons give me confidence in the guide that I just gave you a couple of months back.

Great. And the new product momentum has been super impressive. Knowledge -- you had a dozens of new product announcements, and we've seen that over the years. I guess a key question though is, can customers keep up with the pace of innovation? And at some point, do they just kind of not have enough resources to onboard the volume of products you're taking on? Like how do you think about that? What are some of the things that you're doing to help ensure that customers are ready for what you're innovating on?

Yes. So it's a great question, and it's the question I got earlier today. And I said it's a champagne problem. Like, "Oh my goodness, your company is driving so much innovation. How do we get it in the hands? And how do you get as many people enabled to implement and to sell and to manage it?" We've been hugely focused on that, right? And so think about the partner ecosystem. And so we've been investing in our partners for years and years. They're incredibly important to us as we get our customers implemented. How do we make sure that we're enabled? How are we leaning into investing? We have what we're calling ServiceNow University. And it's about enabling not only our sales force to go sell -- understand the products and sell it, but our partner ecosystem to implement it, and then the customers to understand it and to be able to manage it. And so what I'd say is there's lots of opportunity to continue to grow. Coming off a strategy session with the management team just yesterday and Erica Bellini, who runs our partner ecosystem was telling me about, the fact that over the last 2 years, we've increased the number of certified partners leading implementations. Like we've tripled that number in the last 2 years. So is there more room to grow? Absolutely, and more to do when you're continuing to innovate at the pace we are, for sure. We're always trying to catch up and keep up, but it's an area that we continue to invest in and we'll continue to invest in.

Yes. And Gina, you talked earlier about the international growth opportunity, too. Globally, you're still pretty low penetration of the Global 2000. I think at Analyst Day, you also mentioned that there are some big economies, big markets like U.K., France, that can be billion-dollar businesses for you. Just walk us through what sort of the differences in adoption patterns or buying trends you see there? And some companies have called out some softness in Europe over the last few months. Are you seeing any of that as well?

Yes. So I think we talked about the fact that we see a number of markets growing to $1 billion over the next several years, U.K., Germany, Canada, Australia, Japan, for example. And I'd say the buying patterns are not that different. What I'd say is that understanding of who ServiceNow is and what we can do for them is probably not as robust. So really making sure that we are spending time with customers, educating them as to what we're able to do and how we're able to do it is a key area of focus. Also leadership matters, right? And so where we've put new leaders in because what gets you to $200 million is not necessarily the same thing that's going to get you to $1 billion. So making sure that we have the right leaders in the right place at the right time has been a huge area of focus for us. So we've got a brand-new leader in the U.K., a new leader in Germany the last year, Japan as well and Australia. And so really focused on making sure that we are selling the breadth of the portfolio and understanding the fact that we are a platform-first, educating the partner ecosystem because they're super important to us, especially internationally, and then really making sure that we have the right leaders in place to drive the growth is a key area of focus for us. But yes, a ton of opportunity still outside the U.S. because these are large software markets where we are definitely underpenetrated to date vis-a-vis where we are in the U.S.

And I guess from a product perspective beyond regional localizations like languages or other standards in HR, you might have various core systems that are different in France than the U.S. Do you feel like from a product perspective, you're kind of ready to go after that? Or is there more room to go in terms of getting all those features rolled out?

From a product perspective, again, because it's the one platform, it makes the ability to go into new markets pretty seamless. Obviously, there is localization of language. But obviously, in those key markets, we've been investing there for a while. So from a product portfolio perspective, we are where we need to be. It's really about investment from a go-to-market perspective, from a partner ecosystem perspective.

Yes. Awesome. I did want to talk to you also about another big opportunity, which is the federal and public sector business. I know that's when -- we've seen a lot of momentum from ServiceNow over the years, but just given the topical nature of the federal business with the U.S. elections, how are you expecting this quarter's federal business to trend considering everything going on? And have you seen any signs of maybe folks doing deals a little bit faster to get ahead of potential election changes?

Yes. So just for context, Q3 is the biggest quarter in the federal business, right? It's when they reset budgets. And so Q3 last year, we had incredible growth over 75%. Our federal business has been extremely robust. Public sector, in general, what we've been talking about federal being one of the first verticals that we really heavily invested in, and we've seen the growth. And what we've done at the federal business is definitely replicable in public sector outside the U.S. as well as state and local. And so we've been investing there and continue to invest. We continue to see great growth and great opportunity. Q3, we talked about on the call for earnings, pipeline for feds looks great for Q3 and the back half. I would say I feel as good about the guide and as good about the federal business today as when I guided. I'm not seeing any much different actions on the part of customers based on elections. What I can tell you is that even when there was the turnover 4 years ago between parties, the federal business did not stop, right? The mandate to digitize the federal agencies is more important than ever, especially post-COVID, and that's the same whether you're talking to federal agencies, state and local or public sector outside. And so it remains a really strong vertical for us. Really excited to have great leadership running that team, and there's just more opportunity than ever before to continue to lean into that sector.

Yes. Yes, definitely. We talked about partners earlier, I think more from the GSI lens, but I did want to talk about the technology partnerships, particularly among ISVs and hyperscalers. So Microsoft, which we heard from earlier today, actually, you recently announced, I think, an expanded partnership with them, being able to deploy some of the ServiceNow workflows on Azure, maybe some co-selling arrangements. I think you talked about the largest new logo win from Microsoft or something of the sorts in the last couple of quarters. Just give us an overview of that partnership. What are you bringing to the table? What are they bringing? How are you expecting to kind of go out and win together?

Yes, it's a great partnership that continues to expand, right? And so the latest expansions are all around really opening up new addressable markets for us, going after new logos, co-selling with the Microsoft enterprise sales team, right? And so really being able to get new logos who want to deploy ServiceNow on Azure. It's a win-win for both of us, right? And so they get more Azure, we get more ServiceNow. And by the way, we have joint customers that get huge value. And that's the key, right? How do we really go together to market and co-sell to help our customers get to value even faster? And so really excited. We talked about 7 deals, over $1 million on Azure marketplace in the quarter, with 2 really large new logo GTK wins -- G2K wins, sorry. And really just exciting momentum there. And what we're doing with Azure, we're doing with AWS. We're further along with Azure, but we can do the same thing with AWS. And it's all about expanding that addressable market and really getting new logos. I talked about 85% of our new business comes from existing. New logos, though, are really important as we think about future growth. So it's just about how do we continue to expand that addressable market. So really excited about those partnerships. And then in more broader with Microsoft is the relationship that we have with Copilot and with Now Assist, our Pro Plus SKUs, right? And so the connectivity so that if you're working in ServiceNow, for example, and you're looking at the data that you're pulling up and you want to create a PowerPoint for your supervisor to show where you are, you can do that within Now Assist really easily, and that's all coming to market in the fall. Vice versa, if you're in Teams and you get a question and you want to kick off a workflow into ServiceNow, that connectivity is built to -- so continued evolution on these tech partnerships and I get the question on like, why they're important and who gets what? Well, it's all about serving the customer, right? And how do you get the customer to value and how can we continue to really lean into helping our customers get the best outcomes for the business.

Yes, it sounds very exciting, especially some of the integrations that come. I mean I guess and I did want to talk about industries, too. We talked about federal. But if you think about that partnership, are there specific customers or sectors where you're like that's just been a tough nut to crack, where this maybe can push us over the finish line? Is there anything super exciting that you think is really can start to move the needle just gets unlocked by that partnership?

I don't know if it's specific to industry. It's just about really where we have just had a harder time getting into. I think at the end of the day, there -- while we're in 80% of the Fortune 500, that means that there's 20% that we're not. And so let's go get them. And the ability to potentially allow the customers to decide and be flexible whether they are in our data center or if they're on-prem or if they're using a hyperscaler, the ability to give that flexibility is something that customers are really leaning into in a way that I think positions us very well as we think about future growth.

Yes. And on the topic of industries, you obviously served all of them pretty much. And you've also built some pretty interesting industry solutions. Are there any that are sort of hitting that S-curve of adoption -- or that inflection point of the adoption curve that you're seeing at the moment?

Yes. I mean our telco SKUs have been really remarkable. And it's all about really trying to get rid of that messy middle, right? There's so many manual processes, homegrown systems and swivel chair work going on. How can our platform really help those telcos really drive much better productivity and efficiency and end results, better results were their end customers. We've been really successful there financial services, Citi is a customer, thank you very much, continue to lean into how we can really help hide the messy middle and get rid of the manual processes to help drive better governance, better customer support is a key area for us. Federal. So our federal SKU is really interesting. By the way, federal also leaning in very heavily to Gen AI. So we'll be launching some Gen AI capabilities in the federal SKUs very soon as well. And so I think if you think about manufacturing, health care life sciences, all of these are areas where we've been focused from an industry perspective and seeing really strong growth and really good adoption from the customer side.

Yes. Great. Well, I did want to talk about profitability. I know we've talked a lot about all the exciting growth stuff. But how do you think about just the, a, the balance of growth and profitability in running a business of this size? And where do you think long-term margins can ultimately go to?

I love that question. I don't get it often. No, I'm kidding. So what I'd say is we've always been really focused on a balance of growth and profitability. We've never been that growth at all cost company. And I think it served us well, right? So we've been this incredible, scaled growth company with also best-in-class margins. And I think we've been able to do that inherently because of the leverage within the model. I talked a little bit earlier, every dollar of R&D spend gets added to the platform, which benefits all of the products, right? If you think about the fact that we are one platform and one from a go-to-market perspective, 85% of our new comes from existing customers, there's inherent leverage in there. Now we use a lot of that leverage, and we invest it in international markets, for example, an enablement for our partners like I talked about for continued R&D, but it does give us the ability to give some bottom line dollars back. So I've guided back in May, right? So a point of operating margin leverage over annually on average and 50 bps on free cash flow, despite the fact that we're becoming a U.S. taxpayer now. And so I'm not going to guide any further than that. But what I can tell you is that you can continue and you would expect to continue to see that balance of growth and profitability that ServiceNow has always been known for, and that Bill and I and the entire management team are really focused on. That being said, we'll always skew a little bit more heavily towards growth, if it makes sense.

Yes. And with that profitability come -- and frankly, profitability and organic growth stories, you've accumulated a lot of cash. I think you're close to $9 billion, if you add up all the investments and cash on the balance sheet. How are you thinking about capital return? How are you thinking about M&A in that context as well?

Yes. So as you would imagine, we're always focused on thinking about capital allocation and capital return. You'll continue to see us do M&A as we've always done, right? Smaller tuck-in M&A based on really getting top talent in or driving capabilities. One of the first M&As that agreement when I came as CFO was a company called Element AI, which is where we brought in most of our incredible AI talent back in 2020. So kudos, I'm going to give myself a pat as well as the entire leadership team on really bringing in some great talent in great areas. And it's about really driving capabilities on that platform. You'll continue to see us do that. But we've always said that we wouldn't be doing our jobs if we weren't looking at other more strategic larger deals, but we have high hurdle rates, right, best-in-class margins, incredible organic growth rate. It would need to make sense from not only a shareholder value perspective, but also a customer value because if it's not driving customer value, in the long run, it's not going to drive shareholder value. And so we're always looking. And then we initiated a buyback about a year ago, right? I mean that's all about managing dilution, employee dilution, and you'll continue to see us do that. And I think that we've been pretty transparent in how we're thinking about it. We're always going to think about growth and investment for growth first. But if there's remaining dollars to drive better shareholder return, we'll always be focused on that as well.

Yes. And obviously, it's a very high bar given the technical talent that you have at ServiceNow, but are there certain categories that are -- would be more natural in terms of doing M&A? Or where do you kind of have your eyes peeled?

Well, the most incredible thing about the company is that the opportunities are balanced because we are so broad in how we think about the platform, right? So you go deeper in IT, you go out adjacent. So we're always looking at potential options. And I wouldn't [indiscernible] us in any one that direction. And I think that, that's the power of the platform and the power of what ServiceNow has been able to create.

Yes. Great. Well, I know we got about a minute left. I figured I'd hand it back over to you just if there's anything we didn't hit on or any key message that you wanted the audience take home with them?

No. I think the key message that I hope everyone takes away is that the unique position that ServiceNow is in, given the confluence of cloud, AI and workflow automation. And that ability for us to sit at that single pane of glass on top of any system and really drive incredible customer employee engagement, productivity and efficiency is really well positioned for what we believe is going to be a revolution in how work gets done in the enterprise and just really excited to be part of that. So thank you.

Gina, thanks for coming to the conference. Thanks everyone for the great attendance. This is great. Appreciate it.

Thank you.