Michael Scarpelli - Chief Financial Officer Frank Slootman - President and Chief Executive Officer

Jennifer Lowe - Morgan Stanley Walter Pritchard - Citigroup Steve Ashley - Robert W. Baird Kirk Materne - Evercore Michael Turits - Raymond James Justin Furby - William Blair & Company Matt Hedberg - RBC Capital Markets Alex Zukin - Stephens Brent Thill - UBS Rob Owens - Pacific Crest Securities Jason Maynard - Wells Fargo Greg McDowell - JMP Securities Tim Klasell - Northland Securities Derrick Wood - Susquehanna Abhey Lamba - Mizuho Securities Phil Winslow - Credit Suisse

Good day, ladies and gentlemen, and welcome to the Q3 2014 ServiceNow earnings conference call. [Operator Instructions] I would now like to turn the conference over to your host for today, Mr. Mike Scarpelli, ServiceNow chief financial officer. Please proceed, sir.

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 and a simultaneous broadcast of this call can be accessed at our website 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 annual report on Form 10-K, 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, and thank you for joining us on today’s call. Revenues grew 61% year on year to $179 million and billings grew 58% year on year to $201 million. The quarter was marked strong demand from our existing customer base, with renewals at 98% and upsells at 35% of annual contract values signed in the quarter as well as significant new account contributions. During the quarter, we booked a record 11 deals with annual contract values above $1 million. The company now counts 107 customers with an annual contract value in excess of $1 million. Our installed base is now at 2,514 accounts, with 473 Global 2000 customers. Some of the 18 net adds from the Global 2000 in the quarter that we at liberty disclose include Royal Philips in the Netherlands and Crescent Point Energy in Canada. The investments in our federal sales and consulting teams are starting to pay off, with 41 deals in the federal market representing 6% of net new ACV during the quarter. We had our best federal quarter yet, with several large contract awards from organizations such as the U.S. Securities and Exchange Commission, a Department of Defense joint combatant command has adopted ServiceNow [unintelligible] international theater of operations. In addition, working with Accenture federal services, another federal agency has adopted ServiceNow to provide a catalog of non-IT services to their global workforce. Many of these contracts extend beyond the IT organization. Our solutions across the enterprise continue to see strong momentum. We signed 24 deals for HR service automation and 13 deals for facility service automation during the quarter. One global logistics group launched its first HR shared service center in the Netherlands and part of a pilot project to align HR across the organization. With a focus on the common service experience, the HR team is leveraging ServiceNow to provide higher quality services at a lower cost. They have seen significant improvement in service quality and transparency. The group views this concept as portable and has plans to expand to two additional markets in the coming year. We continue to see heavy use of our CreateNow platform that allows customers to build their own custom applications. In February 2013, 64% of our customers that were on a ServiceNow instance for more than six months used our platform to create an average of 3.7 custom applications per customer. Looking at that same cohort of customers today, 83% have now created an average of 6.4 custom applications per customer. We’re also seeing more customers come onto the ServiceNow platform with CreateNow as their entry point. For example, one large Canadian bank with more than 45,000 employees started with ServiceNow outside of IT and with CreateNow will replace hundreds of Lotus Notes applications. ServiceNow will be the designated platform for rapid application development and deployment across the enterprise and we were chosen after a three-day bake off with two other platform providers. Another customer, a leading Australian bank, provides payment solutions for more than 140,000 merchants and onboards more than 20,000 new merchants every year. They went live during the quarter with a customer application built on ServiceNow to help improve overall merchant management. They simplified and automated the process for bringing on new merchants, including credit checks, pricing, training, and shipping payment devices. Through ServiceNow, the bank can now approve an application during the first call with a merchant, significantly reducing the time for the overall process and dramatically improving the close rate of new opportunities. In other news, Morgan Stanley’s most recent CIO survey ranked ServiceNow as a top platform vendor, with one of the highest adoption growth rates. The survey showed that CIOs plan to more than triple their usage of ServiceNow as a platform by the end of next year. With that, I will now turn the call back over to Mike.

Thank you, Frank. We’d like to point out that the company reports non-GAAP results in addition to, and not as a substitute for, financial measures calculated in accordance with GAAP. All financial figures we will discuss today are non-GAAP unless stated otherwise. To see the reconciliation between these non-GAAP results and GAAP results, please refer to our press release filed earlier today, and for prior quarters, previously filed press releases, all of which are posted on our website at investors.servicenow.com. Total revenues for the third quarter were $179 million, growing 61% year over year and 7% sequentially. Subscription revenues for the quarter were $150 million, representing 62% year over year growth and 13% sequential growth. Our average contract terms for new customers, upsells, and renewals, were 33.1, 23.7, and 24.3 months respectively, compared to an average of 33.5, 24.1, and 26.2 months on a trailing four quarters basis, respectively. Professional services and other revenues were $28 million for the quarter, growing 55% year over year and decreasing 17% sequentially. It is important to note that prior quarter professional services and other revenues included $8 million from our Knowledge event while all expenses related to the event ran through sales and marketing. Excluding Knowledge, professional services and other revenues grew 10% sequentially. Our average total revenues per customer were approximately $275,000, an increase of 21% from the prior year and up 5% from the prior quarter. Our average cumulative annualized contract value for Global 2000 customers was $658,000 at the end of the quarter, up 72% from the prior year and up 13% from the prior quarter. Total revenues based on geography were $120 million in North America, $47 million in EMEA, and $12 million in Asia Pacific and other, representing 67%, 26%, and 7% of total revenues respectively, compared to 69%, 25%, and 6% of total revenues in the third quarter of 2013. Our total billings were $201 million in the quarter, including an FX headwind of $4 million, compared to $127 million in the prior year and $187 million in the prior quarter, representing 58% year over year growth and 7% sequential growth. Our weighted average subscription billings term for the third quarter was [unintelligible] months, compared to 12.3 months for the third quarter of 2013. The year over year decrease in weighted average subscriptions billing terms was due to an increase in co-terming of upsell deals, coupled with the removal of incentives to bill for periods greater than one year in our 2014 sales compensation plan. Our subscription gross profit was $119 million, representing a gross margin of 79%, compared to 78% in the prior year and prior quarter. During the quarter, we added 41 employees to subscription cost of sales [unintelligible] 146 employees. Our professional services and other gross profit was $4 million, representing a gross margin of 13% compared to 7% in the prior year and 34% in the prior quarter. Excluding Knowledge, our prior quarter non-GAAP professional services and other gross margin was 13%. During the quarter, we added 15 employees to professional services and other cost of sales, ending the quarter with 385 employees. Our total gross profit was $123 million, representing a gross margin of 69%, compared to 66% in the prior year and 69% in the prior quarter. Excluding the $8 million in revenue from our Knowledge event, prior quarter non-GAAP gross margin was 68%. Our operating margin in the third quarter was 6%, compared to 3% in the prior year and negative 3% in the prior quarter. During the quarter, we added 123 employees to sales and marketing, ending the quarter with 929 employees; 72 employees to research and development, ending the quarter with 542 employees; and 32 employees to general and administrative, ending the quarter with 309 employees. Net income for the third quarter was $6 million or $0.04 per basic and $0.03 per diluted share, compared to net income of $2 million, or $0.02 per basic and $0.01 per diluted share in the prior year, and a net loss of $10 million or negative $0.07 per basic and diluted share in the prior quarter. Our basic weighted average shares outstanding was 146 million, and our diluted weighted average shares outstanding was 163 million. During the third quarter, we generated $25 million in cash flow from operations, which includes the negative impact of a one-time capital gains tax payment of $11 million, resulting from the Neebula acquisition. We used approximately $18 million for capital expenditures, resulting in $7 million in free cash flow. This compares to positive $4 million of free cash flow in the prior year and positive $26 million in the prior quarter. We ended the quarter with $884 million in cash, short term and long term investments, a decrease of $73 million from the prior quarter due to the use of approximately $100 million in the quarter to acquire Neebula. Our current deferred revenue balance was $338 million at the end of the third quarter, up 61% over $211 million reported at the end of the third quarter in 2013. We ended the quarter with 2,611 employees, an increase of 957 employees for the same period in the prior year and an increase of 283 employees from the prior quarter, the most employees we have added on a quarterly basis in the history of the company. Let’s turn to guidance for the fourth quarter. Please note that our margin guidance is on a non-GAAP basis, which excludes stock based compensation expense, acquisition related expenses, and amortization of acquired intangibles and reflects the recent strengthening of the U.S. dollar. For the fourth quarter 2014, we expect total revenues between $192 and $194 million, representing year over year growth between 53% and 55%. Our total fourth quarter revenue estimate consists of subscription revenues between $162 million and $163 million and professional services and other revenues between $30 million and $31 million. We expect billings between $245 million and $250 million, representing year over year growth between 47% and 50%. We expect subscription gross margins of approximately 78%, professional services and other gross margin of approximately 15%, and overall gross margin of approximately 68%. We expect an operating margin of approximately 2%. Additionally, we expect to increase total headcount approximately 245 in the fourth quarter, including approximately 77 in sales and marketing. For the full year 2014, we expect revenues to be in the range of $677 million to $679 million, representing year over year growth between 59% and 60%. Additionally, we expect roughly breakeven operating margin. For further details on the performance of the quarter, including a company overview and market data, please refer to our quarterly IR presentation at investors.servicenow.com. Before turning to Q&A, we’d like to mention that we’ll be holding our third annual financial analyst day on Monday, April 20, 2015, at the Mandalay Bay Hotel in Las Vegas, Nevada. This event will be held in conjunction with our annual Knowledge users’ conference which will take place April 19 through April 24, also taking place at the Mandalay Bay Hotel. Please mark your calendars accordingly. Registration details will be available in early 2015. We hope to see many of you there. Operator, you may now open the call for questions.

[Operator instructions.] Our first question comes from the line of Jennifer Lowe of Morgan Stanley. Jennifer Lowe - Morgan Stanley: Frank, I wanted to go back to some of the comments you made around traction with CreateNow. And I think in one of the customer examples you gave, you noted that it was Lotus Notes replacement. Just curious, as you’re seeing continuing success with that product, more holistically, what are some of the use cases that you’re getting in with? And specifically, is a Lotus Notes replacement typical? Or are there other types of systems that you’re replacing in some of these cases?

Lotus Notes is definitely typical. It’s a platform that’s now aging quite a bit, and typically it has proliferated across to the enterprise to the point where there are sometimes thousands of [unintelligible], and they need a place to go. So we’re often in situations where ServiceNow is sort of designated as the sanctioned platform for the redeployment of those kinds of services. But we see very similar things around Microsoft SharePoint. There’s a ton of one-off web development, any number of tools, sometimes personal databases, spreadsheets, email, things that have never been automated before. So it’s a very large group of application in terms of numbers, even though the individual applications can be quite small and simple in size and so on. But there’s typically an awful lot of them and they’ve been orphaned over time. There’s no transparency, there’s security and compliance issues around them, and the IT organization is looking for a service platform that they can sanction for the organization to land those services on. So Lotus Notes is definitely a chunk of it, but there’s a lot more going on than just Lotus Notes. Jennifer Lowe - Morgan Stanley: And then just a quick one for Mike. You mentioned the strong dollar impact in the guidance, but do you have a sense for what that impact might have been in Q3?

On the revenue side, because most of the movement moved in September, actually, it was about a million dollars on the revenue line. It was pretty much offset on cost savings below the line, so net-net neutral, but it definitely had a million impact on revenue. You’ll see it has a much bigger impact going into Q4 and how we gave our guidance in 2015, if the dollar stays where it is. It took about close to $4 million out of our revenue in Q4, and it’s going to take about $20 million to $22 million out in 2015. As I said, though, we do have a pretty good hedge with our costs, though.

Your next question comes from the line of Walter Pritchard with Citi. Walter Pritchard - Citigroup: You talked about the 24 deals that were the HR onboarding and 13 deals for facilities management. Can you talk about what sort of pricing and size of transaction you’re seeing there? Obviously these are mostly in the installed base, but what sort of dollar uplift are you seeing in those cases?

The pricing is actually on a per fulfiller or per process user basis, very similar to what we’re doing on the IT side. On the HR side, the types of systems they are are not so much onboarding, although we do that as well, but typically are a combination of case management, request management and knowledge management. It’s that group of three apps that makes up our HR service automation. That’s usually the go-to for HR organizations to get started with ServiceNow. But from a pricing standpoint, on the per-process user basis, it’s analogous to what’s going on on the IT side. Walter Pritchard - Citigroup: And then Mike, just a question on seasonality. I know you’re not providing full guidance for next year, but we’ve typically seen, as software companies get bigger, they start to see Q1 seasonality with a decline quarter to quarter from Q4 to Q1. And I know that both in 2013 and 2014, you actually saw the opposite with your billings increasing quarter over quarter. And I’m just wondering how you’re thinking about Q1 of 2014. Have you started to get to the point where you’re big enough that seasonality will impact you, or should we look at the last couple of years as an indicator of what we should see this year?

Yeah, we’re really not going to give any guidance for 2015 until our January call, but I would expect, as you do get bigger and more mature, you will start to see the typical seasonality you see in other companies.

Your next question comes from the line of Steve Ashley of Robert W. Baird. Steve Ashley - Robert W. Baird: A question around business management. At the analyst day, you talked about this being a new market you hope to enter in the future. At the time, there was a few new products pending. Can we get an update on where your entry into the business management market stands?

Business management is a designation, if you will, for a group of applications. One of them is performance analytics, which is a product that we derived from an acquisition that we did last summer. And that product actually saw quite an acceleration and an uptick during the quarter. We’re quite happy with the progress that we’re making. Another area that is getting a lot of attention right now is GRC, governance, risk, and compliance. Essentially, our customers are really running incident management processes around governance, risk, and compliance, when they have exceptions and they have to be worked through and worked out of the system. So we’re actually happy with what’s going on there. The same thing is true with project portfolio management. The uptick in our customer base, I think, is now about 28% penetration, and that is a very competitive standalone market and we’re making really good headway in that area as well. Our customers are really starting to see the benefits of running project management, resource management, and demand management functions on a platform, because they benefit from the shared data model with all our other applications and services. So that’s going well. We expect to do well in the future, in years to come, in that area.

Your next question comes from the line of Kirk Materne with Evercore. Kirk Materne - Evercore: I just had a question actually about the sort of average size of your global [unintelligible], 72% year over year. Can you just talk a little bit about what’s driving that growth? Is it sort of just general expansion of the base or of ITSM platform? I guess are you seeing any commonalities in how those bigger accounts are growing? I’m sure that the platform plays a large role in that, but if you could offer any color on that, that would be great.

So one of the things that we’re observing is that the growth in terms of average revenue per customer is growing much more rapidly in the Global 2000 than in the customer base overall. I think in the overall number, it’s around 20% year on year growth average revenue per customer, whereas in the Global 2000, it’s around 72%. One of the reasons is that obviously those big accounts represent complete markets onto themselves. There is just an incredible opportunity. And from a sales standpoint, it’s a very productive sales motion for our sales people, so they gravitate towards that opportunity. And the final think I’ll say about it is, those large customers have a much higher inclination to view ServiceNow as an enterprise service platform versus what you often see in smaller accounts, where you’re just going after a very narrow definition of the [unintelligible] problem set. So that’s why you see that traction, the average revenue, and the overall opportunity. You’re seeing more and more separation happening in that opportunity from the general customer base. Kirk Materne - Evercore: And Mike, I think you mentioned that you said you’re going to be hiring 77 quota-carrying sales reps in the fourth quarter as part of the new employees. Is there any concentration where you’re going to be hiring in terms of geographies or in specific, say, overlay positions in terms of specific products? Is there any color you can offer on that?

Just to be clear, that’s 77 people in total into the sales and marketing organization, that’s not quota-carrying reps. And those are being pretty much spread throughout the world. And as we talked at our analyst day on a percentage basis, Asia Pacific is one of the areas, just because they have a lower base, which is getting a higher percentage. But the bulk of those are still going into the North American market, which is still 67% of our business and growing very rapidly. I’d like to just add on a little bit to what Frank said. You were asking about how the Global 2000, how we see that growing and getting to the 658. A lot of that is also, we talked about we did 11 new deals. Many of those were Global 2000. We’re really seeing a lot of these larger customers getting more comfortable, taking bigger bites of the apple day one, as well with our change in our sales organization that we have, our client account directors focused on our largest accounts, so there’s upsells. We’re starting to see that really pay off this year with all the upsells. And it also supports, too, the assertion that we think our Global 2000 over time, we should be extracting $2 million on average out of those people. It’s going to take time. It may take another four to six years to get there, but there’s no reason why we can’t get there. We have 107 customers now, I think Frank said, that are paying us north of $1 million a year. Just with those 107, they’re paying us over $1.8 million a year, on average, right now, and those guys will continue to grow too.

Your next question comes from the line of Michael Turits of Raymond James. Michael Turits - Raymond James: Mike, in terms of the planned headcount adds, can you pull out how much is from Neebula? It seems that [unintelligible] relative to those, to the targets with Neebula and prior to Neebula, it seems like you’re higher than the original plan. So can you talk about why that ramped up? And also, does that maybe have something to do why the margin guidance is somewhat below what we were expecting from, at least the Street was, for Q4?

As we said all along, we’re going to be opportunistic. If we see good people, we’re going to hire good people. If we don’t find the right people, we’ll slow our hiring down. Based upon the opportunity we see, we’ve kind of put the pedal down on the gas pedal for hiring. Yes, Neebula is accounting for that, as we said last quarter. I think 30 of the adds in the second half of the year are a result of the Neebula acquisition. And that will obviously have a negative impact on our margins for this quarter, but that’s not the only thing. A lot of that was the timing of those adds in Q3, but furthermore, there was some expenses that got pushed from Q3 into Q4. Hence, we had the higher than expected operating margin in Q3. Michael Turits - Raymond James: And you beat this quarter on margin, so it looks like it’s about even for the second half, just a little push forward. And secondly, last quarter you did I think it was 32% of net new HCV was from non-ITSM. How did that square up this quarter?

It was about the same this quarter. As we said before, that’s not really a metric that we manage the business on, because quite a big piece of our business still comes from our legacy contracts with upsells, so you can’t distinguish between what is ITSA and what is non-ITSA.

Your next question comes from the line of Justin Furby with William Blair & Company. Justin Furby - William Blair & Company: Frank, I was wondering if you could talk a little bit about productivity across reps this quarter. And also curious around, if you look at the quarter in ratability in terms of bookings and demand environment, did you see any changes? Did it look any different from any other quarter? My guess is it didn’t, based on the numbers you put up. But just would be curious to hear comments on productivity and then just ratability this quarter.

We were actually quite happy with the productivity numbers, the way they developed. We were up both sequentially and year on year on productivity, which gives us very strong confidence, not only to [unintelligible]. We’re quite capable of converting the people that we hire to yield, and we’re actually stepping up the numbers in Q4. So that’s just a testament to the confidence that we have in the model, that it’s working, that it’s yielding. In terms of the overall demand environment, we’re such a secular play that we typically don’t feel the headwinds of sort of the natural environment in various geographies. We were just strong across the board, and we’re able to very productively engage wherever we go. So we’re quite happy and bullish on the demand environment out there for our particular play. Justin Furby - William Blair & Company: You had another iteration of pricing changes in June, and I know you love this question, but what did you see this quarter, and do you feel like the latest iteration is sort of where you’ll land? Or what’s been the customer feedback in Q3 around the new pricing?

We’re actually incrementally more confident that the pricing is hitting its stride. The friction’s been going down. The conversations are more productive. We certainly have had our challenges, but as we said before, we keep changing if we don’t feel we’ve got it right. But we’re in a better place now than we’ve been, certainly since we started here. Does it mean that we’re done done? No, we’re never done. I mean, pricing is a dynamic thing, and we will continue to tweak certainly some other areas of the pricing model around some of the non-IT applications where we have some focus right now, where we have opportunity to make incremental changes. But on the whole, we’re in a pretty good place right now.

Your next question comes from the line of Matt Hedberg of RBC Capital Markets. Matt Hedberg - RBC Capital Markets: Appreciate the additional color on CreateNow. It seems like it’s really taken off. I believe last quarter you indicated that it represented about 14% of ACV. I’m wondering, was it pretty similar this quarter, or did you see an uptick there?

No, it was between 8% and 9% this quarter. These numbers bounce around. One single transaction can move the number up or down. That’s still high in a historical context. I think last quarter it just bumped up due to some transaction activity. But on the whole, that’s moving well. So we’re happy the way that’s trending. Matt Hedberg - RBC Capital Markets: And then maybe regarding Share, I wanted to circle back on really the pace around the efforts to monetize that. Maybe how we should think about the timing of third party developers writing apps on Share?

I think I said during the last conference call that we’ve committed ourselves to building an app store or monetization facility on top of Share by the Knowledge ’15 conference, which as Mike said is in April of ’15. So that’s sort of the timeframe. We’re getting a lot of interest in the marketplace from our global partners and people, because we have so much market now, we have good routes to market, that we are becoming a really attractive place for people that not just write software for a living, but have people that need to build software and then sell it. Putting the monetization place is really not so much important for us as it is for them, to be able to make money and have a route to market, if you will, so they can run a business on our platform. So that’s going to become a much bigger thing for us in 2015, obviously, when we start rolling that out.

Your next question comes from the line of Alex Zukin with Stephens. Alex Zukin - Stephens: Frank, if you could talk a little bit about HR case management, how you guys view that market size as you continue to have success and traction there.

The HR marketplace, I think I’ve said prior there’s about 1 million to 1.2 million, depending on who you believe, HR professionals just in the United States, and I think the worldwide model is probably some multiple of that. So we think that opportunity alone, just for case management - forget there’s a whole raft of other type of HR service applications, but just for case management, we see a billion dollar opportunity for HR. But that doesn’t include, as I said, onboarding and offboarding, compensation planning. There’s so many offshoots of request response workflow processes that we can go pursue with ServiceNow. And when I say case management, it is just the incident request and knowledge side that we’re talking about here, that represents that billion dollar opportunity. That is just based on how many HR people we think are out there, based on data that’s publicly available. Alex Zukin - Stephens: And then Mike, just one housekeeping question. I’m not sure I heard it on the call, but just the percent of billings that were for greater than one year?

We went away from giving that. Instead, what we’re doing, which is more meaningful, is giving people the weighted average subscription billings for the quarter. And the reason being is you could have a billing that could be for three years or 1.2 years, and it skews things, and the weighted average gives it better. So it was 11.9 months was the weighted average subscription billing on a year over year comp of 12.3. Alex Zukin - Stephens: Your next question comes from the line of Brent Thill with UBS. Brent Thill - UBS: Frank, just on the federal business, you obviously saw one of the best quarters ever. Can you give us a sense of how you’re approaching this, not just from a U.S. perspective, but on a global basis, and the plans to trickle through the [unintelligible]?

Sorry, the plans regarding the federal business on a global business?

Right, government in general. Taking the success you had so far and extending that.

The federal business is very separate, because it has a separate sales team, it has a separate cloud. It is a very unique business, and we think the potential of the federal business in the United States is probably as much as 10% of our contract value that we signed. And it was about 6% of our contract value this quarter, so we actually made a dent in it, because it grew dramatically on a year on year basis. And most of our business is actually coming from civilian. The whole DOD side hasn’t even kicked in yet. So we’re actually quite bullish. It’s taken us some time to mature in that space. We’ve got some really good partners there. We referenced Accenture, that’s very heavily involved with us in that marketplace When you get outside of the United States, it’s really part of our national market sales motion. So we attack all these foreign markets. One dynamic that is going on in a lot of foreign markets is that there’s a lot of focus on the sovereignty of the cloud in countries like Germany and France, Benelux. We see it in Canada. I think in the U.S. we’ve done quite a bit of damage with the Patriot Act and so on, and that static is something that all the cloud vendors will have to deal with and soon, because that will become a headwind to the business. We have some really good strategies in place to deal with that, because of the way our cloud operates. We’re going to be much quicker on the trigger to be able to accommodate those unique requirements than the people that run multitenant environments. So I actually view it as an opportunity more so than a challenge, especially coming from the national government organizations and in foreign markets, healthcare, financial, everything that people view as very critical in their international markets. That’s where that pressure comes from. Brent Thill - UBS: And Mike, you’ve given some great color on some of the larger million dollar plus transactions in the past, and I’m curious if there’s any common patterns or interesting stories you could share just on some of the larger deals that you saw come in this quarter.

There was nothing unusual with those large deals this quarter.

No, I don’t think there’s anything noteworthy that comes to mind that’s out of the ordinary, from what we’ve been doing. Obviously, we did a lot of large deals this quarter. Last quarter, we were a little bit lighter. This is not a business that’s super linear. These things bunch up, and some quarters we’re lighter on big deals and others, we’re over weighted. That doesn’t mean much, because our business can sustain itself really, really well, with or without a large volume of big transactions.

Your next question comes from the line of Rob Owens of Pacific Crest. Rob Owens - Pacific Crest Securities: With regard to the large deals, were there any elephant-sized deals in the quarter, or were they in the typical $1 million to $2 million range?

We had a few that were around $3 million in ACV, two actually came in right around $3 million in ACV. Rob Owens - Pacific Crest Securities: And then on the DSO front, it was a really strong quarter from a collections standpoint. Did that speak more to the linearity of the quarter, or Mike, really a focus on collections for your team?

No, it’s really a focus on collections. It was typical linearity that we saw in the quarter. And I was actually very pleased with my team. But it also speaks to the customers that we’re selling to, I think is more important. We sell to large enterprises. We don’t have collection issues with large enterprise. Where we have collection issues is when we deal with thinly capitalized resellers, and most of our business is direct with large enterprise. Rob Owens - Pacific Crest Securities: And then lastly, on the Neebula front, was there any contribution to deferred revenue as a result of that acquisition?

It was not meaningful.

There was some, though.

Yeah, it was very, very small. And it does not have a big impact on our revenues. It’s pretty much the expenses as we had said, when we gave guidance around Neebula last quarter. It’s really 2015 that it’s going to start to kick in in the revenues for us.

A lot of interest in our product though, Rob. A lot of excitement. Our sales people really like it. It’s another entry point into the enterprise, so we’re very happy to have that asset.

Our next question comes from the line of Jason Maynard with Wells Fargo. Jason Maynard - Wells Fargo: Frank, as you start to expand the use case for your platform inside of an organization, how do you think your sales organization will trend around product specialization? Do you think you’re going to get to the point where you’re going to want to have folks who are maybe going to have specific disciplines, in HR or really kind of some of the domain areas where you’re going to want to go deeper as part of upselling into a company?

Just a general answer to that question is yes. We are going to apply more vertical or domain expertise. And obviously, I mentioned federal. [unintelligible] sales team, and that’s completely on its own. So that’s the most advanced example of that. In the case of HR, we need resource teams that have the ability to really look at that opportunity, to make sure that we’re speaking the right language, that we’re attending the correct events, that our whole go-to-market motion is what the customer expects, as opposed to viewing us as an IT-centric organization. That’s true in a bunch of other places. One place where we’ve done very well in that regard is in big pharma. We have very large presence in big pharma, and we really have a pharma cloud now. And our pharma customers really, really appreciate the fact that we speak the language, that we know what a qualified instance is, that we can provide that. It dramatically reduces friction when we sell into that vertical. So it’s going to be a gradual process, rather than a step function where all of a sudden the whole model is completely different. We will be applying more and more resources that are vertically oriented, if you will. Jason Maynard - Wells Fargo: And Mike, I think you sort of addressed this a little bit on fiscal ’15, at least on Q1, but maybe if I could broaden the question out around billing seasonality, is it fair to assume that over the next, maybe I can make it a two-year comment, that we should start to see a greater percentage of your deals get billed in the fourth quarter, just given what you see with large accounts and the upsells, and folks doing co-terms on billings and just generally the trend towards some of the larger transactions?

Yes, you will definitely see Q4 being our largest billing quarter on a go forward basis.

It has been. Jason Maynard - Wells Fargo: Well, I know it has been, but I think if we look at it, off the top of my head, I think it’s trended to be a third, if you will, plus or minus a few points, of your overall billings. I mean, is a number closer to a four handle maybe the reality in a couple of years in terms of how that plays out on a quarterly basis?

You know, to be honest, I really haven’t modeled that that far yet, from a billings perspective. The only reason we give billings as guidance is because that’s something you guys really look at. We actually don’t manage the business on billings, quite frankly. So stay tuned. In January, I’ll look into that and give better guidance around that.

Your next question comes from the line of Greg McDowell with JMP Securities. Greg McDowell - JMP Securities: I wanted to ask about analytics. I know you’re partially in this market already, with performance analytics and Mirror42, but in light of the announcements we saw last week from some other SaaS companies, I wanted to ask whether you think your platform lends itself to attacking the analytics market in a bigger way, and perhaps will we see some bigger analytics announcements out of you guys?

We do view analytics as really, really important to the overall business. We have a little bit of a different point of view on it than a lot of vendors historically have had, because we think that the analytics market is very cumbersome, it’s very heavy, it’s very expensive, it’s very staff intense. So we think there’s actually opportunity for reinvention here. When we structure and define and automate processes, the analytics actually have to be built into that. In other words, processes have to have defined dashboards, defined reports, defined performance indicators, so you don’t get into this mode of producing these warehouses that can produce millions of views, and people really don’t know what they’re looking for. So this is an area where we’re looking for a much more structured and prescriptive action, rather than here’s a million things you can do with this particular [unintelligible] and slice and dice and pivot the data. Now, with that, we’re going to be focused on providing analytics on top of our operating data and our asset data as opposed to a generic analytics cloud, the way Salesforce is pursuing it, as well as any number of other vendors. So this is not about analytics in general, this is just analytics specific to ServiceNow applications and services that were standing up. Do we think we’re done with what we have today? Absolutely not. You will be able to expect from us… You know, when that will happen, I don’t know. And I certainly don’t have any guidance on that, but there’s more to come from us in this area.

Your next question comes from the line of Tim Klasell with Northland Securities. Tim Klasell - Northland Securities: Most of my questions have been asked already, but just wanted to hit on the competitive landscape, particularly as you move into facilities management. And maybe you can touch a little bit on the HR side as well. Are you beginning to bump into different players? And then maybe just a quick comment on what you’re seeing out of the traditional HPs and BMCs of the world.

Taking your last question first, I don’t think the dynamic with the legacy vendors has really changed. If anything, it is something that’s weakening and abating more and more as our presence in the market is increasing. And typically, these vendors are really not contestants and contenders in new opportunities. They typically are incumbents that are trying to protect a position. But in new opportunities, much less likely that we would see people like that. And that is a change from the last couple of years. It’s really become a [unintelligible], and really contesting new opportunities. In terms of these other markets, on the HR side, there are some vendors that are specific case management vendors that are incredibly surprised to see ServiceNow show up in those places, because we have very different routes to market, and they have historically not seen us in that space. So we’re really thinking of service management as an enterprise discipline rather than something that is specific to HR or facilities and so on. So we’re a threat to people that just have a specialization in one of those areas, because we have a much broader horizontal approach to that opportunity. There’s different partners there as well, that we are now building relationships with. So it’s really a left field thing for the status quo, to see us show up in those places. Tim Klasell - Northland Securities: How about on the procurement side? I think you’ve spoken about that in the past. How did you see traction on the procurement side this quarter?

You know, I don’t have any data on specifically on procurement. It is an area that we talk about a fair amount internally, within ServiceNow. We use our own systems for procurement, because we think it’s an ideal area for our platform, because it is very much subject to process definition, structuring, and automation. And it’s also one of those areas where there’s just a ton of email and messaging traffic, all things that we can dramatically improve on. So we think that in future periods, that will become more active.

Your next question comes from the line of Derrick Wood with Susquehanna International Group. Derrick Wood - Susquehanna: I wanted to expand on the competitive question, more from kind of a horizontal platform competitive landscape. And obviously you’ve got Salesforce and Salesforce One, and they seem to be going a little bit more down the mobile path. But now you’ve got Oracle, and I know it’s new, but they just had a new announcement and product release on the platform side. So I guess from that platform perspective, how are you guys competing, and where may you be addressing different use cases than what they’re doing?

You know, product for product, there’s always things that can compare favorably or not so favorably. We certainly see Salesforce in a few places when it comes to custom applications. Oracle, I can’t say that we actively see in our marketplace. May well change in future, but we just haven’t. But let me just make one super important point, and we’ve emphasized this over the years. What makes ServiceNow such a different play is that our incumbency is established through the enterprise IT organization and the IT function. And that is typically how we advance throughout the enterprise. And that’s typically where those organizations don’t land. They try to come in through the line of business or some functional area like sales or market or HR. So we have a very, very different way of reaching our end customer than some of the vendors that you’ve mentioned, and a strong advocacy position as a byproduct of our presence in enterprise IT. So there will be a lot of activity in this area. There will be a lot of contention. That’s because it’s a super active marketplace. But as you could see in the Morgan Stanley CIO survey, ServiceNow really ranks near the top of platforms that CIOs know that they’re using, and are planning to use. And that’s not an accident. That is because of our incumbency in the world of IT. Derrick Wood - Susquehanna: The SI channel, you guys are getting to a billion of revenue and trying to scale beyond that, obviously. How important is the SI channel at this stage of your growth, and kind of what investments are you making now?

It’s super important, both the global SIs as well as the managed service providers. They are big influencers and big drivers of opportunities. We’re seeing a huge amount of activity with KPMG, who has been a force in our business, but also a lot of uptake by Accenture, by EY, by Deloitte. The entire group of Indian outsourcers, people like Tata are getting very active in BPO, business process optimization. That’s all outside of IT by the way. In other words, these people are not necessarily coming into our business through IT. We think the SIs are more important in the non-IT side of our business, because that’s really what they specialize in and what they like to do. So we have active programs to engage with all these SIs. We’ve staffed in these areas. We view it as very strategic. It’s really a flywheel to our overall business, especially as we talk about Global 2000 accounts. Can’t get around these guys. They are an influencer and a player and a participant. Luckily, they’ve taken huge notice of our presence as well, and in many cases, our customers are the ones telling them that they have to become proficient on our platform, otherwise they’ll be missing out on the party with future projects. So it’s all working good in both directions.

Your next question comes from the line of Abhey Lamba of Mizuho Securities Abhey Lamba - Mizuho Securities: I just wanted to touch briefly on your [international]. Do you think you guys have built up enough presence in any particular region, outside of EMEA, that could really contribute meaningfully to growth next year?

Well, we’ve been investing very heavily in Asia Pacific, and we think the Japanese market is going to start to kick in 2015, as well as some of the Asian countries in general. We’re not in China. We’re not in India, other than on the R&D side, but definitely in Singapore. Our route to China is through Hong Kong right now. And South Korea is probably the end of ’15, ’16, that we’ll really start to do things there. And Australia has always been a very strong market for us.

Your next question comes from the line of Phil Winslow with Credit Suisse. Phil Winslow - Credit Suisse: Just wondering if you could give some more color on the orchestration and discovery of [unintelligible] your installed base? And also, how far is the penetration in those markets?

Those markets are important, because that really represents our focus and our foray into the IT operations management space. Orchestration is something that we message and position as being part and parcel of service management. In other words, you don’t want to think of service management outside of having a fully integrated, from a workflow standpoint, orchestration strategy. You know, our penetration in that area is not nearly what it eventually will be. We really have a goal for orchestration to be as highly penetrated as the CMDB and things of that sort. But we’re not there yet, and that’s because historically these markets have been very separate. Operations management and service management have been different tools, different peoples, different disciplines, and they sort of touch each other through workflows. But that’s all changing, which is one of the key reason why we’re in operations management to begin with, because it is changing, and we are driving a big part of the change. On the discovery side, because we’re so big on the CMDB side, that always is an opportunity for us, but people can also use non-ServiceNow discovery tools with our CMDB, so we’re getting more mature, stronger in that area. Of course, the addition of ServiceWatch, through the Neebula acquisition, is going to help a lot, because the ability to have dynamic service maps, that is a huge thing that the marketplace just hasn’t had. So we think that’s going to strengthen our business in that aspect as well. But we’re just getting revved up on the IT OM, IT operations management side, so we’re growing a completely new leg, if you will, in terms of product portfolio, routes to markets, customer presence, mindshare, all those things. It is a market that is probably several times larger than the market we historically have been in around service management.

There are no further questions in queue.

Thank you. As a reminder, a replay of this call will be available as a webcast in the investor section of our website, as well as through the dial-in instructions contained in today’s earnings release. Thank you for joining us today.