Ladies and gentlemen, thank you for standing by, and welcome to ServiceNow's Fourth Quarter Fiscal 2021 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Darren Yip, Vice President of Investor Relations, you may begin your conference.

Good afternoon and thank you for joining ServiceNow's fourth quarter and full year 2021 earnings conference call. Joining me are Bill McDermott, our President and Chief Executive Officer; and Gina Mastantuono, our Chief Financial Officer. During today's call, we will review our fourth quarter 2021 results and discuss our guidance for the first quarter and full year 2022. Before we get started, we want to emphasize that some of our information discussed on this call such as guidance is based on information as of today and contains forward-looking statements that involve risks, uncertainties and assumptions, including those related to the impact of COVID-19 on our business and global economic conditions. We undertake 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 10-Q and our 2021 10-K that will be filed or factors that may cause actual results to differ materially from those set forth in such forward-looking statements. We'd like to also point out that we have presented non-GAAP measures in addition to and not as a substitute for financial measures calculated in accordance with GAAP. Unless otherwise noted, all financial measures and related growth rates we discuss today are non-GAAP, except for revenues, remaining performance obligations, or RPO, and current RPO. To see the reconciliation between these non-GAAP and GAAP measures, please refer to today's earnings press release and investor presentation, which are both posted on our website at investors.servicenow.com. A replay of today's call will also be posted on our website. With that, I'd now like to turn the call over to Bill.

Thank you very much, Darren, and a warm welcome to everybody joining us on today's call. ServiceNow has once again delivered results that significantly beat the high end of expectations. Here's the Q4 rundown in constant currency. Subscription revenue growth was 30%. CRPO growth was 32%. Free cash flow growth was 32%. Adjusted subscription billings growth was an exceptional 33%. Operating margin was 23%, one point over our guidance. We had a record 135 deals over $1 million, which was up 50% year-over-year. There has long been a Rule of 40 benchmark for highly successful software companies. These results demonstrate that ServiceNow operates beyond the Rule of 60. The company is expanding in all geographies, industries and buyer personas. Gina will share the details in a few moments, including our strong 2022 guidance. ServiceNow is uniquely positioned. We're growing like a fast-moving start-up with the profitability of a global market leader. We're on a clear growth trajectory to $15 billion plus by 2026. While our strong cash position preserves optionality, we don't depend on M&A for growth. While rising interest rates challenge others, ServiceNow's business model is built to flourish in any economic environment. We are not opportunity constrained as our customers' need for digital transformation is ever expanding. Our organic growth machine is in full flight, and our pipeline is stronger than ever. Our 99% renewal rate is one of several lead indicators for sustained performance moving forward. I'd like to thank all of our stakeholders, especially our customers for their steadfast confidence in ServiceNow. I'll give you the breakdown of our portfolio results, but first, let's discuss the market dynamics. We're in a sustained demand environment here. There are structural challenges facing every industry in every geographic region. The great resignation, supply chain disruption, inflation, to name a…

Thank you, Bill, and Happy New Year to everyone listening in. Q4 was a fantastic quarter, capping an already phenomenal 2021. Despite increased FX headwind, ServiceNow outperformed across all of our top line guidance metrics in Q4. Our performance over the past couple of years not only exemplifies our unwavering focus on delivering customer success, but is a testament to the innovation and flexibility that Now Platform provides to our customers. Whatever the macro challenges were, ServiceNow adapted to deliver value. ServiceNow’s ability to quickly respond to the needs of enterprises when and where they require us most is why we’ve become the trusted digital platform to drive transformation. It’s why our renewal rates are best-in-class, creating a solid foundation from which we grow upon each year. It’s why in 2021, we added more incremental subscription revenues than we reported in 2016. I want to pause there for that to sink in. In 2021, we added a whole other 2016 ServiceNow to the top line, incredible organic growth at scale, while generating over 30% free cash flow margin. Now turning to our Q4 results. Subscription revenues were $1.523 billion, growing 30% year-over-year in constant currency. We exceeded the high end of our guidance range by $3 million when adjusting for the incremental $15 million FX headwind we saw in the quarter we beat by $18 million. RPO ended the quarter at approximately $11.5 billion, representing 32% year-over-year constant currency growth. Current RPO was approximately $5.7 billion, representing 32% year-over-year constant currency growth and a nearly four point beat versus our FX-adjusted guidance. Q4 subscription billings were $2.420 billion, a $110 million beat versus the high end of our guidance. This represents 32% year-over-year growth on a reported basis and 33% year-over-year growth on an adjusted basis as FX and duration…

[Operator Instructions] Your first question comes from the line of Phil Winslow with Credit Suisse. Your line is open.

Hi, team. Thank you taking my question and congratulations on a strong end to a really strong full year. Investors have been concerned this year about a potential pull forward in demand really setting the stage for a decelerating growth across software. Now looking at your results tonight and the guidance, I really can’t find any signs of decelerating demand for ServiceNow. In fact, sales and marketing headcount in Q4 grew at its fastest rate since Q1 2020, which suggests you’re continuing to lean in here. So two questions. First, Bill, my question to you is, what are you hearing from customers that gives you confidence in the sustainability of growth and to accelerate this go-to-market hiring exiting the year? And Gina, what trends are you seeing in terms of ramping these new sales and marketing hires. Thanks.

Thank you very much, Phil, for your kind remarks and also for your question. Customers are absolutely focused on technology being the business strategy. And digital transformation is in full flight, and we will capitalize on that greatly. The reality on our numbers is we did not see any evidence of unusual demand pull forward into our business for 2021. It happened in an extremely linear and coherent fashion, which was really a thing of beauty to watch from an execution perspective. And as I look at the pipelines, they’re ever increasing, and they’re doing that across the platform, the employee experience, the customer experience, the creator experience. And all of this now is really making ServiceNow one of those real standard platforms for well-run companies in the 21st century. And I think that includes a very short list of others. We’re one of them. And Phil, the business just couldn’t be going better.

And then, Phil, on your question with respect to ramp rep, you’re absolutely right, we did not pause at all on our headcount growth in Q4. We’re entering 2022 with more ramped sales reps than we entered 2021, and we feel really good about pipeline and the demand that we see in front of us. So we are absolutely not stopping our investment in go-to-market resources. We are planning for a very strong 2022.

Awesome. Thanks team. Congratulations again.

Thank you, Phil.

Thank you, Phil.

Your next question comes from the line of Raimo Lenschow with Barclays. Your line is open.

Congrats from me as well. Well done. The – can we talk a little bit about the revenue or you’re achieving with one of your biggest clients you have like a record number now or people over $1 million in ACV. But the ACV number is also going up, like – Bill, can you talk a little bit about how you see this trending going forward with all the different products that you have, but also the product expansion that you’re seeing there? How do you think this will evolve over time? Thank you.

Raimo, excellent question. This is really a beautiful point in the scale phase that ServiceNow is in. And you might notice the substantial promotion for CJ in addition to taking on his normal great results for development and engineering. He’s now moving into the industry phase where we’re going to connect the code to the actual industry-specific solutions the specialist professionals that guide our general line sales force and our customer relationships each and every day. And that’s going to give us a real special bilateral communication with our customers to innovate at an even faster clip than we have in the past, if that’s possible. And you see what happens in telecommunications, in financial services. You see what happens in government, health care, life sciences. All the businesses that we’ve chosen to focus on from an industry perspective are really scaling and doing so very, very quickly. And here’s where the big deals have only just begun. If you look at businesses today, and there’s one retailer in particular that I referenced in the call like CBS, which is a great company, they have retail customers, but they’re also transforming into a health and wellness company, and they understand the experience that they have to give their customers is evolving into a multi-workflow environment. So on one hand, I have to keep my associates super happy because they have complex enough jobs. I have to keep my customers happy because, in some cases, they want to come to the store. In other cases, they want the store to come to them. I’m transforming my business model between all of these factors, and now I’m going for health and wellness. And someday, I’ll not only do that in store, but I can do that at the home. So you’re seeing multi-complex workflows possible on the Now Platform coming together to form greater-sized solutions that have major business impact for our customers and the value we can create with digital transformation. So the challenge I’ve got out to the company, Raimo, is the large deals will accelerate dramatically on a year-over-year basis. We are now prepared for that, and we have the best leaders in the positions in the company to deliver that, and we have an extremely inspired workforce and an extremely inspired ecosystem. So all that comes together. And as you know, I’ve seen the movie before. When it all comes together, it equals big growth.

Sounds very exciting. Thank you.

Thank you.

Your next question comes from the line of Alex Zukin with Wolfe Research. Your line is open.

Hey, guys. Congrats on a great end to the year. Bill, maybe the first one for you. If you think about what you just said to Raimo’s question about being in a great position to massively accelerate the amount of large deals, is it right to kind of think that industry clouds and the low-code platform vision, that’s the big motion that you think will unlock the most value in some of these larger deals, even more – maybe even more so than HR, CSM? Or what’s the right way to think about like the growth drivers of these expansion opportunities over the course of the next year? And look, it doesn’t escape all of us the valuation contraction we’ve seen in the public markets. Does it change or in any way influence your strategy or thought process around organic versus inorganic growth?

Yes. Alex, that’s a really significant set of issues, and I’ll address them head on. First of all, every great company has a great core business. Because when you have a multibillion core business, that core business has to perform, so you get the leverage on all the adjacencies. Our core business is better than ever, and it’s growing really strong. In fact, I think it could be very close to the overall corporate growth rate as we look into the crystal ball. Then you add on employee experience. You have to remember, this employee experience and the future of work and where people are going to be working and how they’re going to be working, especially exacerbated by a talent war out there, is really a big deal. And CEOs need to retain the people they have now. They better be recruiting and onboarding in a flawless manner because the employees today expect consumer-grade user experiences in the enterprise. And if they don’t get them, they even don’t come on in the first place because they know what’s going on in these companies. The Internet tells them that. Or when they get there, they don’t stay very long because they’re not happy. So the employee experience is front and center. And then on customer service management, the reality is this is just starting because the world is really acknowledged that the customer is not going to come to you the way they used to. You’re going to have to go to them, and you’re going to have to explain to that customer that your brand gets it and you can give them an experience no matter where they’re experience in your brand that has enormous consistency, service value, and yes, even helpful hands in terms of smart transactions through…

Incredibly specific, and we all love the candor and appreciate that color. I guess maybe just a quick follow-up. First of all, congratulations to CJ. What a wonderful expansion of his abilities and opportunities. I wanted to ask about the shift on the Chief Customer Officer. What plays – Workday as an example, another company that’s made a move to historically make the head of Europe the head of overall sales. I wanted to ask, what – in terms of the motion that you’re seeing successful in – outside of the U.S. that can be applied to the rest of the organization, and particularly inside the U.S., what plays are successful that you think can be run or expanded that will work?

Well, first of all, I want to tip my cap to our regional presidents because they know I love – and I love all of them. We have great leadership with Mitch in APJ, great leadership with Mike in the Americas and now Ulrik coming on in EMEA. I know them all personally. I admire them deeply, and I really appreciate what they’re doing for ServiceNow. And they’re all playing critical roles in our future. Mike as an example has done an extraordinary job here for a very, very long period of time. And 65% of the number resides in his past. So he knows what we think of him. And I've always told our leaders that this is a significant company, and each piece of this puzzle needs to be managed with incredible care, and these are the leaders that will do that. Now Paul Smith brings a very unique style and know-how, especially around the expansion of the C-level relationships where he has proven himself in an exemplar fashion for the 18 months that he has been here. And as you know, we had a great track record before we got here. And he understands all the concepts that I put out on this call today because he's been through them and we're activating them together and we know exactly what we are doing. And the other thing is with CJ and the closeness that CJ and Kevin have had all these years, that continues. Kevin is still with me. And CJ is right with me. And Paul is right with me. So we're all putting this together, and we're going to activate it in every region and every industry and across every persona. And what I'm so inspired by is these executives. I respect them with my whole heart, and they're doing a fabulous job, and they want ServiceNow to be defining enterprise software company in the 21st century. And they all want it as badly as I do, which is why I know it's going to happen.

Thanks so much, guys and congratulations.

Thank you very much.

Thanks Alex.

Your next question comes from the line of Kash Rangan with Goldman Sachs. Your line is open.

Hi, what an incredible finisher, 2021. You have more than $5 billion in revenue, and you have close to 11 plus in RPO that you are hardly within sight of your long-term goal, Bill and team. So kudos on that wonderful milestone. Bill, my question for you is, certainly, your vision of the platform revolution taking over from the database, relational database, middleware, that whole stack old revolution is a very compelling one because you can bring value to customers, pressing problems immediately, right? So that's been the long-term thesis of ServiceNow. Now a little bit more tactically, as you head into 2022, we've got no need to reiterate, but very briefly, inflation pressures, labor shortage, supply chain shortage and a need to boost productivity despite all these constraints. How do you see the Now Platform being equipped to handle these challenges, these tactical challenges in the near-term for corporations with your execution? Thank you so much.

Well, I really appreciate the question. Thank you so much for your kind remarks. I really do, Kash. Thanks a lot. ServiceNow has a unique ability to drive more efficiency and automate these processes and is absolutely a deflationary tool that helps alleviate the need for more hiring. Many companies think the only way to solve a problem is throw more bodies at it while we have no quarrel with increasing jobs. If there's a limited pool of digital assets, that's a problem. And that's why you need ServiceNow. So driving the productivity and efficiency out of the resources enterprises already have, helping them reduce the need for additional spend is our lead play in the playbook for the scenarios you laid out there. And one simple example, take virtual agents deflecting and automating tickets so that the IT help desk personnel can spend their time tackling more strategic issues, giving them more satisfaction with their job and creating a happier work environment. And this also reduces the need to hire more people in the first place. But then really smart CEOs are literally struggling every day now how I keep my people. And the only way to keep them is to give them a great experience. And they're going to feel you right out of the gates. If you recruited them and you can't onboard them properly, they're going to feel you if you can't train them and activate a customized training curriculum that's targeted specifically to their unique skills and attributes. And they're going to feel you real quick if they can't go to one portal to activate all of their services on their mobile device. So no matter where they are, their company's brand, their company's culture is talking to them. And then when you do need…

Profoundly exciting. Thank you so much, Bill.

Thank you, Kash.

Your next question comes from the line of Keith Weiss with Morgan Stanley. Your line is open.

Excellent. Thank you guys for taking the question. And let me echo the congratulations on a great quarter and a great year. I want to follow-through on Kash's interesting question and kind of turn it inward to ServiceNow. And so Bill, from your perspective, do you see any constraints in terms of your partners finding the people or your customers finding the people to be able to deploy ServiceNow? We're hearing about that from some of our checks and some of the systems integrated. It's just such a tight labor market. Are the people there to sort of deploy the solution? Or could that become something of a friction to just getting ServiceNow up and running? And to Gina, are you seeing any incremental or increased wage inflation in terms of sort of – you guys are hiring very aggressively, and I think headcount is up 29% year-on-year. So you're definitely finding the people. Is there any increase in wage inflation or anything extraordinary on that side of the equation given that tight labor market that might impact margins on a go-forward basis?

Well, thank you very much for the question, Keith. As I mentioned earlier, we are one of these significant partners to the global SIs. So if you look at the top five technology partners for the top 10 SIs, we're one of them. So while they may have some difficulty hiring to meet demand, we are getting preferential resource allocation, not only as a top five technology partner, but also because our swelling pipeline and our growth is so amazing that they all want more of that real estate. And where they have less interesting growth scenarios with other partners, they're actually peeling off headcount in favor of the ServiceNow practice. This is happening all the place. In addition, one of the things we have done is we took matters into our own hands and built out academies. And we're doing more for university programs to meet the demand, the ServiceNow train talent. And I'd note that we've also been working with our partners to sponsor and engage with local diversity profit and nonprofits to target diverse populations for next-gen skill development, which will help alleviate such labor shortages in the future. We have to initiate people into the digital world that perhaps aren't initiated but it’s certainly more than capable. And I always go back to the root cause of why ServiceNow is so special. When Fred Luddy created this company, he created a platform that was a sensation, and it was designed to give people productivity, a tool to enable them to do things with their lives and their jobs that they could have never done without it. And I think that level of simplicity and agility in the general construct of the platform makes it so much easier for people to learn and develop and grow on it. And now they see where we're going. They know it's a growth sensation. And you know how it is, rising tide kind of lift all boats, and everybody wants to get on this one.

And then, Keith, on your question with respect to labor inflation rates. Enterprise software's talent has been in high demand for some time now. So competitive compensation has been on the rise, and it's not new for us. We continue to monitor it. We definitely anticipate some continued pressure in the coming quarters, but we remain very committed to our margin guidance that we've given you for 2022 and beyond.

Upstanding. Thank you so much for the detail.

Thanks Keith.

Thank you, Keith.

Your next question comes from the line of Michael Turits with KeyBanc. Your line is open.

Hey, thanks very much, guys and congrats on the quarter. One for Bill and one for Gina. So Bill, I want to talk about a couple of submarkets that you have made acquisitions and specifically in RPA and observability and how you're thinking about those markets and your strategy, whether this will be really directed at existing larger ServiceNow implementations or how directly you're going to go into those types of deals. And then something for Gina.

Yes. Of course. Well, Michael, thank you very much. First of all, we are very excited about Ben, his leadership and the whole Lightstep team. As you know, they have been doing a great job winning amazing forward-thinking brands, and they have been doing a phenomenal job culturally integrating back into ServiceNow. So we are going to begin going to market with Lightstep, and that's going to be at mass scale, and that will be announced at the employee kickoff tomorrow. So that's exciting. And the work with Lightstep to not only serve the needs of IT but to observe things in a way that can be consumed across the value chain of decision-makers in an enterprise is pretty big. And then RPA, this whole process mining, RPA and AI, the platform for hyper automation is the ServiceNow platform. That's a huge point. And CJ and his great team, unbelievable team, they are making a major release in RPA, as you know, in our San Diego release. So more and more customers will benefit from the power of the ServiceNow platform, including RPA built into the San Diego release. It's an exciting release. What Amy Lokey and the team have done also on the user experience. I mean, we sort of demonstration of it with the Board. It's unbelievable. You know when you're dealing with ServiceNow because you're going to have one gorgeous user experience, and it doesn't matter what area of the platform you're looking to enable. It's all one gorgeous user experience. And I mean, I've never seen anything better. And it is the scale story all the way. And when we hit Tokyo in September, I hope to be in Tokyo with that announcement because I want to reach out to my great friends in Japan as a Japanese expression called dantotsu, and that underscores the spirit of ServiceNow to be better than the best. And that's the standard that we hold ourselves to. And the marketplace in Japan is really getting the memo on the power of ServiceNow and what we can do to liberate them into the cloud, and that’s going to be an exciting part of our growth story.

Great. Thanks, Bill. And then, Gina, just some clarifications on the extension of the useful life. So you got essentially to flattish op margins but down a bit, like 70 bps on free cash flow. So just making sure that I understand it, and then obviously, you get that benefit to EBIT margins, but that flows through, and we see it on free cash flow because this is just a non-cash, and you’re actually including expenses. So I want to make sure those mechanics are right. And then also, do you get in year two of this – do you get that tailwind to EBIT and accrual? Does that flip around to a headwind on EBIT margins and gross margins?

Great question, Michael. So you’re absolutely right, the benefit that you’re seeing this year hit EBIT and operating margins, but not free cash flow, right, because it’s just a change in depreciation, which is a non-cash, right? So that’s the reason why you’re seeing the benefit in operating income, but not in free cash flow. What you are seeing is free cash flow is the increased cost that I’ve been talking about as the COVID savings start to fade in 2022 as we come back in person for digital events and in-person events and travel. With respect to the longer tail of this change in depreciation, it definitely tapers off and gets smaller, right? So it’s a 100 basis point benefit this year by 2024. It goes down to just 50 points, right? So – and that’s only on the EBIT margins, not on free cash flow.

Okay. Thanks very much Gina and Bill.

Of course. Thank you.

Thank you very much. Appreciate it, Mike. Thank you.

Your next question comes from the line of Brad Zelnick with Deutsche Bank. Your line is open.

Great. Thank you. Bill, Gina, my congrats as well to you and the entire team and especially the CJ and the others that are so deservedly being elevated within the organization. Bill, you personally have been serving enterprise technology customers for many years. And many of us have been students of the industry for a long time as well. And I hesitate to say this, but it feels like this time is different. This digital transformation freight train just keeps steam rolling down the tracks. And rather than ask you to tell us about the environment, which is obviously very strong for what ServiceNow delivers, I would instead ask you, if you agree with my characterization, why do you think this time might be different?

Thank you for the question. It is entirely different. It is entirely different because the technology that is available to customers today can be so transformative. And I believe strongly that the Now Platform from ServiceNow is literally the control tower, the platform for digital transformation or digital business. And the reason I feel so strongly about that is the enterprise has been so behind in consumerizing experiences for people. And now with ServiceNow, these leaders of companies can finally say, all I hear is good news. My HR leader tells me that all the clunkiness of the past goes away with ServiceNow, and my people are happy, and they’re getting what they need. My Head of Revenue is telling me, wow, we could finally now do all the remote heavy thinking and diagnostics in a fully digital way, and we can bring our story to the customer and have that frictionless digital experience that’s easily repeatable drives tremendous customer SAT and NPS and creates the loyalty effect. Wow, we’re finally there. And then we can finally break through where companies are trying to refresh old applications. They can say, wow, now I can empower my people. They can build the new innovations. They can refresh the old but build the new innovations. And tech is the idea of liberating, not replacing people and creating more economic value and value-add. Plus every own person today doesn’t want to work for just a paycheck. They want to purpose. And I think our purpose to make work better for everyone is absolutely the right way to go. And I think that the leaders of companies want that for their company. And therefore, I think the confluence of all of this on one platform with one consumer-grade user experience for all people, whether they’re inside or outside the company, a platform that could take cost out and build revenue in is what this generation is waiting for. And once people are aware of ServiceNow, we win every time. So one of the moves that we’ve made, and I’m sure you’ve seen the pivot with the world works with ServiceNow, is bringing the world the brand that it deserves from ServiceNow. And I think that’s going to really turn on a lot of people to say, aha, I might have been a C-level decision maker that knew my IT people were happy with ServiceNow. I just never knew why. Once I started to learn about it or asked about it, now I know that they can activate transformation in all dimensions of my company, not the least of which is be the action layer for the whole enterprise. And I keep telling people when I meet with the CEOs, like we have good systems of record. They’re all very fine. But I don’t use them. We only use ServiceNow to run ServiceNow. And that’s why our people are so happy because everything works.

Awesome. Thank you for the perspective, Bill.

Well, thank you, Brad. Thanks very much.

Your next question comes from the line of Pat Walravens with JMP Securities. Your line is open.

Great. Thanks very much. Bill, congrats on the terrific results and outlook. I love hearing the enthusiasm. Could you drill down deeper for us on the relationship with Celonis? And how ServiceNow and Celonis work together to solve customers’ problems?

Yes, I absolutely will. And thank you very much for your kind remarks, and we appreciate it. I want to go back a little bit in time on this one. There once was a time where these gentlemen graduated from Technical University of Munich. We call it TUM over in Germany. And I got to know Alex very well several years ago and also his co-founders, and we built a very strong friendship. And he used to laugh because he sent me a note in December telling me about his business. And within a few minutes, I’d get back to him, and he never forgot that. And I still get back to him within a few minutes, and we still have a great friendship. And we know that we have delivery the past and move it into the cloud. We know we need to put it on an automation platform that can really change business. And therefore, in the non-ServiceNow environments, especially where it’s an ERP environment, Celonis does a very good job in the process mining to actually understand where the breaks are and the opportunities are in the business process to drive business productivity and performance. It is on that basis that we said, look, we should team up because our customers more and more are asking us to get involved, automating back-office business operations and business processes with the Now Platform. So we are essentially taking this relationship and applying automation that truly move the needle for organizations to understand how workflows across the people, processes and systems of their companies. And we’re helping map those elements in real time and building digital workflows to more efficiently automate work because the X-ray by itself doesn’t really help. We have to then put it on the action platform to actually automate it to drive a result. So our engineering teams have created a seamless product experience that’s going to make it easy and simple for customers to get the insight into the process across multiple, I might add, enterprise systems, and they’ll use Celonis EMS platform and convert that insight into action, automation and remediation with the ServiceNow workflow platform. And when you bring together process mining, automation, machine learning, RPA and low-code app development, and this touches on a question that came up earlier, low-code app development into a seamless product experience, customers will enable quick, continuous improvement with the flow of work. And I stress quick because – and this touches on an earlier, very smart question. These opportunities haven’t been there for customers in the past, and they’re only going to start learning about them now, which is why I see an even bigger hockey stick as we look into the future because we can revolutionize old installed base problems into new market opportunities in the cloud that are just sensational in terms of the business value they drive for corporations all over the world.

Okay. That’s super helpful. Thank you, Bill.

My pleasure. Thank you for the question, Pat.

We have time for one more question. Your last question comes from the line of Drew Glaeser with JPMorgan. Your line is open.

Hi. This is Drew on for Sterling. I was just wondering how the government vertical performed in the quarter and whether you could provide some more detail on that.

Yes, I’d be happy to. Our government business is truly a growth story at ServiceNow that is very, very special. So we look at the tailwinds in the U.S. federal market. It came through very strongly. It’s a big opportunity for us. What’s happening through is many of these agencies, they need or they have a mandate actually to digitally transform. One of the mandates is the President’s management agenda of PMA. Their vision is the administration’s guide to invest in the government’s capacity to deliver better results. And it’s aligning with ServiceNow’s core offering. So for example, if you look at the pillars, it’s all about strengthening and empowering federal workflow in the workforce. It’s sharing data, sharing business processes, looking at things across boundaries. They have delivered excellent equitable and secure federal services and customer experiences. This is driving acceleration for better customer service. If you look at their pillar three, it’s managing the business of government and that they want to make sure the systems work well. So this is all about business resiliency. Our cloud is extremely resilient. And they’re focused also on cybersecurity. And I think you’re familiar with that and the role that we could play in having a control tower for all the things going on from a security perspective. We can help other people’s solutions also tie into that control tower effect to manage the nation’s cybersecurity and obviously avoid recent ransomware attacks and other things. They’re also focused on vaccine management. And we said a long time ago, I believe this was in March of 2020 when we said this that the old vaccine management process would be the greatest workflow challenge that government faces maybe in our lifetime. And as you know, we have the world’s leading solution for that with entire countries. Of course, part of the United States, Germany, Scotland, many countries, including in Asia running on the Now Platform for vaccine management and returning to work safely and so forth. So all of this, to net it out, basically says that at the federal, the state, the local, the university and all public entities combined are focused on transforming digitally. They have to take these paper-based slow dangerous processes and put them in order. And the only way to do that is work home, digitize them and then execute the mission of government serving the people. And that’s why the public sector now represents double digits of the Now business, about 10% of our business. And look, with the problems the government has in digitizing things, this should be one of the more sensational industry stories for us for a long, long time, which is one of the reasons why the great Kevin Haverty and I will be working very, very closely on the public sector initiative globally in his new capacity.

Got it. That’s very helpful. Thank you.

Thanks, Drew.

Thank you very much. Appreciate it, Drew.

This concludes today’s conference call. Thank you for your participation. And you may now disconnect.