Operator: Our next question comes from the line of Matt Hedberg from RBC Capital Markets. Please proceed.
Matt Hedberg: Great, thanks for taking my question, and I’ll offer my congrats as well. Gina, you talked about a strong pipeline exiting 4Q and obviously delivered a strong quarter here. How do you feel about the pipeline as we enter the quarter? And obviously, there’s been some additional volatility in financial services, and it sounds like that was fairly stable for you guys this quarter. But maybe talk about the visibility you have entering the quarter.
Gina Mastantuono: Yes, absolutely, Matt. Thanks for the question. So pipeline remains robust. We feel really good about pipeline moving into Q2 and beyond. From a metrics perspective versus same time last year across the board, we’re in better shape. As you talk about the direct exposure to financial services, we actually saw growth and had some great customer wins in the quarter despite the macro headwinds. And so really feel great about where we’re currently landing pipe, our knowledge event, our used car release. We’re really excited about how we can continue to increase the opportunities in the back half of the year as a result. And so from that perspective, we feel really good about where we are. And as always, because 85% of our net new comes from existing customers. The visibility to our pipe for Q2 and the back half remains strong as well.
Bill McDermott: And one thing you may find interesting, Matt – one thing you may find interesting is financial services, as Gina said, continued to perform. And in EMEA, two of our top five deals were in financial services, including one with one of Europe’s largest banks.
Matt Hedberg: Thanks for the color guys. See you in a couple of weeks.
Gina Mastantuono: Thanks, Matt.
Bill McDermott: Thank you.
Operator: Our next question comes from the line of Kirk Materne from Evercore ISI. Please proceed.
Kirk Materne: Yes, thanks very much. And I’ll add my congrats on the quarter. Bill, I was kind of curious on your impressions on just consolidation in this kind of macro environment. I think for a while, you’ve always said no one has to lose for you to win. I’m just wondering if that’s changing a little bit in terms of your opportunity to go and maybe replace systems that just gotten either antiquated or go after more greenfield that’s adjacent to where you’re selling. So just kind of curious if the consolidation wave is picking up, I guess, from your point of view. Thanks.
Bill McDermott: Yes. Thank you very much for the question, Kirk. We stand by. No one has to lose for us to win, and I really do believe the systems of record that team up with ServiceNow would see dramatic increases in their win rates. That’s obviously up to them, but there’s no question that, that would happen because the power of the ServiceNow platform versus point solution is pretty clear. C-level decision-makers want an enterprise-wide workflow capability to drive their performance, and it’s just that simple. And when you have a lot of point solutions that optimize the department but don’t tie into the greater workflow across the domains or the functions, it doesn’t really help at the corporate level. And I think that’s the coherence that we bring to the enterprise productivity story.
And frankly, the one thing I would say is that customers aren’t interested in forced marches with upgrades to technology that’s not delivering business impact. It’s kind of like thinking about why would I do a heart transplant when I can do a simple bypass and gain massive, new productivity with a platform that drives a great user experience, empowers my employees, satisfies my customers and enables my creators? In fact, on the banking case, in particular, what you were seeing is some serious focus on risk management across the whole bank and using us to consolidate all the point solutions so there would be one dashboard or one version of the truth to protect that house. So you’re seeing more and more of a platform approach to decision-making in the market.
Kirk Materne: Super. Thank you. See you in Vegas.
Bill McDermott: Thank you very much, Kirk. See you there.
Operator: Our next question comes from the line of Kash Rangan from Goldman Sachs. Please proceed.
Kash Rangan: Hi thank you very much. Great start to the year, Bill and team. But curious, the strategy to expanding the base of customers, you’ve done a great job, you’ve got 7,700 customers, a lot of million dollar wins. But if you look at enterprise software beyond $10 billion to $15 billion, $20 billion in revenue, those companies have always had a base of the pyramid that has a big chunk of commercial customers, SMB customers. I’m curious how you think about ServiceNow’s strategy to expand the base of the pyramid going forward. Thank you so much and congrats.
Bill McDermott: Thank you very much, Kash. I mean think of it this way. We are very focused, and I mentioned this as one of the three things that we’re focused. We’re very focused on net new business. And this is going to come from upper mid-market in particular, lots of new logos there. There’s a lot of individual companies that talk a lot about their climb into the enterprise. We might just meet them where they live right now in smaller establishments. We’ll see how that goes. But I can also tell you, we have a great focus on the Fortune 2000. And in particular, we have an amazing focus on the Marquee 250 with a true build-out of a go-to-market machine. And we’re doing that by industry, and we’re doing that with all the assets across the company.
And we’ve collectively put that together in a way with the full power of the platform, the content, the thought leadership and obviously the solution power where the customer gets everything from ServiceNow. So, I would like you to think about the top of the pyramid, the larger part of the big part of the pyramid and obviously the mid-market up as areas in which we are getting stronger by the minute and extremely focused.
CJ Desai: I’ll just add one thing, Kash, that from a product strategy perspective, as Gina shared, we are very focused on top of the house of the pyramid, as you call it, in terms of expansion strategy, whether it’s just additional products that we continue to deliver release after release or creating vertical-specific solutions for those industries where we can get higher ASP uplift vis-à-vis selling horizontal solution. And as Bill mentioned, whether you call that commercial segment, mid-market segment, we are absolutely focused on that as well from a new logo perspective. We have commercial go-to-market selling motion that allows us to move up, and those customers sometimes become massive customers, and that is an area of focus for new logos or new business in addition to the existing one.
Gina Mastantuono: And I would just add on new logo piece that our net new customer ACV growth remains an area of strength for us. I talked about this in my script that the average deal size is up significantly year-over-year, and that really is demonstrating the durable demand and the mission-critical nature of our platform in this environment. We actually landed our largest net new logo deal in EMEA this quarter with ITZBund. And we’ve evolved our focus to really make sure that we’re going after those right new logos, those right new customers, those that offer us the best ROI and have the greatest opportunity to continue to expand with us. Not all logos are created equal, and we’re really targeting those logos that can grow with us over time. And so it’s easier to expand an existing customer, the fact that our new logo ACV continues to grow and do well is a continued area of strength for us that we’re very proud of.
Kash Rangan: Thanks Gina.
Gina Mastantuono: Thank you.
Bill McDermott: Thanks Kash.
Operator: Our next question comes from the line of Gregg Moskowitz from Mizuho. Please proceed.
Gregg Moskowitz: Okay. Thank you very much and congratulations on the strong start to the year. The last time that ServiceNow had grown cRPO sequentially in a Q1, we’d have to go back to 2019, but you just did it and you did it in a really challenging environment. So aside from what, it sounded like good sales execution clearly, would you attribute the cRPO outperformance on the fact that you had fewer early renewals in the Q4? Or is there another reason that you would highlight? Thank you.
Gina Mastantuono: Yes. I would say that our beat versus the guide was fully due to higher net new ACV in the quarter, so great results from our incredible sales execution team across the board.
Gregg Moskowitz: Terrific. Thanks very much and see you in a few weeks.
Bill McDermott: Thanks Gregg.
Gina Mastantuono: Thanks Gregg.
Operator: Our next question comes from the line of Arjun Bhatia from William Blair. Please proceed.
Arjun Bhatia: Hi guys. Thanks for taking the question. Gina, maybe just a follow up on the expansion fulfillment. One of the things that we’ve been hearing out in the sector is that there are seat headwinds as headcount growth is moderating at end customers. What are you seeing in your growth algorithm from a seat expansion versus upsell/cross-sell dynamic? And how has that changed at all?
Gina Mastantuono: Yes. It’s a great question, and we got that question a lot if you remember back in 2020. We’re not really seeing any compression, right? Where we’re continuing to see expansion across the enterprise, expansion geographically within a company and a customer and really as an upsell on the other workflows, and so seat compression has not been an issue that we’ve been seeing. Obviously, keeping a close eye on it given the macro but not something that’s been an issue for us thus far.
Arjun Bhatia: Okay. Perfect. Thank you.
Operator: Our next question comes from the line of Alex Zukin from Wolfe Research. Please proceed.
