ServiceNow, Inc. (NYSE:NOW) Q4 2016 Earnings Conference Call - Final Transcript
Jan 25, 2017 • 05:00 pm ET
Good day, ladies and gentlemen, and welcome to the ServiceNow Q4 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded.
I would like to hand the call over to Mike Scarpelli, Chief Financial Officer. Sir, you may begin.
Thank you. Good afternoon and thank you for joining us. On the call with me today is Frank Slootman, our Chief Executive Officer. Our press release, investor presentation, and broadcast of this call can be accessed at investors.servicenow.com. We may make forward-looking statements on this conference call such as those using the words may, will, expects, believes, or similar phrases to convey that information is not historical fact. These statements are subject to risks, uncertainties, and assumptions. Please refer to the press release and risk factors and documents filed with the Securities and Exchange Commission, including our most recent quarterly report on Form 10-Q, for information on risks and uncertainties that may cause actual results to differ materially from those set forth in such statements.
I would now like to turn the call over to Frank.
Thanks, Mike. Good afternoon. Thank you for joining us on today's call. Q4 capped off an outstanding 2016 and we have strong momentum heading into 2017. Total revenues in 2016 grew 38% year-over-year to $1.4 billion making ServiceNow the fastest growing enterprise software company with more than $1 billion in revenue. The strong quarter was driven by acceleration of net new ACV and a 97% renewal rate. 341 customers now pay us more than $1 million in ACV, an increase of 39 in the quarter and 24 customers now pay us more than $5 million in ACV, an increase of six in the quarter. We also continue to track towards our 2020 revenue goal of $4 billion. We added a record 31 Global 2000 logos in the quarter, including General Mills, DNB Bank, and Renault. Our average ACV for Global 2000 is now approximately $1.1 million, a 9% sequential increase and our commercial channels continue to balance out our global enterprise business.
There are three key things worthy of note. First, Q4 was punctuated by large deals. We booked a record 27 deals with net new ACV greater than $1 million, 11 more than the next closest quarter. The highlight was an $11 million net new ACV upsell to a Global 25 customer representing our largest net new ACV deal ever. We are replacing fragmented on-premise tools with a scalable platform that consolidates global ITSM and ITOM capabilities on to a single ServiceNow system. This transformation will reduce mean time to resolution and increase service availability driving $100 million of savings over three years and $44 million annually thereafter. A key reason for the size and speed of this transaction was Inspire, our elite advisory team that helps executives transform their business on ServiceNow. In Q4 Inspire contributed