Bill McDermott
Chairman and Chief Executive Officer at ServiceNow
Thank you, Darren. And thank you, everyone, for joining us today. By now you've all seen the press release. You know we crushed the quarter. We raised the full-year guidance. And we've never been more excited about the future of ServiceNow.
But before we get into all the details, I just want to comment on the leadership announcements we made today. The company received an internal complaint earlier this year regarding the hiring of an individual who had previously been a U.S. Government employee. As you would expect, we took the complaint very seriously. The Board of Directors conducted a thorough internal investigation with the assistance of outside counsel and determined that our company policy was violated.
Acting with total transparency, the company proactively disclosed the findings of the investigation to the proper government entities. And as a result, today, we're announcing the departure of the individual whose hiring was the subject of the original complaint. We also came to a mutual agreement that C.J. Desai, our President and COO, would offer his resignation from the company effective immediately. While we believe this was an isolated incident, we are further sharpening our hiring policies and procedures as a result of this situation. And when it comes to compliance, let me be perfectly clear, we are fully committed to doing the right thing.
And from a continuity standpoint, I'm extremely proud that our team has the incredible depth of talent and expertise to lead forward without any disruption. In fact, Chris Bedi, a respected ServiceNow executive for the past decade who was recently named the MIT Sloan CIO Leadership Award winner for 2024, he'll serve as the interim Chief Product Officer while I consider internal and external candidates alike.
Our entire products and engineering team is the best in the enterprise software industry, and they're focused on delivering our Xanadu release in a few weeks' time. In fact, I just got done talking with them, and they're in great shape. And we wanted to give you the facts as clearly and succinctly as possible because we have so much else to cover today.
So, as I said at the start, ServiceNow is once again in a beat-and-raise situation. Our Q2 results prove that we are delivering elite-level execution. Subscription revenue grew 23% year-over-year at constant currency, which is 100 basis points above the high end of our guidance. CRPO grew 22.5% at constant currency, which is 200 basis points above our guidance. Operating margin was over 27%, nearly 250 basis points above our guidance. And we had 88 deals greater than $1 million in net new ACV, up from 70 a year ago, a 26% year-over-year increase. A year ago, Q2 had one deal greater than $1 million from a net new logo perspective. This year, we had six of them that were net new logos. Our first federal customer actually crossed the $100 million plus ACV threshold, and we signed our third largest net new ACV deal ever.
All of our workflow businesses were in more than one-half of our top 20 deals. Security and risk, ITSM, and ITOM had 8, 9, and 10 deals over $1 million, respectively. Customer workflows had a big Q2, with 14 deals over $1 million, employee workflows had 12 deals over $1 million, and creator had 10 deals over $1 million.
What's the headline? ServiceNow's relevance as the AI platform for business transformation is soaring. This is a growth company on an unprecedented trajectory.
Moving to the topic of AI. Now Assist's net new ACV doubled quarter-over-quarter, significantly overachieving our expectations. And it became the fastest-growing new product in the company's history. We signed 11 Now Assist deals with $1 million plus NNACV in Q2, two of which were over $5 million. We had impressive wins across industries from banking, healthcare, and manufacturing to semis, tech, and many others.
As an AI lighthouse customer, Stellantis is using ServiceNow as its strategic AI platform to manage operations across HR, finance, and supply chain. American Honda selected Now Assist as their Gen AI solution of choice to improve deflection and efficiency of service, delivering a world-class experience to their employees. Merck is using the ServiceNow platform to streamline operations across IT and cybersecurity to advance its global biopharmaceutical business. Adobe will leverage Now Assist to optimize routine tasks for employees, which will increase efficiency across the entire organization.
Dell will integrate Now Assist with its service capabilities to deliver a seamless customer and employee experience. And with Now Assist, STMicroelectronics plans to enhance productivity and user experiences across their entire organization. LTIMindtree is using Now Assist for ITSM to increase developer productivity by 30% with code and flow generation. We're also collaborating together to grow and expand offerings in finance and supply chain workflows.
So why are so many enterprises rapidly adopting ServiceNow's Gen AI strategy? Think about this in the context of design thinking and innovation. The first pillar is always desirability, do we have the big idea? ServiceNow is putting AI to work for people. Our Gen AI strategy is focused on infusing intelligence into the flow of work end-to-end across the enterprise, every department, every persona. With our native integrations, we already help people orchestrate across different systems and data sources. Now, we can train the machines to do the low-value work so the people can up-level to the knowledge work.
The second pillar is viability. Does our approach to Gen AI make business sense? We set the tone on innovating with domain-specific multimodal language models. This approach is more accurate. It doesn't have the hallucinations of the large models from the internet. It's faster to train, and it's faster to deploy these models. It's more cost-effective and sustainable because these models are less GPU-hungry than public models.
The final pillar is feasibility. Can we actually do it? This is the best pillar of all for ServiceNow because we've actually done it. When you look at our own deployment of Now Assist, the initial results are staggering. With better deflection, our IT help desk is saving 45 minutes per avoided case. In customer service, our colleagues are saving 30 minutes every time the computer generates the knowledge-based article for them. Our employees will save 21,000 hours with faster self-service, and our developers are completing non-complex scripts in half the time.
This is a moment where business leaders are looking for the role model. What does it look like to run a business with Gen AI at the core? ServiceNow, thanks to our engineering and our Now on Now teams is leading the way. There's an excitement for Gen AI, and it's one reason Gartner forecasts global IT spending will be up 8.9% in 2024, and that's even higher than originally forecasted. By the way, more than 3x GDP.
Within software spend, according to IDC, Software-as-a-Service will grow 17%. So the trend line's clear, enterprise software buyers are moving away from consolidating the past into building for the AI future. ServiceNow has been the modernizer at many points on this journey, creating a single pane of glass into the IT estate, expanding our core from IT to employee service to customer service, now making it easy to build new consumer-grade applications on a single data model. The AI moment is the culmination of this journey. CIOs don't want a thousand points of dim light. They're betting on a few market-leading platforms working together as the great unlock. They see ServiceNow as the intelligent action platform spanning the entire enterprise.
And that is why our pipeline has built, from knowledge, over 50% year-over-year improvement. It's why CIO surveys continue to show ServiceNow's relevance rising to the top of the charts. It's why more IT and line-of-business buyers alike are looking at long-term blueprints for ServiceNow and planning out the future with us. It's why Jensen Wang hit it on the head when he said, ServiceNow is the AI operating system for the enterprise. Customers are seeing us like Jensen sees us.
While our performance has been consistently strong, we take nothing for granted. Every aspect of our innovation engine and our go-to-market machine is moving up to the next level. We're tracking and tackling more of the automation and market opportunities every day with both our customers and our engineers. Our new Creator Studio available with ServiceNow App Engine, is extending our existing low-code leadership to no-code, so every employee can now build applications.
Other updates to our automation engine help simplify RPA deployments. We see a great opportunity for ServiceNow there. We're moving even faster on co-innovation partnerships with major global brands. An expanded multi-year agreement will extend ServiceNow's capabilities to all BT group units. Bell Canada will develop new capabilities within the business service experience while accelerating their own internal transformation as a tech services and digital media leader. This is the largest telecommunications collaboration for ServiceNow and the first of its kind in Canada.
Boomi is expanding from the small ServiceNow footprint to replace existing competitor implementations. Boomi will use all Now Assist solutions and work with us on joint product development. Deloitte is leveraging the ServiceNow platform to drive industry-specific managed services to bring AI-based innovations to clients around the world.
We're accelerating our growth in key geographic markets and verticals. ServiceNow will help the U.S. Air Force adopt new best-in-class technology. The federal government's National Science Foundation is utilizing ServiceNow's new Gen-AI solutions to support their mission to promote research, expanding knowledge in science, engineering, and education. In Germany, Bayer is using NowAssist to empower their employees with Gen-AI and hyper automation as they create a culture where every employee has the potential to innovate.
Our momentum in Japan continues with major wins this quarter, including Nomura, Panasonic Information Systems and NITORI Holdings. We announced plans to launch a ServiceNow UAE cloud hosted on Microsoft Azure so we can meet the business transformation requirements of all public and private sector entities in the UAE.
We announced two growth investments in our partner ecosystem in India. inMorphis will extend our presence in India and across Southeast Asia through the development of new Gen AI offerings, solutions, and digital skills training. Prodapt will further develop digital business transformation through AI-enabled solutions and the Now platform's skills expansion. We're also expanding into new categories, further increasing ServiceNow's total addressable market yet again.
Industry analysts have reported that the number one priority for CIOs is getting their data house in order. And that's why at Knowledge, we share our plans for a powerful new database offering, RaptorDB. It's built for enterprises looking for speed and scale to support new AI use cases. RaptorDB gives ServiceNow customers the capability to ingest data at massive scale from multiple data sources, so they can analyze it much faster to feed our domain-specific models.
We're already achieving 12x transactional throughput and 27x improvement in response time for analytic inquiries in our ProPlus version of the platform. Today, we're launching the RaptorDB Lighthouse program. This is similar to our highly successful Gen AI Lighthouse program. This new offering is designed for a select group of top customers at the forefront of this new AI world. We already have many signing up. We also completed a tuck-in acquisition of Raytion, an industry-leading data company based in Germany. In combination with Now Assist, Raytion will further accelerate our Gen AI-powered search and knowledge management capabilities.
This is only the beginning. The data opportunity is massive, and we intend to make some additional announcements on September 10th regarding our growing data ambition. As you can see, ServiceNow is not opportunity-constrained. New buying centers, new industries, new geographic markets, and we're fielding more inbound interest for new partnerships than at any point in our history. There's a sense of excitement here in the community, in our company, and it's all for good reason.
In closing, our focus is exactly where it should be, expanding this differentiated platform, scaling this business, and delivering great results for our stakeholders. I got a few questions about the second half with a rare speculation out there that elections or other macro factors will challenge the business environment. Are our customers mindful of the unknowns in the broader macro? Of course. That's exactly why they are leaning into ServiceNow, because AI is the elixir that drives productivity, cost efficiency, and new business models.
Simply put, enterprises are investing in business transformation. They are investing in AI, they are building a new reference architecture for the decades to come. This is the largest, most compelling business opportunity in the world. We are bullish on what's ahead. That's why we have not only confirmed but also raised our full-year guidance. Our brand represents an optimistic view of the world's future, it's why we're putting AI to work for people.
And ultimately, why? As we celebrate the 20th anniversary of Fred Luddy's original dream, we believe the next 20 years will be even more exciting. I personally have never been more convinced that ServiceNow will be the defining enterprise software company of the 21st century.
Thank you for your time and attention. I look forward to your questions. I'll now turn you over to Gina. Gina, over to you.
