CJ Desai: Yes. Karl, great to hear from you. I would say fundamentally, when I look at that particular financial services institution, 100% is true that it is on our core of the core. So, from an IT service management perspective, IT operations management perspective, this is not generative AI-specific deal, but it was very much a very strategic transaction on the foundational platform for automation and digital services at this large financial services institution. It is the largest new logo win that we had there, and it is in eight-figures of net new ACV. So, that is material.
Karl Keirstead: Okay. Congrats on that.
Bill McDermott: Thank you very Karl. Appreciate it.
Gina Mastantuono: Thanks Karl.
Operator: Your next question comes from the line of Joel Fishbein with Truist Securities. Joel, the floor is yours.
Joel Fishbein: Thank you for taking the question. I will also echo the outstanding execution you guys have done. Bill, I guess this is for you. Just around the public sector vertical, it’s been very strong for you for several quarters. I guess two things. Number one is, how is the spending remain subsistent, it used to be very cyclical there? And the second question around public sector is, what do you think their AI adoption cadence is going to look like from your perspective?
Bill McDermott: Yes. Well, thank you very much for the question. I really appreciate it. Our federal business is really outstanding. And for the benefit of our shareholders, I think that there’s a tremendous opportunity to replicate what we’re doing in the United States federal and many other governments around the world. That is clearly an ambition that we have, and we have many use cases and many references to back that up. So, CJ, I think you spent a lot of time with our team. And I know that I mentioned some of the names like United States Army, United States Postal Service as an example, really marquee wins, really, really important stuff. Why don’t you build on that?
CJ Desai: Yes. So, Joel, everything that we have seen, as you saw in 2023, consistent performance in our what we call global public sector. So, let me start there. US Federal, we highlighted the strength in Q3, followed by some of the logos that Bill discussed. However, I do want to state that we are also doing really well. Our platform is for state and local governments in the United States and that growth was also very inspiring in 2023. So not only US Federal, but also US state and local. Now, let me take an example for Q4. Besides United States, we also did really well in public sector in United Kingdom. On Bill’s ask and our customers’ ask, I spent some time in London with our public sector customers, and they continue to also leverage ServiceNow for similar use cases that we have seen in the US Federal.
And then in Q4, our Australia public sector team also did really well, and we had significant platform expansion with some of the large central governments their agencies, including generative AI. So, it is a pretty good picture. And we see in 2024, besides these nations. When I look at Canada, when I look at Germany and many others, the opportunity remains large, as Bill called it out.
Joel Fishbein: Great. And just as the follow-up on the public sector adopting AI. Can you just give us a little color on what you think the trajectory is there?
CJ Desai: The trajectory, so I just want to make sure that you understand, first is that our Gen AI conversations have started with the government. One of our first logos in Q3 was with a large public sector agency, as I call it. We also had a few wins in Q4 in public sector. And as we go into 2024, across state, local and federal, across countries, we will continue to see the demand. It’s early days. I would say, compared to like a financial services or manufacturing and others. But given our position of our platform and the strength we have with AI, we are definitely going to see in the second half adoption of generative AI.
Joel Fishbein: Great. Thank you so much.
Bill McDermott: Thank you.
Operator: The next question comes from the line of Peter Weed from AllianceBernstein. Peter, the floor is yours.
Peter Weed: Thank you and congratulations on the major continued momentum and wins that you are seeing with the latest releases. And I guess building on that, I’d say, prior to this year, for several years, I think there have been some really nice stability in kind of expansion in NRR or customers that I think Gina had and really comforted. But I think this year, there has been some deceleration in that driven by macro. As you look out to 2024, do you see signals that we may be able to see some acceleration where NRR in 2024 might exceed what they kind of dipped to this year or is this kind of like the new normal and kind of from here, things may continue to trend down?
Gina Mastantuono: Thanks Peter for the question. What I’d say is that we are — we feel great about our expansion rates at the scale that we’re at as well as on new logo growth. So, CJ mentioned earlier, our new logo growth, especially in our larger customers, has been an accelerating each and every year and each and every quarter over the last several years. And so at our scale, our expansion rates remain extremely strong, and as does our net new logo growth. And so you will continue to see a nice mix of existing customers upselling with us as well as new logos joining us. And so we hit $8.7 billion in revenue going to $10.575 billion next year. At our scale, these expansion rates are best-in-class, and we remain extremely proud of them.
Operator: We have time for one more question. And that question will come from the line of Brad Sills with Bank of America. Brad, the floor is yours.
Brad Sills: Great. Thank you so much. I wanted to ask about the large new logo strength. We just haven’t heard from a lot of enterprise applications companies around that this year. It seems like a tough environment to close big transformational new application deals. So, I wanted to ask why now? I know this has been a focus, but any color on where you’re at in kind of closing that gap on some of these large global organizations? And then also, what does that mean for your expansion opportunity, does this give you more line of sight to that given that these are large organizations with big wallets just getting started with ServiceNow? Thank you.
CJ Desai: Yes. So, Brad, I will touch on it. Besides financial services institution, we also saw many large new customer wins in manufacturing, specifically automotive. We also saw in public sector. We got new logos with new agencies and commercial business which is a massive strength for ServiceNow continue to outperform large new logos. And in my initial commentary, I stated that Americas and Europe also had large logo, new growth. So, this is something that Paul Smith and the team focused on starting with the first quarter and continued to build throughout the year. And as I told, Keith Weiss, this is something we are really, really proud of in terms of just our ability to focus on high-quality logos that matter. And even these logos, whether it’s in public sector, manufacturing, financial services or our commercial segment, it’s not that we have maxed out.
