ServiceNow, Inc. (NYSE:NOW) Q4 2016 Earnings Conference Call - Final Transcript

Jan 25, 2017 • 05:00 pm ET

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ServiceNow, Inc. (NYSE:NOW) Q4 2016 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. [Operator Instructions] And our first question comes from the line of Matt Hedberg from RBC Capital Markets. Your line is open.

Analyst
Matt Hedberg

Hey, guys. Thanks for taking my questions. Congrats on the strong end of the year. ACV growth per customer was particularly impressive, I think It grew 9% sequentially. It looked like ITOM had a very strong quarter. I guess, Frank, could you comment on what else is driving this? What other products? Are sale cycles shortening on some of these add-on sales? Just kind of curious about that dynamic.

Executive
Frank Slootman

Yes. So, it wasn't one particular product sector that sort of carried the day. We were exceptionally strong across the board. Our core ITSM business was up by 25% sequentially. ITOM, as you mentioned, was very strong. All our emerging products, they have been very strong out of the gate during 2016. It is true that some of the newer products have shorter sales cycles than our traditional ITSM business. So, that's another attractive feature for our sales organization.

Analyst
Matt Hedberg

And then maybe one follow-up for Mike. Even on an adjusted basis, subscription in total billings accelerated year-on-year. I'm curious though can you talk about the longer billing terms you're seeing? I'm curious what drove that and should we expect that trend to continue? I'm talking about the subscription billing terms.

Executive
Michael Scarpelli

There was really only one customer and it's a rate regulated company that they prepaid five years that drove that. We were expecting a few. But I think that is kind of a one-time with that entity.

Analyst
Matt Hedberg

Great. Thanks a lot, guys.

Operator
Operator

Thank you. And our next question comes from the line of Raimo Lenschow from Barclays. Your line is open.

Analyst
Raimo Lenschow

I got another new name, thank you. As you think out about 2017, should we expect any big changes on the salesforce setup, on the salesforce composition, salesforce and how they got comped in terms of new products versus old products, et cetera?

Executive
Frank Slootman

No. I mean there's not going to be any major changes on that front. The only thing that is beginning to change is that we are starting to structure in vertical industry focused sales teams. We've always had that. We are evolving in that area. So, that's a theme that you will continue to hear from us about is to see increasing verticalization of our business. It's a very gradual process. It's not one big switch that we're throwing. But that's certainly a trend in how we are structuring our selling motions.

Analyst
Raimo Lenschow

Okay, perfect. Thank you. That's it actually for me already. Well done. That's very clear results. Thank you.

Operator
Operator

Thank you. And our next question comes from the line of Sarah Hindlian from Macquarie. Your line is open.

Analyst
Sarah Hindlian

Thank you and congratulations on the quarter, Frank and Mike. Really well done. It's Macquarie. Couple of questions, Frank, just to get started. You were talking to Raimo in particular about where you're at in some sales capacity. Could you give us a little bit more