good afternoon ladies and gentlemen welcome to the servicenow Q3 2022 earnings conference call at this time all participants are in a listen only mode and please be advised that this call is being recorded after the speakers prepared remarks there will be a question and answer session if you would like to ask the question during this time simply press star one on your telephone keypad if you would like to withdraw your question simply press star one again and we do ask that you please limit yourself to one question and now I'd like to turn the call over to Mr Darren Yip vice president investor relations please go ahead thank you good afternoon and thank you for joining servicenow's third quarter 2022 earnings conference call joining me are Bill McDermott chairman president and chief executive officer and unimo our Chief Financial Officer during today's call we will review our third quarter 2022 results and discuss our guidance for the fourth quarter and full year 2022. before we get started we want to emphasize that some of the information discussed on this call such as our guidance is based on information as of today and contains forward-looking statements that involve risks uncertainties and assumptions we just take no Duty or obligation to update such statements as a result of new information or future events please refer to today's earnings press release and our SEC filings including our most recent 10q and 2021 10K for factors that may cause actual results to different materially from our forward-looking statements we'd also like to point out that we present non-gap measures in addition to and not as a substitute for financial measures calculated in accordance with death unless otherwise noted all Financial measures and related growth rates we discussed today are non-gap except for revenues promoting remaining performance obligations our RPO current RPO and cash and Investments to see the reconciliation between these non-gap and gas measures please refer to today's earnings press release and investor presentation which are both posted on our website at servicenow.com a replay of today's call will also be posted on our website with that I'll turn the call over to Bill thank you very much Darren and I'll add to my welcome to everyone joining today's call servicenow at an outstanding third quarter looking at the Top Line results in constant currency subscription Revenue was 28.5 percent growth crpo growth was 25 percent on profitability operating margin was 26 all three metrics are above our guidance bidding expectations once again service now had 69 Q3 deals greater than a million dollars our U.S federal business had its best quarter ever in Q3 we saw strength across Industries and business segments our performance was consistent globally with Europe executing especially well this quarter our renewal rate remains Best in Class at 98 percent we are the largest organically grown enterprise software company we have an unmatched combination of organic growth and profitability at scale as these Q3 results demonstrate we fully intend to maintain this leadership position regarding the operating environment in recent quarters we said that secular Tailwinds was stronger than macro Crosswinds they are nothing we saw in Q3 changes this core thesis digital technology is a deflationary force the Enterprise digital transformation Market is validated the investment thesis is stronger than ever hybrid multi-cloud deployments adoption of a modern data infrastructure stack cyber security and risk management Ai and data analytics remote remote work and collaboration these Trends are not only durable their relevance is expanding there'll be 750 million new applications built by 2025. in the U.S alone nearly 100 million workers will remain in hybrid environments 27 billion connected devices will drive more data in the cloud over the next three years and servicenow's platform directly addresses all these challenges which translates to numerous growth vectors for our business I hear one thing from CEOs consistently anything we prioritize must generate results in weeks or months this is the essence of the Great reprioritization in past decades waves of Enterprise systems were introduced to meet Market challenges of those times operating systems databases applications what we see now is a generational shift from architectures built in the last century to platforms engineered for this one if you look at the Erp Market we see customers at various stages of their move to the cloud some of the world's largest manufacturers for example are consolidating hundreds of old procurement processes into a modern workflow experience this declutters the Legacy environment driving more than a billion in cost efficiencies for just one of our many Erp wins this quarter we can do it because servicenow was born in the cloud we integrate with everyone we meet our customers wherever they are any environment any organizational structure any operating model where there is complexity we simplified we are fast to deploy fast to generate Roi in this Need for Speed environment the servicenow platform is becoming the Strategic center of gravity for our customers in light of this today we're announcing a new initiative rise up with servicenow to scale 1 million servicenow certified professionals by 2024. our customers partners and servicenow itself are all growing their servicenow workforces we see opportunity everywhere with rise up with servicenow will give people the knowledge to see them overall the demand environment is strong the market opportunity is growing the ecosystem is expanding servicenow is a growth company on every level we see the growth across multiple buyer personas as customers consume more of our expanding solution portfolio in Q3 well itsm and itom were in 17 of our top 20 deals with six deals each over a million dollars security and risk we're in 15 of the top 20 with five deals over a million customer and employed workflows were each and 12 of the top 20. once again we saw a creative workflows in all the top 20 deals with nine deals over a million customer review servicenow admission critical the defense Logistics agency works with servicenow to support the global defense supply chain with automated workflows faced with the crisis of hurricane Ian the State of Florida work with servicenow to deploy a mission-critical application to manage requests from people searching for their loved ones in crisis situations weeks to deploy isn't an option which is why the state did it on servicenow in a few hours Dutch Telecom provided kpn works with servicenow to reduce their order management process from three days to under a minute saving Millions thank you these stories are everywhere in fact one CEO who chose servicenow for the first time said his best to me personally it's always easier to make a strategic partner decision when you trust the people on the other side of it in late September we announced the service now Tokyo relief we delivered AI powered task intelligence which is all about making the customer service agents life more productive reducing manual effort speeding time to resolution and improving the customer experience on the revenue facing side we delivered enhancements to order management including support for bundling configurable products and pricing models we delivered major advances in field service operations and dispatch with scheduled optimization and territory planning these capabilities help our customers better manage their costs but also the ESC footprint at a moment in customer service is at the very top of c-level agenda servicenow's net new innovation is driving and transforming the front office the technology leaders we released a new service operations workspace which will deliver faster incident resolutions to keep people highly productive and given the ongoing migration to the cloud we release a new licensed Cloud cost simulator so leaders can model the cause benefits of moving from on-premise to Cloud deployments the Tokyo relief contains many more new features across each of our major workflow businesses technology customer employee and creator it is the latest demonstration that servicenows product and Engineering machine is the best in the world the Best in Class like no other and speaking of Best in Class I've been lucky enough to learn from one of the greatest innovators of the 21st Century Fred Luddy and I have been on a multi-year journey together one built on love and mutual respect at this week's board meeting I was honored to take on the role of chairman with Fred remaining an active member of our board for the long term Fred Remains the soul and inspiration of service now and I'm honored to call him our founder and my personal friend in conclusion we again delivered on our promise in Q3 we said the company would continue its fast growth in any operating environment we did we said the crpo growth would accelerate during Age Two as our Q4 guidance reflects it is we've said that we've preserved The Benchmark near the rule of 60 for the full year in constant currency we are on track servicenow has the revenue growth predictability of growth and sustainable business model While others are managing the past our Engineers are innovating for the future the fundamental question facing Enterprises today is this can modernization wait with the robust demand environment we see the answer is a compelling no it cannot the stated ambition of service now remains we will be the defining enterprise software company of the 21st century we are firmly committed to that Journey we are focused on value creation for our customers our partners our colleagues and our shareholders our confidence in Q4 extends to 2023 and Beyond sales capacity and pipeline coverage are higher today than at any point this year we have Best in Class sales and marketing efficiency we have a highly differentiated platform we have a business model that will be managed by Design for net new innovation growth and profitabilities you can count on with this growth and margin profile operating near the rule of 60 servicenow is a unique asset and a premier company we are hiring with an absolute focus on people who can innovate through code and who can sell Solutions and who can help customers realize success the bottom line is this when our customers work the world works better for everyone that's why the world works with servicenow if we didn't do what we do it wouldn't get done the Hallmark for servicenow is net new innovation and with that in mind I thank you so much and I'll hand things over to Gina thank you Bill Q3 was a fantastic quarter of execution the team delivered strong results beating all of our constant currency growth and operating margin guidance metrics an outstanding performance across the board investments in digital transformation are a necessity and servicenow remains a strategic priority CEOs recognize that the now platform can deliver the workflow needs for their digital first initiative while driving quick time to value and hard dollar savings these outcomes are imperative in the current macro environment and why we continue to see robust demand for our products in Q3 subscription revenues 1.742 billion growing 28.5 percent year-over-year in constant currency exceeding the high end of our guidance range by 100 basis points RPO ended the quarter at approximately 11.4 billion representing 24.5 year-over-year constant currency growth current RPO was approximately 5.87 billion representing 25 year-by-year constant currency growth of 150 basis points B versus our FX adjusted guidance 50 basis points of the beat was driven by early renewals from Q4 as the team looked to get it to get ahead of our large renewals cohort our renewal rate was the Best in Class 98 continuing to demonstrate the stickiness of our business as the now platform remains a mission-critical part of our customers operations we finished the quarter with 1530 customers paying us over 1 million in ACV of 22 year over year the number of customers paying us over 10 million in ACD grew 60 year over year as a cohort expansion remained healthy from an industry perspective net New hcd Growth was led by retail and Hospitality of nearly 50 percent followed by strength and education manufacturing had a good quarter as well led by a large eight digit deal and Technology media and Telecom continue to show durability Federal had its best quarter ever including an over 20 million dollar net new ACD win we closed 69 deals greater than a million in net new ACD in the quarter including five with new logos what's more each of those five deals were led by a different product that diversification showcases the breadth of our product portfolio and increasing customer awareness of servicenow's capabilities as a platform which includes 11 organic businesses with over 200 million in ACV in fact 18 of our top 20 deals contain five or more products journey to profitability operating margin was 26 one point above our guidance driven by our Top Line beat and operating efficiencies of Recaps on margin with six percent we ended the quarter with a healthy balance sheet including 5.5 billion dollars in cash and investment together these results continue to demonstrate our ability to drive a strong balance of world-class growth and profitability before I move to guide us I want to give a brief update on the macro our ability to outperform in Q3 is a testament to the strong execution of the servicenow team account executives are staying close to the customer constantly checking in and proactively assembling the necessary materials to get deals across the line we will operate with the same rigor in Q4 and are confident that we're factoring in the macro Trends into our guidance consistent with the market on a year-over-year basis the strengthening of the US dollar also resulted in incremental FX headwinds we now expect a 290 million dollar headwind to 2022 subscription Revenue a 330 million dollar headwind to Q4 crpo 100 basis points headwind to operating margin and approximate 160 million or 100 basis point headwinds for free cash flow margin for 2022. with that in mind let's turn to our 2022 Outlook we're revising our subscription revenues range to between 6.865 billion and 6.870 billion representing a raise to our year-over-year constant currency growth Outlook to 28.5 excluding a 550 base Point FX headwind we continue to expect subscription growth margin of 86 of 100 basis points year over year we continue to expect an operating margin of 25 consistent with our original guidance at the beginning of the year as we are offsetting incremental FX headwinds with operational efficiencies and discipline spend management we now expect to be caption more than 29 reflecting the incremental FX headwinds I previously noticed despite the 160 million dollar impact of FX we will generate over 2.1 billion dollars in free cash flow demonstrating the incredible resilience of our business model finally we expect gaps diluted weighted average outstanding shares of 203 million for Q4 we expect subscription revenues between 1.834 billion and 1.839 billion representing 26 27 year-by-year growth on a constant currency basis excluding a 600 basis point FX headwind we expect crpo growth of 26 on a constant currency basis excluding 600 basis points of FX headwinds we expect an operating margin of 26 and we expect 204 million gaps diluted weighted average outstanding shares for the quarter in summary we had a fantastic Q3 I'm so proud of our people for being focused disciplined and committed to helping our customers succeed bill and I would like to thank all of our employees around the globe for their continued hard work and dedication our business is resilient our teams are delivering and we're as confident as ever about the future we have the platform Enterprises need to reinvent their business models and adapt to the new economy so they can innovate to win and come out of this moment stronger than ever we continue to see a robust Pipeline and on maintaining our investments in growth hires as the opportunity in front of us remains large we're well in a way to becoming the defining enterprise software company of the 21st Century with that I'll open it up for Q a thank you very much Miss mcintuano ladies and gentlemen at this time if you have any questions or comments simply press star one and if you do find that your question has already been addressed you can remove yourself from the queue by pressing star one again and just a quick reminder we ask that you please limit yourself to one question we go first this afternoon to Samad Samana at Jeffrey's hi good afternoon and thanks for taking my question it's great to great to see the strong results Bill maybe I'll start with you you know you've been telling us as you noted on the call that that service now is going to grow durably regardless of the environment and I'm just wondering if maybe either the shape or the nature of the conversation that you're having with Executives has changed in this type of environment and and how that's ultimately still allowing you to close all of these large deals and make any of this momentum yeah I think Gina said it very well Samara when she said we're Mission critical and the now platform has really become the standard for digital transformation in a modern Enterprise today and with solving so many so many challenges um our customers need to drive Automation and productivity as you know they're either not hiring they're laying people off and they have to do more with less we're built for that um they need the computers and the platforms to do the work so that people have a more pleasant experience on the employee side and they require an experience no matter where they're working from that's world class we take care of that the customer service management has evolved from just the engagement layer of how I Market to you sell you cross-sell you it's really moved into the mid office and the back office and back into the supply chain on how I can streamline with great efficiency giving you the right product in the right form factor and price on time just as you expected it and that end to end is all about the servicenow platform and finally you're seeing a breakthrough here on building net new innovation customers are going to have to do that for themselves and with partners and we are also going into a co-creation mode with our partners in every industry in Geo around the world that's pretty stunning and there's lots of use cases and examples the big thing samadas the c-level executives are looking to serve us now they are calling us they want to work with us they see that with a defining and that took some time to build and I think we're there now oh the growth is incredibly impressive and Gina maybe just a quick follow-up for you on the comment around factoring macro and can you maybe just help us understand you know last quarter you call that slightly longer deal Cycles any change like can you just dimensionalize what you factored in from a macro perspective as it relates to maybe skill Cycles or close rates thank you so much yeah it's a great question and certainly um we are not immune to the macro environment and we're we're certainly not blind to what's happening around us our ability to execute despite the macro is quite astounding and I give amazing kudos to our incredible sales organization around the world um we are staying closer to our customers than ever before checking in with them making sure we understand the levels of approval that they need to go through making sure that we understand what they need to get that deal across the line we will maintain that level of rigor that you've seen us do in Q3 and so while certainly there's more um you know there's more outlook on on deals that are getting closed and there's more you know people are looking at deals closer but we are closing them close rates are stronger um and we feel really good about how we put that all into our guidance and so macro is is is evolving but our sales force is staying so close to our customers and really driving superb execution great congrats thank you thank you and just a reminder ladies and Gentlemen please lend yourself to one question we go next now to Phil Winslow at credit Suite there you go thanks for taking my questions and congrats on just an awesome quarter you know Bill one of the things that you mentioned during your comments was sales capacity has never been higher never has and the coverage ratio for the year has not been higher uh this is even on the context of growing you know sales marketing head count 30 yeah my question to you is you know this is you know one of the biggest net ad quarters integratives of employees and sales and marketing this year and over the past couple years you usually don't see a lot of sales people moving to a new company in a Q3 but they're doing that as to servicenow when you talk to you know these new employees and you and your and your management team what are they saying about why they're coming to service now and then Gina you talk about continuing to invest in you go to market there you obviously hit 30 growth uh in in Q3 how should we think about the exit rate for the share thanks well Phil thank you very much uh Pete kind remarks also the question um if you think about the first quarter of the year you know the economies of the world um really weren't taken everything was going very well and um especially a tech company uh like servicenow you know people were very desirous of having our people too um but we still weathered that um and we continued to hire um and obviously the people that get hired in the second and the third quarter the beauty of that is they're now becoming truly productive uh and certified to execute at a level that we would consider you know statistically um relevant for moving the needle and that's where I come with my Max Capacity it's not just based on the number of people but it's based upon their Readiness to enter into the customer relationship with a level of proficiency so they can execute at a high level that's what I'm talking about and where they are now and we're there are stronger than we were all year long Phil so it's an absolute number um but it's also on Readiness and it's in the pipeline and the coverage in the pipeline is better so all those dials look great in terms of why people come here they come here for the culture they know that this is all about net new innovation it's all about customer centricity and Brilliant execution and it's a politically fat free environment we just want to win and people want to be a part of a winning organization and then on your question on actual sales and marketing higher Bill yes servicenow is hiring and will continue to hire um and are investing for growth so we are absolutely committed to continuing to build up our world-class go to market organization and it's all about driving long-term growth and ensuring that we also are continuing to drive ramp rep productivity um really it's really about ensuring that the opportunity that we see in front of us there are sales and go to market scenes are ready to drive that growth that we continue to see so you'll see us continue to grow our sales for the bearing especially will also be hiring our critical engineering heads we're very much open for hiring at least critical gross hires and and one thing Phil I just don't want to you know fall between the cracks is the million and the rise up with servicenow campaign where we're going to hire them um some of them will end up getting hired here of course but we're going to train them for our customers uh for our partners and to servicenow so there's a bold move for a million um servicenow trained professionals to put them into the growth engine of service now and that'll be done on a global basis we see bold moves that need to be taken in India Japan Korea and continued expansion in Europe uh we just have a a tireless appetite for growth excellent congrats again and uh thanks for taking my question thank you Phil thank you we go next now to Sterling Audi at mobit Nathanson yeah thanks hi guys my question is when you look at the large deal activity in the quarter and the pipelines how much of that is actually replacing Legacy architectures to save money in this tough budget environment we're heading into how much of it is about that automation to drive increased productivity thank you Sterling uh it's uh it's an interesting question it's always important to reinforce that the 20th century architectures were heavily invested in by our customers and our desire is not to replace them our desire is to make them more relevant so they deliver modern value in a highly agile and experience oriented way for employees customers and partners so those underlying systems some of them that are Point Solutions and they never should have been there in the first place they do disappear the core large well-known brand systems they remain bought with the agility of the servicenow platform above them and our ability to automate the workflows and completely change the experience set we're now Reinventing the way Supply chains runs for the biggest order manufacturers in the world we're now taking procurement management to an entirely new level of procurement and finance organizations for the biggest retailers manufacturers um freight companies around the world there were double digits wins doing this for some of the largest companies in the world so they're taking out huge costs they are getting rid of Point Solutions they're keeping the main ones and then they're automating the Speed and Agility and value on the servicenow platform the business cases are unbelievable it makes one ask you know why are we so generous with our pricing if they can get a billion can't we get a little more that's the situation we're in here thank you thank you we'll go next now to Keith Weiss of Morgan Stanley excellent uh thank you for taking the question and uh Bill congratulations on on the new chairman position and congratulations on on a great quarter in in the difficult environment um my question is actually great for Gina um you guys did a tremendous job in in driving um operating margins at the same time you're you're hiring um uh to plan right and you're still aggressively hiring can you one talk to us a little bit about where you're seeing the efficiencies and sort of um where you're able to kind of drive that uh incremental uh productivity um out of the entire service now and two um I was I wonder if you could touch on on free cash flow a little bit um it has been getting more seasonal over the years uh this is the lowest Rick National margin we've seen in quite some time where the FX impacts was there increased seasonality uh if you could just give us any kind of visibility in terms of uh what happened on that side of the equation yeah absolutely great question so really proud of the fact that despite about a hundred basis points of FX impact on our operating margins we're able to hold them flat with our original guidance at the beginning of the year while at the same time still hiring for quarter bearing go to market fingers on keyboards and Engineers right and the efficiencies that we're seeing are across the board so if you think about leverage in mid and back office DNA leverage on the marketing side of things um if you think about really what our incredible Cloud infrastructure team is able to drive with respect to efficiencies even in this master environment it's pretty remarkable um and so the other thing is that our platform drives efficiency for ourselves we are the customer zero for all of our new product Innovation so our platform enables those efficiency these across the board so that's the other big lever that we always have to play here so I feel really great about the fact that we've been able to drive those efficiencies even through this current macro environment with respect to free cash flow absolutely so Q3 in general is a lower free cash flow period we have our mid-year bonus payout we have bonds interest payout but we also have seen a pretty big FX impact in the quarter and for the remainder of the year so we talked about 100 basis points impact on precaution margin that we're not able to absorb this year because truly the impact on collections happens all at once whether the FX impact on your p l because of the radical way that we recognize revenue and Opex happens over a period of time and so underlying health of free cash flow remains great we're obviously as we talked about staying close to our customers and giving them some um some leeway on payment terms if they need it but what I can tell you is that it stays as opposed to weeks and so we are really staying close to the customers the trajectory of free pastoral accre creation over time Remains the Same got it so it sounds like much more linearity and FX Ted wins than any significant change in in voicing terms or or payment terms exactly exactly awesome that was very clear thank you very much thanks Keith thank you Keith thank you we go next now to Matt Hedberg of RBC Capital markets great thanks for taking my questions guys Bill G in a great quarter um Bill had a question for you uh you've you've made some previous advances in observability right stuff in this quarter you acquired era uh software which looks like a great addition to the platform can you talk about sort of what the integration plans are there and sort of maybe refresh what this means for your broader observability efforts yeah absolutely uh thank you very much for the question uh Matt um basically if you look at uh what we're trying to do here we're bringing a scalable Cloud native log management solution and database that complements lightstep's existing solutions to the world and this is really exemplifying and accelerating our vision which is essentially to unify Telemetry logs metrics and traces and now deliver that truly unified observability workflow on one platform and this is going to take huge cost out of the equation and it's going to bring a much greater experience to all users involved because they'll avoid the confusing context switches they have to do now so um all the integration work that is necessary is being done it is all integrated back onto the now platform and there's a roadmap to do that but right now we're extremely happy with the way Ben is leading um Aerosoft word just makes us stronger and we're super excited about the future of this business and what it can be um it's going to be interesting to watch this thing play up thank you very much thank you Matt thank you we go next now to Alex zukin of wolf research hey guys thanks for taking the question um bill I don't think we've heard you say the words procurement and supply chain more often than you have on this earnings call and I guess I want to dive into that because after seeing you know Sap's results after what Oracle was talking about it does feel like they're there there's a there's like a deferred amount of activity that's getting done in the back office and I just want to see you know your take on on kind of participating in that uh activity as as you're talking about that driving it seems like some pretty material wins uh in the quarter and then I guess maybe a a follow-up for Gina's around linearity in the quarter and and also if there's a way to quantify you know the Federal Business seems like it again had the best quarter ever just how much of that was uh up front uh or kind of self-hosted uh Revenue recognition Alex first of all let me thank you for your question uh you're right um there's quite a bit that has to be done in the back office to automate business processes uh for a new world order of things in the macros so you're 100 right it's still uh early days but I see a massive opportunity given how much Enterprises and spend on Erp today and if you look at procurement and supplier life cycle Management Solutions that make it possible for customers to unify these transactional systems and enable them through workflow capabilities that truly Drive efficiency and the user experience and the consumer grade aspect of servicenow is really coming front and center because these transactional systems they all work fine uh if you're a power user or a super user but when you start to get more people collaboratively involved in a process there's a demand now for Consumer grade ux and there's nothing that works better than workflow automation to solve some of these problems so we are providing a collaborative platform for all the stakeholders in an Enterprise and that consistent user experience is our superpower and I do want to underscore we are not interested or trying to replace the transactional systems of the brands that you mentioned those are wonderful companies and they do something that's very important what we're responding to is the agility of a supply chain and how you can reorient it at a record speed because that's what this world order is asking for um how you can rethink suppliers to manage different labor issues whether it's an Arbitrage or just buying from the people you should be based on your ESG efforts um or your mwbe spend and many other things that many customers care a lot about esg's a big thing um they're doing that all on the workflow automation context of servicenow and they love the fact that we integrate with everybody and we're not at war with anybody because we're on the side of the customer and that's what we should all be doing and on your question Alex on linearity in the quarter we actually had great linearity in Q3 our best ever um really really pleased with how the sales organization is again staying really close to the customers um Federal Business had its best quarter ever this year and Q3 and outperformed we had 16 deals over a million dollars one of which closed with over 20 million of net new ACV um Federal also saw great linearity in the quarter really because the platform is demonstrating such strong Roi that it's really enabling them to get through the approval process faster um we're really seeing an increase in the volume of federal agencies that are really looking at their partnership with servicenow through an Enterprise lens right so those fields are getting bigger more strategic more multi-year and we're seeing cabinet level agencies really trying to consolidate contracts at an Enterprise level with us and standardize their spend on the now platform so Federal team just doing incredible work with their customers um with respect to hosted we had about three percent this year started this quarter which is flat quarter on quarter but down one percent from last year Q3 and so really great linearity across the board hosted flat quarter recorded but down a point year over year which is actually a headwind to that Revenue growth which means our Revenue growth is even stronger so really really great results across the board thank you guys very comprehensive congratulations thank you thank you we take our next question out from Cash Grandin at Goldman Sachs hi thank you very much congratulations and what a change from the Microsoft earnings Compass called yesterday bill I want to get your pursue you talked about the great career prioritization Microsoft talked about how some some new Cloud workloads are being passed by their customers and they're optimizing existing workloads so I just wanted to see what is it that is different about the prioritization of servicenow in the face of other headwinds that we're starting to hear about in the public cloud and how does this position the company for 23 and looking into a more uncertain time we all thought we're going to have a recession 22 we sort of escaped it maybe it happens in 23 maybe it doesn't how the grid re-prioritization that you talked about Bill how are customers viewing the value proposition return on investment and service now relative to the the cost of capital and Gina if you could care uh how would you be approaching calendar 23 guidance so you're going to be more conservative than usual given the risks in environment that we all appreciate thank you so much yeah cash um markets are very rational customers are extremely focused right now on productivity they care a lot about their customers and their employees and obviously their bottom lines and no platform in the enterprise software industry gets them what they want faster from creating great experiences for their employees you can't give a customer a three-star Michelin experience until you first energize your employees so that's one aspect of it they know they have to have more productive Happy People the cost of turnover and problems in the workforce it's a huge huge bottom line hit that a lot of people don't factor into the equation and a lot of it's caused by bad onboarding bad systems and not really a great user experience for the people who work for their company from anywhere they want to be and as it relates to the customer I touched on that I think what we're adding on customer service management right now with the completeness of our vision is stunning in terms of value creation and a big surprise to customers who didn't used to think of servicenow in that space and now they do and as it relates to our core I.T I mean you know we're obviously um the leader there sign out to go into great details on that but they're Blown Away by the San Diego release in March and the Tokyo release in October they know there's an immediate cycle from what they need and and how quickly we can engineer it and get it into the release level so the existing customers love that um that they have this incredible seamless experience with servicenow they know the Innovation is coming on time and at the highest level of quality and finally I think and at a platform level you know the need to speed cash is everything you know getting these business cases rational getting these customers up and running swiftly and demonstrating immediate business value is the essential ingredient I didn't give you one example in the Erp world where we did not get these customers live in more than 100 days so we're talking we're talking Need for Speed and we're talking ability to deliver and the customers are having great experiences you can't find a customer in the global economy that doesn't love the platform I keep trying I still can't find them and Cass on your question with respect to 2023 obviously we'll try to provide more details on 2023 in January um overall as you're hearing from our tone the demand that we're seeing for the now platform has remained resilient and strong um FX as you know has become a significant headwind particularly over the last three months um since the beginning of this year we now see about a 400 million dollar headwind related to FX in 2023 and we certainly don't think the macro environment is all of a sudden going to change as we enter into 2023 so when we think about guidance we'll be taking all of these factors into account as you would expect us to thank you so much congrats again thank you thank you cash and we go next now to you Brad tills of Bank of America oh great thanks guys um I wanted to ask uh about an update quickly on the um SI Channel I think Bill in the past you've said seven or eight of the top ten Global sis with a billion dollar plus pipeline that's just an astounding number when you think just a few years ago that channel was almost non-existent so just curious how much of their productivity is contributing to your results here today how do they give you that reach into these other departments that you know historically servicenow hasn't been and obviously you're talking about Erp and back office and you know Creator employee customer you're seeing a ton of momentum there just just wanted to get your thoughts on how important that channel is in bringing you into those types of opportunities and the traction you're seeing there thank you Brad Brad it's a great question and you know look it was um very interesting in the early days just opening people's minds to the power of the now platform and our Global partner ecosystem is obviously a meaningful enabler and they're critical um for us to drive successful implementations for our customers and also to tailor our products to different Industries so this idea of co-creation whether it's foreign industry it's for a sub-industry vertical and even at a micro vertical level we've only scratched the surface of what's possible with the ecosystem we're we're young in terms of the runway for growth as it relates to the top ones we now have eight of the top 10 Global advisory and systems integrators that have committed to a plan greater than a billion dollars with servicenow and again I'm very open to the ecosystem and that's why you see us making a bold move today on rise up with servicenow to scale a million I know I under called it but it is what it is I'm sure it'll be 2 million because there's such demand for the platform and I really want our partners uh to love and Trust service now as we love and trust them because it really is about Mutual goal setting um it's about making sure we're very clear about you know who's doing what and we don't duplicate efforts and we never disappoint our partners it's all about trust and uh they like us because we're Straight Shooters here and we want to win and they want to win and the other thing that's happening is they have like to cash this point on the great reprioritization you know there's there's going to be you know so much spend that'll go around um but what they all realize now is business impact is what it's all about especially in this macro and they're more and more reaching deep into the servicenow relationship because the customers won't listen to long drawn out expensive time-consuming multi-year projects if that project isn't in the same calendar year the likelihood of getting approved is real low and you know if you remember in 2008 that was the era where everyone moved away from capex to Opex and that was where the cloud got the big Tailwind well now you know you got half of them in the cloud so they're looking at Opex and that Opex question is which platform can get me to the winning equation the fastest and which platform is going to be around 10 years from now to be a dominant force in my infrastructure and that's where servicenow seems to be answering the Bell great to hear thanks so much Bill thank you very much Brad let me go next now to Mark Murphy of JPMorgan yes thank you very much I'll add my congrats on a fantastic quarter so Bill how broad are your Ambitions in the employee workflows Market I believe you had uh crossed 500 million there some of your partners uh seem to have 20 or 30 percent of their pipeline in HR and now you have um you have this hitch Works asset for for talent intelligence and skills so just curious how broad is that multi-year roadmap at this point yeah it's real first of all thank you for the question mark it's really broad you know if you look at employee workflows you know the 12 of our top 20 deals and we had seven deals greater than a million and well we're helping customers do really is navigate this uncertainty that they're dealing with and they've got to give these employees that they have no matter where they work a great experience and it's not only limited to I would say recruiting um hiring onboarding training certifying providing all the services that the employee needs on one mobile app and that includes off-boarding employees in a first-class way which most companies forget to do which really hurts their brand image we care about all of that but in addition in addition to all of that we're now in a world where customers are really pulling at us because they're like hey I'm not going to have as many people and I really got to think about re uh reorienting my business processes or rethinking how I automate things that I just haven't gotten to yet but I need to do it quick so our Ambitions are always in the billions and this is another business where we're in Aliens and I think we're just getting started on the employee experience journey and I'll tell you what if you look at even ourselves there isn't a single employee in this company that could tell you a single system of records that might be in the infrastructure somewhere in our Cloud they have no idea but what they do know like Gina said earlier everything that they do is on a mobile application on their phone and it says servicenow because we completely workflow automated the entire Corporation so they don't know anything else and what we're constantly hearing is people want to join because the onboarding experience is so great and we don't lose employees we have gotten lots of employees joining here that literally bounced out of another company in a week because they couldn't stand the onboarding experience and said this isn't for me so everything having to do with the employee experience and the management experience we launched in the Tokyo release a complete manager solution so we can manage their careers their hierarchy of their training and development and they can also do that with their employees on the now platform and while this is happening in real time so the system of Records again we're not interested in being one of those and we have no quarrel with any of them we are interested in the experience and that's what money is thank you very much thank you very much for the question thank you leave the next map to John papucci of Google nine thank you um Bill Bill we've done a lot of work on the US government opportunity and you and Gina both mentioned the record results there in this quarter as you know this is the fiscal fourth quarter for the government and likely the strongest spending quarter of the year for that customer or vertical I guess it's a vertical but can you talk about the opportunity for any spillover into next quarter or even next year or is this or is this really sort of a user lose lose it mentality something is that something you can't avoid in this vertical so it's always going to be material just like a third quarter thing yeah John thank you for the question you know we have always been really strong and Federal and a lot of that is driven by productivity efficiency and government organizations and I think we can all agree that that's a big opportunity so that area of focus for us has always been a priority the budget there is large and there's a lot of demand for updating the technology environment for governments what they love about servicenow is we integrate the things that they've already done and we're not in a debate about whether the past was done properly or not the customer can decide how they retire Point solutions by the bundles but we don't insist upon that we are driving the experience and I can tell you with great confidence John we have a very strong pipeline going into the fourth quarter with more multi-million dollar deals and I couldn't be prouder or more confident in our team that's great thanks a lot Bill thanks thank you very much John thank you we go next now to Carl kerstead of ubx oh great I'll ask a quick one for Gina Gina did that uh pull forward phenomenon that you cited in three Cube continue into the fourth quarter such that it's shaping up to perhaps be a little bit more front end loaded in terms of renewal timing than you would have expected uh thank you so I I talked about the fact that one of the reasons why our CPR crpob in Q3 was related to 50 basis points of full forwards of Q4 renewals into Q3 and if you remember on prior calls I talked about the fact that this Q4 was a large renewal cohort so the fact that we were able to get some of them done early absolutely helped drive crpo but also rats are a revenue beat as well expectation is that our Q4 renewal will be on par we had 98 renewal rates in Q3 we expect similar levels in Q4 and so feel very good about the pace of renewals for the remainder of the year got it thank you Gina thanks and ladies and gentlemen we have time for one more question this afternoon and that'll come from Michael tureks of Key Bank hey thanks very much um congrats on a good job so so I'm going to continue in that van my understanding is that the the expectation for the crpo increase was primarily predicated on on renewals and you know at par as opposed to expansion so can we can you comment on on how the expansions have been going both on the early renewals and the prospects for those the expected renewing for Q yeah great question Michael um expansion rates you know we don't give expansion rates anymore on a quarterly basis but we reported last year expansion rates of 125 and we've seen very strong similar expansion rates throughout 2022. great thanks great thank you thank you thank you thank you thank you and ladies and gentlemen I will conclude the service now Q through 2022 earnings conference calls I'd like to thank you all so much for joining us and we should have a great evening goodbye