Ladies and gentlemen, thank you for standing by and welcome to the ServiceNow Inc. Q1 2023 earnings conference call. I would now like to turn the call over to Darren Yip, Vice President of Investor Relations.
Please go ahead.
Good afternoon and thank you for joining ServiceNow's first quarter 2023 earnings conference call. Joining me are Bill McDermott, Chairman and Chief Executive Officer, Gina Massenduto, our Chief Financial Officer, and CJ Decyde, our President and Chief Operating Officer.
During today's call, we will review our first quarter 2023 results and discuss our guidance for the second quarter and full year 2023. Before we get started, we want to emphasize that the information discussed on this call, including our guidance, is based on information as of today and contains four looking statements that involve risks, uncertainties and assumptions.
We undertake no duty or obligation to update such statements as the results of new information or future events. Please refer to today's earnings press release and our SEC filings, including our most recent 10Q and 20Q 10K for factors that may cause actual results to different material leaks from our four looking statements.
We'd also like to point out that we present non-GAP measures in addition to and not as a substitute for financial measures calculated in accordance with GAP. Unless otherwise noted, all financial measures and related growth rates we discussed today are non-GAPs, except for revenues, remaining performance obligations for our PEO, current RPO and cash and investment. To see the reconciliation between these non-GAP and GAP measures, please refer to today's earnings press release and investor presentation, which are both posted on our website at investors.servicenow.com. A replay of today's call will also be posted on our website.
Thank you very much, Darren, and thank you everyone for joining us today. Servicenow had an outstanding first quarter. Subscription revenue grew 27% in constant currency, which was 150 basis points above the high end of our guidance. The RPO grew 25% in constant currency, 100 basis points above our guidance. Starting margin was 26% to full points above our guidance. We had 66 deals greater than a million and net new HV.
We saw a strong, sustained demand to service now's platform. In January, we committed the company to perform it beyond expectations. We said it. We did it. Our Q2 guidance reflects our strong conviction in the fundamentals of business. We remain laser focused on net new innovation, new business growth, and profitability. Servicenow is a growth company that consistently executes in any environment. We will continue to do exactly that.
Looking at the big picture, there's no question this remains a complicated macro environment. See level leaders of managing and endless array of headlines and mixed signals. When you filter all that noise, it comes down to one simple reality.
There is an app for everything, but nobody wants every app. This consolidation is a tailwind for service now as the intelligent platform for end-to-end digital transformation.
We are now seeing conversations up level to business transformation. This is bringing CEOs directly into the process as principal executive sponsors. Nearly 40% of CEOs think their company will no longer be economically viable in a decade if they continue on the current path. They aren't interested in turf battles between departments.
They want enterprise-level investment to drive business impact. This isn't merely an inspection of what historically has been a big core center. This is CEOs engaging on a strategic level, insisting on a clear roster of technology partners to drive very specific business outcomes. For example, when it comes to technology in the age of gender to AI, it's a build by operate conversation.
They are looking for a single platform that can orchestrate the entire technology value chain. Service now does just that. Businesses are also working hard to transform their customer experience. The AI opportunity here is when you integrate the front, middle, and back offices to better serve that customer. This is a service now core competency.
On the internal side, it's about reducing the number of touch points for employees to get work done. People can't maximize their potential by juggling multiple systems with different user experiences. Our customers use service now as the one-stop digital hub to create a consumer-grade experience at work. Whether it's efficiency, productivity, cost takeout, or business model innovation, service now has never been more relevant.
This is a message I hear directly from CEOs who know they need to shake things up and they want our help to do it. Once again, these secular trends are fueling service now. 70% of global tech equity value comes from firms that rely on network effects. We see growing platform adoption across all of our businesses.
ITSM was an 18 of our top 20 deals with 3 deals over a million. ITOM was in 14 of the top 20 with 5 deals over a million. When increased focus on cost takeout, ITAM had a very strong quarter in 14 of our top 20 with 3 deals over a million. Security and risk were in 12 of the top 20 with 3 deals over a million. Customer workflows was hot in Q1 in 18 of the top 20 with 9 deals over a million. This is where it emphasized because service now is more relevant than ever as businesses invest in a differentiated experience for their end consumers. Very exciting indeed what we're doing with customer service management. Employee workflows was in 10 of the top 20 with 4 deals over a million. Creator workflows was in 18 of the top 20 with 3 deals over a million.
Each of your global brands continued to accelerate their own transformation by working with service now. Maria, group Bimbo, Navy, Federal Credit Union, Travelers, the USA Air Force and Schneider Electric just to name a few. Look at banking as one example. P and C works with service now to modernize the way it manages disputes which will reduce losses and improve case closures. We also saw major co-innovation milestones in the quarter. For example, service now and AT&T have created a global telecom product to help communication service providers manage 5G and 5R network in inventory.
Q1 was also the latest step forward for our organic innovation machine. The service now Utah release was engineered to drive faster business outcomes for our customers. The release includes AI powered process mining with robotic process automation capabilities. Additional search enhancements, expanded workforce optimization and health and safety incident management. These are all designed to help increase automation, simplify experiences and offer greater organizational agility. It bears repeating that while customers are aware of market excitement for individual technologies like Generative AI, they expect a platform strategy to integrate the various tools. Service now has AI, process mining, RPA, low code and many other technologies built natively into a single workflow automation platform.
Of course, we will have much more to say about all of this at our knowledge event in Las Vegas on May 16. I hope you can join us. I'd also like to extend a warm welcome to Deborah Black, vice president, engineering at Netflix, who is the newest member of service now's Board of Directors. We're so proud to have Debbie's leadership on our journey to be the defining enterprise software company of the 21st century.
In closing, I'll simply reiterate things we've said consistently. First, businesses need service now. Enterprise software is mission critical. Their demand environment is robust. Second, service now is a unique company performing at a very high level. We are delivering strong growth, aggressively managing costs and creating immense shareholder value. The company has momentum everywhere. We're performing very well across the best places to work scorecards, including Glass Door. Our brand recognition is increasing as we rise on lists like fortunes, most admired companies. Our market opportunity is expanding and this is the early days of a truly generational growth story. Finally, we know the trust is the ultimate human currency. What we have here is a platform, a culture and a company that is built entirely on trust.
The results tell that story. We just eclipsed the $2 billion threshold in a single quarter and we were the fastest ever to do that on an organic basis. This is about a fast growth, durable, predictable cloud business model. This will be the red thread at our financial analyst day in a few weeks. We look forward to seeing you all there.
Businesses work with service now, people work with service now, the world works with service now and we're only getting started. I'd like to thank you very much for your time today. I'm looking forward to your questions and for now, I'll hand things over to Gina.
Thank you, Bill. Q1 was a tremendous quarter with strong beats across our top line and profitability guidance metrics. We saw resilience demand as the now platform continues to deliver the productivity improvements and our prizes are looking for in the current macro environment. The quarter was yet another example of consistent execution from our team. Q1, subscription revenues with 2.02 billion, going 27% year-over-year in constant currency, exceeding the high end of our guidance range by 150 basis points.
RPO ended the quarter at approximately 14 billion, representing 24% year-over-year constant currency growth. Current RPO was approximately 7.01 billion, representing 25% year-over-year constant currency growth at 100 basis points, versus our guidance.
From an industry perspective, energy and utilities, government and transportation and logistics led the way, followed by strong growth in education. Financial services met new HVB also continue to grow despite a tough comp and volatility in the banking sector. New customer HVB growth remained an area of strength as the average deal size was up significantly year-over-year.
Our renewal rate with a best-in-class 98% in Q1 continuing to demonstrate the stickiness of our business as the now platform remains a mission critical part of our customer's operations. Our customer cohorts have also continued to show solid expansion.
We ended the quarter with 1,682 customers paying us over 1 million in ACB of 20% year-over-year. We continue to see healthy customer engagement with enterprise buying patterns demonstrating the extensibility of the now platform. We close 66 deals greater than a million in net new HVB in the quarter up from 52 a year ago. In Q1, 18 of our top 20 deals can be five or more products showcasing how service now is providing customers the single platform they need to orchestrate the technology value change.
Turning to profitability, non-gap operating margin was 26%, 200 basis points above our guidance driven by continued discipline spend management. Our pre-tafed margin was 35%. We ended the quarter with a robust balance sheet including 7.2 billion in cash and investment. Together, these results continue to demonstrate our ability to drive a strong balance of world-class growth and profitability.
Moving to our outlook, our pipeline continues to look robust for the remainder of the year and we're excited about what the Utah release and knowledge 2023 can further contribute to those opportunities. While we've seen market resiliency, we continue to pretty quickly factor in the evolving macro-cloth with each of our guidance.
As Bill mentioned, we remain laser focused on balancing that new innovation and new business growth with cost management and profitability. With that in mind, let's turn toward 2023 guidance. We are raising our subscription revenues outlook by 25 million at the midpoint to a range of 8.47 billion and 8.52 billion representing 23 to 23.5% year-over-year growth on both a reported and constant currency basis. We expect subscription growth margin of 84%, operating margin of 26%, a free cash of 30%. And we continue to expect gap diluted weighted average outstanding shares of 206 million.
For Q2, we expect subscription revenues between 2.04 billion and 2.045 billion represent 23.5 to 24% year-over-year growth on a constant currency basis, excluding a 50 basis point at the expense headwind. We expect CRPO growth of 22.5% on a constant currency basis, excluding a 50 basis point at the expense tailwind or 23% on a reported basis. We expect an operating margin of 23%, and we expect 205 million gap diluted weighted average outstanding shares for the quarter.
In summary, Q1 was a very strong quarter. We're extremely proud of our team's performance, and we can't fake our employees enough for their continued hard work and dedication. It's their collective commitment to our culture that has enabled us to be named one of Fortune 100's best companies to work for yet again in 2023. The consistency of our results exemplifies the strength of our platform and our people. We deliver great experiences that drive powerful employee engagement, peers, customer loyalty, and significant productivity gains.
Service now's intelligent automation is a deflationary force that helps enterprises retool their business to get more done with less. And since we use the now platform ourselves extensively, we continue to see the benefit from those efficiencies generating incremental opportunities for further operational leverage. The Bright Service now is so well positioned to become the defining enterprise software company of the 21st century. You can hear more about that momentum and our new product and long-term opportunities that are upcoming investor days on May 16th in Las Vegas. We look forward to seeing you there.
And with that, I'll open it up for Q&A. The floor is now open for your questions. To ask a question this time, please press star one on your telephone keypad. If at any point you'd like to withdraw from a key, please press star one again. We please ask that you limit yourself to one question.
So thank you very much and congratulations on another excellent quarter. So I wanted to ask C.J. or Bill, you seem to be in a great position to embed AI into your proskues and try to unlock new efficiencies. Can you speak to how you see that opportunity playing out? And as chatbots become more powerful, do you see that affecting the head count or seat count of a typical IT help desk or contact center? If you try to project that forward a few years down the road.
Mark, first of all, thanks for the question. Here is what I would say. When we started the ITSM Pro journey in 2018 Q4, the exact question was asked because we embedded machine learning and AI into ITSM Pro and that was a game changer both for our customers and our shareholders. And I look at specifically generative AI. We absolutely believe that this side are code machine learning and AI features that are in platform today. It is a clear end and this particular end for system or provides more productivity not only for the employees of our customers, but for the customer service agent or ID agents as you ask. And wherever we can capture that additional value, we will monetize that further. We are additional skews that we offer on top of our current offerings. So overall, I feel very good about generative AI and what it does for our business. And we have learned a lot through our ITSM Pro traction over last four years now, four plus years and I feel very optimistic for next three to five years related to it is an a tribute to our top line.
Wonderful. Thank you. Great to see you. I want to ask a question around the non-IT mix. If you take customer and employee plus creator combined, it is 43% of new ACV this quarter, which is the highest I can remember. The question is what is it about now that you are seeing success kind of taking service now outside of the IT department? Obviously you have these great products to address more workflow automation. Is there something about the go to market whether it is director in the channel that you would call out here where you are seeing that real traction outside of IT? Thank you.
Yes. Thank you very much for the question, Brad. And I think it underscores the importance of service now becoming the intelligent platform to end to end digital transformation. As I said, the C level decision makers now, CEO, the CFO, obviously the head of technology along with the head of HR and various other departments in the company are aligning their business strategy on technology platforms that truly matter and can impact business results. And they are moving away from the appers, the day and platforms that don't matter. They are also taking antiquated platforms and building our innovation on top of them.
So if you want to think about our unfair advantage, we actually started in IT and have extended that beautifully into HR, into the customer service management and into creator. Think about the importance of creators. 75% of the app development that will take place in the next two years will be done by the customers themselves on a low-code platform like service now. We feel we have a whole position. In a service management, everybody is trying to align the front, mid and back office to give a seamless, self-service direct to consumer experience on the mobile. It's our core competency. And when you think about the employee experience, there is wonderful systems of record out there that do what they are supposed to do. But our expertise is really taking the technology view of recruiting, hiring, onboarding, all the services and what generative AI actually giving the employee next best action and fundamentally changing the game on the productivity curve. All of this is aligning the executive team around a platform strategy and our teammates here at ServiceNow are proud and confident in that platform. They can tell the stories by industry, by persona, and they can bring countless examples to the first meeting now. And they are aligning these executives. One of the biggest requests we get is, hey, can we have an off-site with our entire management team with your team so we can figure out the best next step for the relationship? That's a very different outcome than we were doing four years ago, where it was a more land and expand kind of approach.
Thank you very much, Brett. Our next question comes from the line of Keith Weiss from Morgan's family. Please proceed.
非常感谢,Brett。下一个问题来自Morgan家族的Keith Weiss。请提问。
I just want to thank you guys for the question and congratulations on a really nice start in the year. I want to dig in a little bit on the thread that Mark Murphy started pulling on in terms of the impact of gender to the AI. The question that I get a lot from investors is, does it necessitate that ServiceNow has to change their pricing models and is there an ability to do that? So maybe you could kind of walk us through, as this functionality creates more automations and it's more just the work flows in the platform, the data in the platform that's driving the value, is there a necessity or a potential of changing the pricing model to be more consumption or volume oriented versus like a seed based model?
So Keith, this is CJ and I'll address it. We think in multiple buckets. So when we look at technology workflows, as you know that CMDB is the core foundation and all the IDSM processes or ITAM or our security and fast growing products like risk and asset management, they are all driven through our CMDB for a single end to end platform for transformation from a technology standpoint.
So when I look at that for the most part, as you know Keith, we have good, better best packages and we are pretty consistent in how we drive the go to market as we will describe overall at a platform level. The same thing is true for customer service management and HR as an employee workflow. And then when I look at creator workflow, we also have opportunity to expand service now ecosystem significantly where anybody could be a service now developer by using text to code or text to workflow or someday text to app that they can create.
So overall when I look at the full buckets, the good, better, best mechanism that we have put in place is working beautifully. The traction is great, we are getting the uplift as we have shared with you and will share more at the financial analyst day.
Now in terms of additional pricing because now which is a generative AI, what I call Mark, it's an end as in you can get higher productivity for specific use cases where it's incident deflection or whether it's related to the agent productivity, we believe that we can absolutely monetize that. We are barely early, I'll share more with you at the financial analyst day on what that pricing model will look like, whether it's an add-on, whether it's a bundle and we are working through the details where we are only going to charge where we provide value for our customers and that is the first principle we are looking at. Got it. I will stick to you for an update from our details.
Appreciate the color. Steve, you would have been very impressed if you saw C.J. and his engineering team in yesterday's board meeting. We are dealing with real technology, real time demos, real customer references, what you are going to get to see and you are going to get to see examples and business cases that we are already working on at financial analyst day. He is a little bit modest and he deserves to be because he has the best team in the business but wait until you see financial analyst day. It is going to knock you down.
Our next question comes from the line of Samada from Jeffries. Please proceed. Hi, good evening, thanks for taking my question. So I wanted to ask you, service has one of the few tech companies that we focus on that is still growing head count and you guys added more clothing than once you did the last couple of quarters of last year. What is underlying that confidence in adding talent and what appears to be a little bit of a slowing world and how should we think about that strengthening your position in a world or maybe your competitors are actually going to have to go back and rehire when we come back on the other side of this?
Yes, Samada, thank you very much for the question. First of all, everybody is entitled to their strategy and there are lots of great companies out there that have taken a different approach to managing head count and the people packed. We have been highly intentional throughout the last four year journey that I can personally speak to on hiring in the first place and we have been very biased towards great engineering especially fingers on keyboards and go to market folks that actually carry a quota and keep in the company extremely lean on GNA where most of our investments have been in F.
So we started into this macro scenario that the world is in right now in a thoughtful position to begin with and therefore we are still managing our head count tightly. It is not like we are boldly hiring and especially now we have doubled down on exactly that quota bearing and fingers on keyboards and the good news and I really believe we have a new dimension here where our culture is actually attracting people in the marketplace and we are hiring truly best in class talent. We call it 9-10-year. If you are an 8-and-a-half you do not get in the door now and I would like you to take away from this answer.
The numbers are commensurate with the new business they are bringing in the door not the existing business and they will continue to do that in a way that manages the margin profile in accordance with what shareholder value expectations are in the marketplace. I honestly believe we will look back at this moment and how we are managing the people part of the business and putting people first as something that created a very special highly differentiated company as it relates to people's desire to work here. It is pretty interesting.
I would have asked we are remaining extremely flexible in agile with how we are adding head and so we are being very cautious in the current environment and you could absolutely expect that we will continue to be cautious and discipline with how we are thinking about our hiring, these are the growth for the remainder of the year and really always. Yeah, I mean we internally we call it a checkbook approach.
Great. Thanks for taking my question and I will offer my congrats as well. Gina, you talked about a strong pipeline exiting 4Q and obviously delivered a strong quarter here. How do you feel about the pipeline as we enter the quarter and obviously there has been some additional volatility in financial services and it sounds like that was fairly stable for you guys this quarter but maybe talk about the visibility you have entering the quarter quarter.
Yeah, absolutely Matt, thanks for the question. So pipeline remains robust. We feel really good about pipeline moving into Q2 and beyond from a metric perspective versus same time last year across the board or in better shape. As you talk about the direct exposure to financial services, we actually saw growth and had some great customer wins in the quarter despite the macro headwinds and so really feel great about where we're currently landing and pipe, our knowledge event, our youth call release. We're really excited about how we can continue to increase the opportunities in the back half of the year as a result. And so from that perspective, we feel really good about where we are and as always because 85% of our net new comes from existing customers.
The visibility to our pipe for Q2 and the back half remains strong as well. One thing you may find interesting Matt. One thing you may find interesting is financial services as Gina said continue to perform and in a Mia two of our top five deals were in financial services including one with one of Europe's largest banks.
Yeah. Thanks very much and I'll add my congrats on the quarter. Bill, I was kind of curious in your impressions on just consolidation in this kind of macro environment. For a while you've always said no one has to lose for you to win. I'm just wondering if that's changing a little bit in terms of your opportunity to go and maybe replace systems that have just gotten either antiquated or go after more greenfield that's adjacent to where you're selling.
So just kind of curious if the consolidation wave is picking up from your point of view. Thanks.
从你的角度来看,整合浪潮是否正在加剧?谢谢。
Yeah. Thank you very much for the question Kirk. We stand by. No one has to lose for us to win. And I really do believe the systems of record that team up with service now would see dramatic increases in their win rates. That's obviously up to them, but there's no question that that would happen because the power of the service now platform versus point solution is pretty clear.
Sea level decision makers want an enterprise wide workflow capability to drive their performance and it's just that simple. And when you have a lot of point solutions that optimize the department, but don't tie in to the greater workflow across the domains or the functions, it doesn't really help at the corporate level. And I think that's the coherence that we bring to the enterprise productivity story.
And frankly, the one thing I would say is that customers aren't interested in forced marches with upgrades to technology that's not delivering business impact. It's kind of like thinking about, you know, why would I do a heart transplant when I can do a simple bypass and gain massive new productivity with a platform that drives a great user experience, empowers my employees, satisfies my customers and enables my creators.
In fact, on the banking case in particular, what you were seeing is some serious focus on risk management across the whole bank and using us to consolidate all the point solutions so there would be one dashboard, a one version of the truth to protect that house. So you're seeing more and more of a platform approach to decision making in the market.
Super, thank you, too, and Vegas. Thank you very much, Kurt. See you there.
超级的,谢谢你,太谢谢了,还有拉斯维加斯。非常感谢你,库特。那里见。
Our next question comes from Alina, cash rangen from Goldman Sachs. Please proceed.
我们下一个问题来自高盛的Alina,她是现金范围方面的专家,请开始提问。
Hi, thank you very much, Chuck. Great start to the year of the Bill and team. I'm curious. This strategy to expanding the base of customers. We've done a great job. We've got 7,700 customers, a lot of million dollar wins. But if you look at enterprise software, you know, beyond 10 to 15, 20 billion dollars in revenue, those companies have always had a base of the pyramid that has a big chunk of commercial customers, SMB customers. I'm curious, how you think about service no strategy to expand the base of the pyramid going forward.
Thank you so much, congrats. Thank you very much, Cash. I mean, think of it this way. We are very focused, and I mentioned this is one of the three things that we're focused we're very focused on net new business. And this is going to come from upper mid market in particular. Lots of new logos there. There's a lot of individual companies that talk a lot about their climate to the enterprise. We might just meet them where they live right now in smaller establishments. We'll see how that goes.
But I can also tell you we have a great focus on the Fortune 2000. And in particular, we have an amazing focus on the marquee 250 with a true build out of a go-to-market machine. And we're doing that by industry. And we're doing that with all the assets across the company. And we've collectively put that together in a way with a full power of the platform, the content, the thought leadership, and obviously the solution power where the customer gets everything from service now.
So I would like you to think about the top of the pyramid, the larger part of the big part of the pyramid, and obviously the mid market up as areas in which we are getting stronger by the minute and extremely focused. I just had one thing, Gash, that from a product strategy perspective as Gina shared, we are very focused on top of the house of the pyramid as you call it in terms of expansion strategy.
Whether it's just additional products that we continue to deliver, release after release, or creating vertical specific solutions for those industries where we can get higher ASB uplift, vis-a-vis selling horizontal solution. And as Bill mentioned, whether you call that commercial segment, mid market segment, we are absolutely focused on that as well from a new logo perspective. We have commercial go-to-market selling motion that allows us to move up, and those customers sometimes become massive customers.
And that is an area of focus for new logos or new business in addition to the existing one. And I would just add on new logo piece that our net new customer ACV growth remains an area of strength for us. I talked about this in my script that the average deal size is up significantly year over year. It really is demonstrating the durable demand and the mission critical nature of our platform in this environment. We actually landed our largest net new logo deal in the me at this quarter with ITZ Boone.
And we've evolved our focus to really make sure that we're going after those right new logos, those right new customers, those that offer us the best ROI and have the greatest opportunity to continue to expand with us. Not all logos are created equal and we're really targeted those logos that can grow with us over time. And so, you know, it's easier to expand in existing customer the fact that our new logo ACV continues to grow and do well is a continued area strength for us that we're very proud of. Thanks, Gina. Thank you. Thanks, Carosh.
Our next question comes from a line of Greg Moskovitz from Muzouho. Please proceed. Okay. Thank you very much. Congratulations on the strong start to the year. The last time that service now had grown, CRPO, sequentially in a Q1, we'd have to go back to 2019, but you just did it and you did it in a really challenging environment. So aside from what sounds like good sales execution clearly, would you attribute the CRPO out performance of the fact that you had fewer early renewables in the Q4 or is there another reason that you would highlight? Thank you.
Yeah, I would say that our our our our beat versus the guide was fully due to higher net new HDB in in the quarter. So great results from our incredible sales execution team across the board. Terrific. Thanks very much and seeing a few weeks. Thanks Greg. Thanks Greg.
Our next question comes from the line of Argent Bautier, from William Blair. Please proceed. Hey guys, thanks for taking the question. Gina, maybe just to follow up on that on the expansion, one of the things that we've been hearing out in the sector is that there are speed headwinds, those head-to-growth is moderating and end customers. What are you seeing in your growth algorithm from a speed expansion versus up-salt cross-bale dynamic and how has it changed at all?
Yeah, it's a great question and you know we got that question a lot if you remember back in 2020, we're not really seeing any compression right where we're continuing to see expansion across the enterprise expansion geographically within a company and and a customer and really as an upsell on the other workflows and so speed compression has not been an issue that we've been seeing obviously keeping a close eye on it given the macro but not something that's been an issue for us thus far. Okay, perfect. Thank you.
Our next question comes from the line of Alex Zuchen from Wolf Research. Please proceed. Hey guys, thanks for taking the question and congrats on a solid quarter. Maybe Bill, can you talk a little bit about the macro from two different respects? One being, are you starting to kind of settle into this new longer sales cycle, you know customers, you know making you pitch ROI every time, everywhere and you're getting ready to kind of anniversary this in June meaning it's a status like a stabilization or a new normal. And then maybe just comment on the demand environment, these are the US versus international because it does feel a little bit different depending on which geo you're in.
Thank you very much for the question Alex and it's a really good question. It is absolutely clear to everybody that our customers are operating in a complex environment and the environment they're operating differs by industry but all of them have a set of challenges that they are dealing with. So we have completely retooled the go-to-market machine in acknowledgement of our customers' challenges. So we're able to go in with content and thought leadership that's very specific to their industry. We have tremendous insight and depth in what's going on specifically with their business.
We have excellent outside end protocols and real detailed account plans and relationship plans and obviously at the end of the day all of the sales that happen in this environment have to be backed by an unbreakable business case, not just the business case, an unbreakable one. And we have built that resilience into the go-to-market machine and I'm extremely proud of our sales leadership in this company and that goes for all the executives that report to me on the before but also the regional leaders and our feet on the street I believe to be the best in the business. So that's one thing.
The demand environment, there is no shortage of demand. The whole idea here is to educate our customers on the art of the possible and make sure that we align business and IT. So the business executives are participating in this conversation because leaving them out shrinks the size of the deal and that's why Gina telling you the ACV is growing including a new business gives you a good signal that we are really educated and know what we're doing. But also by aligning the entire executive team you be risk the last minute surprise or the last minute push because you have multiple executives pushing for the service now brand as an answer to their problems.
So I would say the demand environment, there's no shortage of it, you just have to understand how to manage it. But our coverage today and we manage all this on service now on a CEO dashboard is better than ever. And I would just add from a geo perspective demand pretty strong across the board, America has had a strong quarter in Q1 with particular strength in health care and life sciences and state local and education. We've focused verticalization strategy has really driven some strong momentum there. We feel really good about results in America's as well as demand.
The number of million dollar deals increased over 30% year over year. So that's great news. Amia had a really strong Q1 as well, UKI strong demand, great momentum, central Europe continue to outperform renewal rates continue to be strong at 99% in Amia despite the macro. So again, strong durable demand across the board. And then from an age of past perspective, selling into the seed fleet has been working well and really helping to drive larger transformational deals. We landed 71 million plus deals in APAC and Q1. So really strong demand across the board from a geographer perspective as well, Alex.
Thank you guys. Your unfair advantage is very clear.
谢谢你们。你们的非公平优势非常明显。
Thank you very much, Alex.
非常感谢你,Alex。
Good, Alex. Our next question comes from a line of Michael Turn from Wells Fargo. Please proceed. A great, thanks, good afternoon, appreciate the strong federal results for Q1. The two Q guide for CRPO suggests growth down a bit from what you just delivered, Gina. You've talked about prudence over the past several quarters. Can you maybe step through what you're factoring into Q2 for CRPO? How much is seasonality versus anything more specific to this year? In any update you can provide just around the change in early renewal dynamics you saw last quarter. I think it's also useful context.
Thank you. Yeah, great question. So from an overarching perspective, as I said before, the durable demand that we're seeing has really kept our business resilient. So strong Q1, the RPO, the Q2 guide, if you remember, beginning in Q2 of last year is when the macro headwinds really started to hit us. And so we've seen muted growth in the past couple quarters as a result, which is driving a little bit of a decel in Q2. The other thing, as you rightly recall, absolutely continuing to remain prudent in our guidance assumptions, given the uncertainty in the macro environment. And so again, go really good about the guide. It's a strong guide given the current uncertainty. But those are kind of a couple of the things that are going into the number.
And in respect to early renewals, what I'll say is that early renewals actually exceeded our forecast slightly this quarter. And so as I talked about at the end of Q4, we really factored in some prudent assumptions with respect to early renewals, given the current macro. And basically, they are lining up as expected.
Thank you, Michael. Our next question comes from the line of Derek Wood from Calum. Please proceed.
谢谢,迈克尔。下一个问题来自卡伦的德里克·伍德先生。请继续提问。
Great. I'll come back and grab some. And thanks for taking my question. Bill, I wanted to ask about the Microsoft partnership and the Coastal Agreement. I think you guys announced that a year ago. I imagine you've been laying some groundwork. You've just given up data to how that partnership is trending. What kind of dividends you see in 2023? And what you may be looking to do around generative AI with them?
Absolutely. Those conversations, Derek, are very active. As you know, we're very proud of our relationship with Microsoft. Also, a big tip of the cap to Microsoft and Satsya and his team for an outstanding quarter. It's very, very happy to see that for them. And at the end of the day, we continue to help accelerate Azure adoption for our mutual customers, which is opening additional addressable markets to service now, particularly with I-Tam and I-Tam.
I agree with you 100 percent that, you know, CJ can give you an update on what we're doing in the area of generative AI. But I think that, you know, that work is in flight and in progress. And we think that's a big opportunity for both companies to work closely together.
CJ, absolutely. So, it's what I would say, Derek, is at the highest level when we think about our partnership with Microsoft. Certain products such as our I-Tam product, which gives you visibility into Azure and overall our products that allows you to consume public cloud services is going in the right direction. Our footprint of I-Tam with Azure Cloud continues to expect. So, that's number one. From a go-to-market standpoint, whether it's in US Federal Cloud with our IL-5 certification, we have had some recent wins in Australia and few other geographies where our go-to market teams are working really well together. We will share more on generative AI with Microsoft, but we absolutely plan to leverage open AI, as well as Microsoft Azure capabilities when it comes to how service now use cases will work in conjunction with open AI and Microsoft Azure.
Yeah, thanks. Hi, guys. You touched a little bit on my question in the last answer, but I just want to dive deeper and better understand the traction, which driving the traction you're seeing in your observability solutions. How much of it is maturation and the light step functionality and what you built on top of it? How much of it might just be price and what you're able to bundle together as a platform?
Yeah, so I would say overall, I put including observability all that in the I-Tam umbrella, right? Point out a cloud of observability that our lights have been has done well and they had an amazing win with a very large spin tech company where we are going to actually display an incumbent that does metrics and tracing and we beat all the top competitors to win that deal in Q1. So this is an example. But overall, when I look at I-Tam and that deals with the cloud state, whether it's private or public cloud and as customers or join customers with hyper scalers that are trying to optimize their cloud spend or expand, we are the right workflow platform when it comes to the workloads that are running in those clouds. And with I-Tam specifically, we saw that our grow and enterprise adoption has actually increased, including higher selling volume in Q1 of this year. In addition to that, our cloud discovery that happens via I-Tam with Azure AWS GCP is also on the rise with a number of customers using those capabilities.
Sterling one build I would give on this just for you to know, Microsoft and Service now understand each other and have like-minded ways of going to market and including not just geographically but in industry. So as CJ said, this was really in government agency we were referring to as one example. But then you can go to South Africa and you would see us doing something very interesting for an insurance provider where we also displaced an aging legacy system. So we're on the front end of innovation, by industry and geo and we really have common goals and shared values around making these customers successful and we both know how to do it. Understood. Thank you. Thank you very much. Thank you very much.
Our next question comes from the line of Tyler Radke from City. Please proceed. Yes. Thank you for taking the question. Gina, just as we look at the updated guidance for the full year, I'm wondering if you could just walk us through some of the assumptions both on the subscription revenue side and margin side. Look like you did beat by more than you're raising the full year guide if you account for currency. So just wondering if there's any extra conservatism or moving pieces and then the same thing on margins, there's strong app performance is colder.
Thank you. Yeah. Thanks for the question. So we did raise the full year revenue guide by FX and we did raise it slightly about four million for our feet, but given the current macro uncertainty and given that we're only at the end of Q1, we wanted to remain prudent in our guide for the full year, which shouldn't be surprising to you. There's many, many years that we haven't really raised in Q1 with such a big portion of the year still to go. So it's really about being prudent in the current uncertainty more so than anything else. Feel really good about the beat in Q1 and our guide, well prudent to reflect the current macro, I think still should send a strong signal to our investors on the durability and strength of the NEL platform. Yeah, makes sense. Thank you.
Thanks, Alex. Our next question comes from the line of Brad Zeldnik from Deutsche Bank. Please proceed. Great. Thank you so much and I'll echo my congrats on a strong start to the year. For Bill or Gina, I've been getting a lot of questions on your net new ACV growth for last year, which was disclosed in your proxy at 14%. And considering the backdrop and tough prior to your compare, it seems very healthy to me. But what factors should we consider in bridging to your $16 billion plus target, which implies mid, you know, close to mid-20s compounded growth? And how would you characterize the companies that new ACV target for this year?
Yeah, Brad. Great question. So yes, net new ACV growth in 2022, given the current macro and backdrop was very healthy given that environment. We've talked about the fact that the current macro as well as the effects movement would likely weigh on that guy for 24 and 26. What I can tell you and what I'm excited about is to make sure you come to Financial Office Day in May, we'll be really focused on the longer term strategy as well as updating those relative numbers for you. And so, you know, we don't guide for net new ACV as you know, but we will give a lot of clarity as to what we're thinking for the mid and longer term at that in just next month. So look forward to seeing you there. Awesome, always get to see you even better in Vegas. Thank you.
Thanks, Brad. Thanks, Brad. Our next question comes from a line of Karl Kiersted from UBS. Please proceed. Oh, hi. Thank you. Maybe this one for Gina. On the call three months ago, when you were asked about the shape of the CRPO trajectory throughout the year, you got it to a deceleration throughout calendar 23. Just given that you outperformed in Q1 and conversely, the two QCRPO guide is a little bit below expectations, is that still the right framework to think about the second half? Thanks so much.
Yeah. I mean, listen, Karl, I think that given the current macro deceleration is very normal and expected, but you'll continue to see us really driving strong demand across the board. So we absolutely think that demand remains robust and strong and that we will continue to perform. But yes, given the current macro, these of the last year, we'll definitely see a little bit of deceleration throughout the year. Got it. Thanks, Gina.
Our next question comes from a line of rainbow lend show from Parklays. Please proceed. Thank you.
我们的下一个问题来自于Parklays的彩虹贷款节目,请发言。谢谢。
One quick question on the platform side. So that's the one product area that really gained in relative share for you guys this quarter. What are you seeing in terms of platform adoption out there? Because there's obviously a lot of like system or record guides that have a platform that stands alone, local guides that kind of want to be a platform. And then you guys, you seem to be getting shared. Kind of a function of in the downturn, you know, or in tougher times, you have a consolidation to the core strategic vendors that's playing out there or is this more longer term theme. Thank you.
Listen, we are first of all, rainbow super pleased with our creator workflow performance that has many aspects to it. But the key aspect to this is of course our local engine and our automation technologies. This platform as you described it, you're 100% right that there are many companies even with point solutions that market themselves as a platform company. We are truly a platform company. And when we sell creator workflows that is sometimes used to extend our out of box applications and sometimes as Bill mentioned, customers used to create many, many new applications to digitize their processes. That business in itself is a very nice business that has been growing significantly over last three to four years. And I feel very optimistic on that.
And the reason I feel optimistic versus point solutions that you describe or a system of record because you cannot have all these applications being developed randomly without governance. Our key buyer tends to be IT organization. We serve IT organization. We have governance features on how you develop this apps. Where does the data reside? And when we say that to our customers, they say we would rather use your platform to create new applications than a point solution or from a system of record that only has system of record data.
And the second thing that's really working for our platform is we organically build our integration or automation engine that not only integrates with all the 600, 700 plus applications out there in the world, but allows you to automate any processes via RPA machine learning and many new AI technologies that we are going to deliver. I am extremely optimistic and bullish on this aspect of our platform, aka creator workflows. Thanks Ram.
我们平台的另一个真正有用的特点是我们自然地构建了我们的集成或自动化引擎,它不仅与世界上所有的 600, 700 多个应用程序集成,而且可以通过 RPA 机器学习和许多新的 AI 技术来自动化任何流程。我对我们平台的这个方面,即创作者工作流程,非常乐观和看涨。谢谢Ram。
Okay, so it does appear we do have time for one more question. Our final question comes from Michael Toritz from Keybank. Please proceed.
Hey, thanks. Great question. Very happy to get it in the end. Thank you. You mentioned that you saw a strong demand across front, middle and back office. You also mentioned that you saw a strong demand for customer workflows. So in a down market, one wonders about front office. So I was wondering how you were seeing that demand and what specifically with the type of customer workflows that you were addressing and whether they were competitive or not with some of the systems of record.
Yeah, so Michael, first of all, I'm just addressed on customer workflow, customer workflow as Bill called it was hot and show the great quarter. But we saw Michael what we shared last year at the financial analyst day with you and the team is we have now created industry specific solutions, whether that's for insurance, for state local and federal government, whether it's for health care and life sciences, all of those investments that we have made in the past few years are working really well in the context of customer service and we are getting higher ASP.
In addition, our field service management product is also resonating and there are some of our competitors who have announced end of life or re-platforming their field service management offering. We have absolutely capturing that opportunity in the single platform company to have field service management solution alongside of customer service management solution that is industry specific. I'm really proud of the product and engineering teams as well as our sales team on how they executed our horizontal and vertical capabilities for largest insurance companies, health care companies or state local and federal government. Thanks, CJ.
Thanks, everybody. Thank you very much. Thank you, ladies and gentlemen. This does conclude today's call. Thank you for your participation. You may now disconnect. Thank you. Thank you, ladies and gentlemen. This does conclude today's call. Thank you for your participation. You may now disconnect. Thank you.