1 00:00:02,520 --> 00:00:08,400 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Well, I'm thrilled to 2 00:00:08,480 --> 00:00:12,399 Speaker 1: welcome Bill McDermott, Chairman CEO of Service Now. Hot of 3 00:00:12,480 --> 00:00:15,080 Speaker 1: the heels of your earnings, which, let's just say it, 4 00:00:15,120 --> 00:00:18,000 Speaker 1: beat expectations across the board. You're raising your forecast. We've 5 00:00:18,000 --> 00:00:20,520 Speaker 1: got analysts raising price targets left, right and center, and 6 00:00:20,560 --> 00:00:23,920 Speaker 1: in particular they seem to love the current remaining performance obligations. 7 00:00:24,680 --> 00:00:26,759 Speaker 1: Why is there such resilience? What's driving this? 8 00:00:26,800 --> 00:00:29,720 Speaker 2: Bill? It's all about AI. 9 00:00:30,080 --> 00:00:33,680 Speaker 3: And thank you first of all for acknowledging the performance. 10 00:00:33,720 --> 00:00:36,920 Speaker 3: I know all the teammates of Service Now will be 11 00:00:36,920 --> 00:00:40,880 Speaker 3: honored by very nice remarks. AI has become the new UI, 12 00:00:41,600 --> 00:00:45,600 Speaker 3: and we have that platform that is the leading enterprise 13 00:00:45,840 --> 00:00:48,720 Speaker 3: platform in the world, which provides a single pane of 14 00:00:48,800 --> 00:00:53,080 Speaker 3: glass that connects any agent, any model, any cloud, and 15 00:00:53,120 --> 00:00:54,480 Speaker 3: any data source. 16 00:00:54,960 --> 00:00:56,040 Speaker 2: To the platform. 17 00:00:56,200 --> 00:00:59,560 Speaker 3: So the companies that we serve can run a lot better. 18 00:01:00,040 --> 00:01:02,279 Speaker 2: And it's an AI world and we're here to win. 19 00:01:02,320 --> 00:01:04,679 Speaker 1: It told us about the kind of customers. Are they 20 00:01:04,720 --> 00:01:07,800 Speaker 1: global in nature? What kind of industry groups are particularly 21 00:01:07,800 --> 00:01:08,440 Speaker 1: looking for your help? 22 00:01:08,520 --> 00:01:08,880 Speaker 2: Right now? 23 00:01:09,800 --> 00:01:13,320 Speaker 3: Yeah, these are the most significant brands in the world. 24 00:01:13,440 --> 00:01:19,040 Speaker 3: Brands like Nvidia who is live on our AI platform, Starbucks, 25 00:01:19,280 --> 00:01:24,600 Speaker 3: Exxon Mobile Standard chartered into it, the state of California, 26 00:01:25,440 --> 00:01:31,160 Speaker 3: Banco do Nordeste do Brasil, very interesting one, al Raji Group, 27 00:01:31,360 --> 00:01:34,480 Speaker 3: Burla Group, Tokyo Gas, a mercant company. 28 00:01:34,880 --> 00:01:37,680 Speaker 2: So it's truly a global situation. 29 00:01:38,440 --> 00:01:42,080 Speaker 3: And what's really happened and I've tried to be very 30 00:01:42,120 --> 00:01:46,759 Speaker 3: clear on this. We don't live in a cloud SaaS neighborhood. 31 00:01:46,920 --> 00:01:50,840 Speaker 3: We actually invented our own space in this market. That 32 00:01:51,000 --> 00:01:56,080 Speaker 3: highly differentiates Service Now because AI work is cross functional, 33 00:01:56,480 --> 00:02:02,000 Speaker 3: it goes across functions, and today everyone's selling agents for departments. 34 00:02:02,320 --> 00:02:04,040 Speaker 2: But the problem is eighty. 35 00:02:03,800 --> 00:02:06,960 Speaker 3: Five percent of the digital transformation projects out there don't 36 00:02:07,000 --> 00:02:11,160 Speaker 3: deliver a positive ROI today because of integration problems. So 37 00:02:11,360 --> 00:02:13,880 Speaker 3: if you just throw agents in a department, you're going 38 00:02:13,919 --> 00:02:16,720 Speaker 3: to have a bigger mess. And that's why service Now 39 00:02:16,880 --> 00:02:21,799 Speaker 3: takes all your investments, integrates it into one beautiful platform 40 00:02:22,160 --> 00:02:25,200 Speaker 3: and gives you an experience for your people, your customers, 41 00:02:25,280 --> 00:02:27,680 Speaker 3: and your network that drives performance. 42 00:02:27,720 --> 00:02:28,840 Speaker 2: And that's what it's all about. 43 00:02:28,960 --> 00:02:32,160 Speaker 1: But Bill, who are you kicking out? Who are you replacing? 44 00:02:32,480 --> 00:02:35,440 Speaker 1: And is it existential to those that you are replacing. 45 00:02:36,480 --> 00:02:41,880 Speaker 3: Yeah, it's a really important question because Agenic AI is 46 00:02:42,320 --> 00:02:47,280 Speaker 3: an extinction level event for traditional CRM systems of record, 47 00:02:47,919 --> 00:02:50,240 Speaker 3: and the reason for that is ninety percent of the 48 00:02:50,280 --> 00:02:53,520 Speaker 3: market we'll move to a system of action with a 49 00:02:53,560 --> 00:02:58,280 Speaker 3: front end or autonomous engine by twenty twenty nine, and 50 00:02:58,320 --> 00:03:03,040 Speaker 3: we are that provide We handle the order management process 51 00:03:03,120 --> 00:03:06,560 Speaker 3: with a world class configure, price and quote, all powered 52 00:03:06,600 --> 00:03:07,079 Speaker 3: by AI. 53 00:03:07,600 --> 00:03:09,960 Speaker 2: We fulfill and we service the. 54 00:03:09,960 --> 00:03:14,119 Speaker 3: Customer all on one AI platform, and that's the only 55 00:03:14,120 --> 00:03:15,920 Speaker 3: one in the world like it, and that's what the 56 00:03:15,960 --> 00:03:16,600 Speaker 3: world wants. 57 00:03:16,840 --> 00:03:19,440 Speaker 1: To meet that demand, you need the infrastructure. We understand 58 00:03:19,480 --> 00:03:21,320 Speaker 1: that you've just secured a new cloud deal about four 59 00:03:21,320 --> 00:03:23,560 Speaker 1: billion dollars. Can you tell us who you've gone with? 60 00:03:23,720 --> 00:03:26,040 Speaker 1: We understand maybe it's a Google Cloud deal. 61 00:03:27,360 --> 00:03:27,600 Speaker 2: Yeah. 62 00:03:27,680 --> 00:03:31,880 Speaker 3: We have great relationships with all of the hyperscalers and 63 00:03:31,919 --> 00:03:35,000 Speaker 3: they're all fantastic companies and they're all going to do 64 00:03:35,160 --> 00:03:39,320 Speaker 3: amazingly well, and our customers rely on them, and some 65 00:03:39,800 --> 00:03:43,120 Speaker 3: do better in certain geographies than others. Some have certain 66 00:03:43,160 --> 00:03:46,280 Speaker 3: services perhaps that are stronger than others, but they're all 67 00:03:46,600 --> 00:03:49,440 Speaker 3: some of the greatest companies ever, and so we integrate 68 00:03:49,480 --> 00:03:52,120 Speaker 3: with all of them and we'll move workloads for our 69 00:03:52,160 --> 00:03:54,640 Speaker 3: customers to all of them, and the customer if they 70 00:03:54,680 --> 00:03:57,280 Speaker 3: want to run service now in those cloud formations, they 71 00:03:57,320 --> 00:03:57,800 Speaker 3: may do so. 72 00:03:58,240 --> 00:04:00,240 Speaker 2: If they want us to connect to. 73 00:04:00,200 --> 00:04:03,080 Speaker 3: Their data sources, of course we do that, or any 74 00:04:03,120 --> 00:04:07,400 Speaker 3: other data source and any other cloud. And so we're 75 00:04:07,400 --> 00:04:12,200 Speaker 3: the open architecture that makes it all come together and work, 76 00:04:12,320 --> 00:04:14,480 Speaker 3: and Caroline, that's exactly what the world needs. 77 00:04:15,120 --> 00:04:18,880 Speaker 1: Okay, I'm interested in what the world needs. Also is 78 00:04:18,920 --> 00:04:21,840 Speaker 1: sort of clarity on reskilling, because I'm just looking at 79 00:04:21,839 --> 00:04:24,320 Speaker 1: what you're projecting one hundred million dollars in projecting cost 80 00:04:24,360 --> 00:04:28,560 Speaker 1: savings for this year alone. Is that about replacing people 81 00:04:28,960 --> 00:04:32,280 Speaker 1: with the AI the productivity. If you're hiring less, what 82 00:04:32,279 --> 00:04:34,240 Speaker 1: does that mean when you start to scale that out 83 00:04:34,279 --> 00:04:34,960 Speaker 1: across the world. 84 00:04:36,080 --> 00:04:40,000 Speaker 3: Well, what we're doing is we're slowing down the hiring 85 00:04:40,200 --> 00:04:44,200 Speaker 3: in jobs that are quite frankly soul crushing jobs. 86 00:04:44,480 --> 00:04:46,520 Speaker 2: I mean, just think about like it support. 87 00:04:46,960 --> 00:04:51,799 Speaker 3: You know, ninety seven percent of standard software automatically generated 88 00:04:51,839 --> 00:04:57,080 Speaker 3: by AI now, and the pressure on supporting function and 89 00:04:57,200 --> 00:05:01,719 Speaker 3: people has been cut in half. Customer support, eighty percent 90 00:05:01,839 --> 00:05:05,400 Speaker 3: of the customer inquiries in cases now are fully managed 91 00:05:05,400 --> 00:05:09,440 Speaker 3: by agentic AI. And think about security and risk management 92 00:05:09,480 --> 00:05:11,800 Speaker 3: in real time. All the patch work and the change 93 00:05:11,839 --> 00:05:15,039 Speaker 3: management is done by agents now. And the same is 94 00:05:15,040 --> 00:05:17,320 Speaker 3: true go to market. You know, think about people that 95 00:05:17,440 --> 00:05:20,760 Speaker 3: talk to customers. There's no prep work anymore. Their AI 96 00:05:21,320 --> 00:05:24,920 Speaker 3: teammate is doing that for them at service now, So 97 00:05:25,120 --> 00:05:28,920 Speaker 3: the speed of the company has accelerated dramatically. The supporting 98 00:05:29,040 --> 00:05:32,159 Speaker 3: cast of the soul crushing work is now being done 99 00:05:32,240 --> 00:05:34,640 Speaker 3: by agents. They work hard twenty four by seven. You 100 00:05:34,640 --> 00:05:37,560 Speaker 3: don't have to pay them, and they don't need any lunch, 101 00:05:38,000 --> 00:05:40,560 Speaker 3: and they don't have any healthcare benefits, so they're very 102 00:05:40,760 --> 00:05:45,120 Speaker 3: affordable and that really complements our workforce. So we're still hiring, 103 00:05:45,560 --> 00:05:48,839 Speaker 3: but we're hiring less in those supporting functions. And I 104 00:05:48,880 --> 00:05:51,919 Speaker 3: suppose that's going to happen to all well run companies. 105 00:05:52,000 --> 00:05:54,760 Speaker 3: And I say that because we now need to think 106 00:05:54,800 --> 00:05:59,160 Speaker 3: about how you've run a corporation on service Now, how 107 00:05:59,200 --> 00:06:01,960 Speaker 3: you change the w where you run your business processes. 108 00:06:02,200 --> 00:06:04,640 Speaker 2: It could be ordered a cash, procure to pay. 109 00:06:04,520 --> 00:06:08,560 Speaker 3: Hire to retire, designed to product. These are all processes 110 00:06:08,600 --> 00:06:11,880 Speaker 3: that go across functions and we need to have those 111 00:06:11,920 --> 00:06:14,800 Speaker 3: twentieth century ORG charts obliterated. 112 00:06:15,120 --> 00:06:16,760 Speaker 2: We now need to work in teams. 113 00:06:17,200 --> 00:06:20,680 Speaker 3: Teams need to work across processes, and the agents need 114 00:06:20,760 --> 00:06:23,000 Speaker 3: to be the best friend to humans. And if we 115 00:06:23,080 --> 00:06:25,640 Speaker 3: do this right, the GDP of the world will go up. 116 00:06:26,080 --> 00:06:29,479 Speaker 3: Companies will outperform not just on the op X, cost 117 00:06:29,600 --> 00:06:33,719 Speaker 3: takeout and productivity, but they will be building new horizons, 118 00:06:33,760 --> 00:06:37,560 Speaker 3: new business models, and new dreams on the service now platform. 119 00:06:37,600 --> 00:06:38,360 Speaker 3: And we're excited. 120 00:06:39,160 --> 00:06:41,480 Speaker 1: Someone else is excited right now about AI, and it's 121 00:06:41,480 --> 00:06:43,880 Speaker 1: the administration. We've got the new AI Action pan. 122 00:06:44,200 --> 00:06:45,120 Speaker 2: What did you make of it? 123 00:06:45,200 --> 00:06:46,960 Speaker 1: What do you think about perhaps the light to touch 124 00:06:46,960 --> 00:06:48,320 Speaker 1: in terms of regulation. 125 00:06:49,560 --> 00:06:53,920 Speaker 3: I think it's outstanding. We need less regulation and more innovation. 126 00:06:54,520 --> 00:06:57,479 Speaker 3: And I think the President and the administration are doing 127 00:06:57,480 --> 00:07:00,240 Speaker 3: a very good job on AI. They dedicated a whole 128 00:07:00,680 --> 00:07:05,120 Speaker 3: symposium to it yesterday and I fully support it. You know, 129 00:07:05,240 --> 00:07:10,880 Speaker 3: government has to run more efficiently, more transparently, with greater accountability, 130 00:07:10,960 --> 00:07:13,480 Speaker 3: and that's what the service now platform has been doing 131 00:07:13,520 --> 00:07:15,920 Speaker 3: in the public sector, especially in the US for many 132 00:07:16,000 --> 00:07:18,840 Speaker 3: years now. And now that we'll bring an AI to 133 00:07:18,880 --> 00:07:21,640 Speaker 3: the forefront, we're just going to accelerate the pace in 134 00:07:21,680 --> 00:07:24,920 Speaker 3: getting behind the President's agenda and do even better work. 135 00:07:25,160 --> 00:07:27,080 Speaker 3: And I think this is going to happen in governments 136 00:07:27,120 --> 00:07:29,280 Speaker 3: around the world. You know, I travel to countries all 137 00:07:29,320 --> 00:07:31,920 Speaker 3: the time, and when I meet them, they all want 138 00:07:31,960 --> 00:07:35,200 Speaker 3: to understand what the US government is doing. They're very 139 00:07:35,240 --> 00:07:39,360 Speaker 3: interested in this AI movement, the efficiency movement, the effectiveness 140 00:07:39,400 --> 00:07:42,640 Speaker 3: of technology. So I think it's a pace setting move 141 00:07:42,680 --> 00:07:43,840 Speaker 3: and I'm fully behind it. 142 00:07:44,800 --> 00:07:47,640 Speaker 1: Within that, of course, you mentioned how you're winning contracts 143 00:07:47,680 --> 00:07:50,880 Speaker 1: with the government of the State of California. How has 144 00:07:50,960 --> 00:07:54,040 Speaker 1: federal spending been within service now? How you looking at 145 00:07:54,040 --> 00:07:56,560 Speaker 1: that as an opportunity to scale because many had worried 146 00:07:56,560 --> 00:07:59,560 Speaker 1: that they were shutting down perhaps some of the services 147 00:07:59,560 --> 00:07:59,760 Speaker 1: to you. 148 00:07:59,760 --> 00:08:04,680 Speaker 3: And yeah, of course, I mean if a department shuts down, 149 00:08:04,800 --> 00:08:08,520 Speaker 3: obviously that's not great. But at the same time, we 150 00:08:08,640 --> 00:08:12,320 Speaker 3: got six net new logos within the government in the 151 00:08:12,360 --> 00:08:15,760 Speaker 3: current quarter. And you also have state and local governments too, 152 00:08:15,960 --> 00:08:19,160 Speaker 3: So yes, we're winning in federal but we also have 153 00:08:19,680 --> 00:08:23,720 Speaker 3: like the North Carolina Department of Transportation for example, the 154 00:08:23,760 --> 00:08:27,560 Speaker 3: State of California. They're doing many, many things with this 155 00:08:27,640 --> 00:08:30,760 Speaker 3: AI platform for business transformation because they have to give 156 00:08:30,800 --> 00:08:34,320 Speaker 3: the citizens better service, they have to lower their cost base, 157 00:08:34,400 --> 00:08:36,400 Speaker 3: they have to do a lot more with less head count, 158 00:08:36,880 --> 00:08:40,720 Speaker 3: and Frankly, the unreported truth of the matter is there's 159 00:08:40,880 --> 00:08:45,400 Speaker 3: millions of technically related jobs in the global economy that 160 00:08:45,440 --> 00:08:50,920 Speaker 3: are unfilled today, and AI needs to fill those jobs. Similarly, 161 00:08:50,960 --> 00:08:55,440 Speaker 3: we need to train, certify, and get the workforce ready 162 00:08:55,480 --> 00:08:58,960 Speaker 3: for this AI revolution because it will not stop, it 163 00:08:59,040 --> 00:09:02,760 Speaker 3: will intensify greatly, and we can't leave people behind. So 164 00:09:02,800 --> 00:09:05,960 Speaker 3: we've developed service Now University where we're training three million 165 00:09:06,000 --> 00:09:08,760 Speaker 3: people this year. We have rise Up where we rise 166 00:09:08,880 --> 00:09:13,040 Speaker 3: up with governments and communities around the world, especially those 167 00:09:13,520 --> 00:09:15,280 Speaker 3: that don't have access to some. 168 00:09:15,200 --> 00:09:16,040 Speaker 2: Of these services. 169 00:09:16,320 --> 00:09:19,120 Speaker 3: And we're not even charging for this because we have 170 00:09:19,520 --> 00:09:21,959 Speaker 3: a big heart, a big culture, and we want to 171 00:09:22,000 --> 00:09:25,080 Speaker 3: be the defining enterprise software company the twenty first century, 172 00:09:25,280 --> 00:09:27,200 Speaker 3: and this is how we intend to do it. We 173 00:09:27,280 --> 00:09:30,800 Speaker 3: will continue the pace of innovation, we will win an 174 00:09:30,800 --> 00:09:33,720 Speaker 3: AI and our company will set the standard for all 175 00:09:33,840 --> 00:09:36,839 Speaker 3: other enterprise participants bill. 176 00:09:36,840 --> 00:09:39,800 Speaker 1: With tackling talent. But is there any other bottleneck or 177 00:09:39,840 --> 00:09:42,720 Speaker 1: anything else that perhaps limits the growth in the business 178 00:09:42,720 --> 00:09:45,760 Speaker 1: that clearly is pretty stellar right now? Is it macro environment? 179 00:09:45,960 --> 00:09:47,680 Speaker 1: Is it certainty? Is it interest rates? 180 00:09:49,000 --> 00:09:52,319 Speaker 3: Imagination is the limit? So we have to have dream 181 00:09:52,360 --> 00:09:56,800 Speaker 3: big people. And similarly, we need everybody in the workforce 182 00:09:56,840 --> 00:10:00,160 Speaker 3: fully engaged, not just in our company, but in every company. 183 00:10:00,679 --> 00:10:03,720 Speaker 3: You can't leave people behind because right now, if I 184 00:10:03,760 --> 00:10:06,720 Speaker 3: look at the biggest challenge with AI, AI is magic. 185 00:10:06,760 --> 00:10:11,640 Speaker 3: It's fantastic, but a small percentage of the workforce today 186 00:10:12,080 --> 00:10:15,120 Speaker 3: understands it, knows how to use it, and as being 187 00:10:15,200 --> 00:10:18,960 Speaker 3: encouraged to prosper with it. And so a lot of 188 00:10:19,000 --> 00:10:22,439 Speaker 3: times the headlines read AI as a negative and as 189 00:10:22,440 --> 00:10:25,120 Speaker 3: a concern, And I look at AI as the best 190 00:10:25,120 --> 00:10:28,600 Speaker 3: friend to humans and the best teammate a human ever had, 191 00:10:29,040 --> 00:10:32,120 Speaker 3: because it'll give you access to knowledge and information that 192 00:10:32,160 --> 00:10:35,480 Speaker 3: you would have never had without AI, and so having 193 00:10:35,600 --> 00:10:38,400 Speaker 3: that can make everybody better. And we have to lift 194 00:10:38,440 --> 00:10:41,120 Speaker 3: these companies up, and we have to have every department 195 00:10:41,160 --> 00:10:45,320 Speaker 3: in these companies work together, collaborate together with AI, work 196 00:10:45,400 --> 00:10:49,400 Speaker 3: with AI to transform. So the human element is the 197 00:10:49,400 --> 00:10:53,200 Speaker 3: biggest limitation all the other things, alike the weather. You know, 198 00:10:53,280 --> 00:10:56,520 Speaker 3: some days the weather's great, some days it's not so sunny, 199 00:10:56,720 --> 00:10:58,720 Speaker 3: And you've got to operate in all environments. 200 00:10:58,720 --> 00:11:00,840 Speaker 2: And we're ready for that. Old Weather Company