ServiceNow CEO Bill McDermott positioned the company as the "AI Control Tower for business reinvention," leveraging its "Universal Agentic Network" to coordinate AI agents across the enterprise. McDermott dismissed concerns about seat-based pricing compression, arguing that the volume of AI agents and new monetization models (hybrid pricing, assets, devices) will drive significant growth. He highlighted strong adoption of the Now Assist Pro SKU (30% price uplift) and a "hockey stick" of consumption expected in H2 2026. M&A strategy has shifted to capture the AI opportunity, expanding the TAM from $90 billion to $600 billion with acquisitions like Moveworks, Veza, and Armis.
Key Takeaways
- Universal Agentic Network: ServiceNow integrates with all major hyperscalers and LLMs (e.g., Anthropic, OpenAI) to serve as the central control plane for enterprise workflows, coordinating human and AI agents.
- AI Monetization & Pricing: The company utilizes a hybrid model where customers purchase seats (up 25% YoY) plus consumption-based "Assist packs" for AI agents. Since May 2024, Assist pack consumption has grown 55x.
- Pro Plus SKU Traction: The Now Assist Pro Plus SKU commands a 30% price uplift and has already secured nearly 3,000 customers, with a strong pipeline including a $2 billion opportunity in CRM.
- Consumption Ramp: Management expects a "hockey stick" in AI consumption revenue in the second half of 2026 as customers exhaust initial entitlements and reload Assist packs.
- Strategic M&A: Recent acquisitions of Moveworks (agentic front door), Veza (identity), and Armis (OT security) were executed to accelerate the AI roadmap and expand the TAM to $600 billion, aiming for a $1 trillion valuation.
- Competitive Moat: McDermott argued that ServiceNow’s "workflow action" capability distinguishes it from LLMs that can only diagnose problems. Integration into systems like medical records allows for immediate remediation, not just advice.
- Seat Growth Durability: Despite market fears, active user seats grew 25%, driven by expansion across new buying centers (Employee, Customer, Creator workflows) and industries.
Q&A
Keith Weiss (Morgan Stanley): How does ServiceNow defend against AI labs like Anthropic or startups becoming the new interface where work gets done?
- Bill McDermott: ServiceNow provides the "workflow action" that LLMs lack. For example, in healthcare, it integrates directly into medical records so nurses can remediate issues immediately rather than just receiving advice. ServiceNow embraces models from partners like Anthropic and OpenAI but remains the unique "control plane" that executes complex, cross-enterprise workflows.
Keith Weiss (Morgan Stanley): What traction are you seeing with Now Assist since its GA launch, and are there specific use cases driving adoption?
- Bill McDermott: Now Assist has nearly 3,000 customers. Use cases include manufacturing IoT controls and "customer resolution management" in CRM, where ServiceNow has a $2 billion pipeline. Customers value the "hybrid pricing model" that allows them to manage both human and AI agents on a single platform.
Keith Weiss (Morgan Stanley): Should investors expect a rapid adoption cycle for Now Assist similar to the Pro SKU, given it's an evolution of the automation theme?
- Bill McDermott: Yes. The Pro Plus SKU commands a 30% price uplift and is growing. Beyond the initial SKU, consumption of "Assist packs" has grown 55x since May 2023. As customers exhaust initial entitlements, reloads will drive a revenue "hockey stick" in the second half of the year.
Keith Weiss (Morgan Stanley): With investors concerned about seat growth compression due to AI, how do you explain the recent 25% growth in active seats?
- Bill McDermott: Seat growth is driven by ServiceNow expanding its role as the "ERP of IT" into employee and customer workflows across the Fortune 2000. While seat counts may evolve, the volume of AI agents (which will outnumber humans) represents a massive new monetization opportunity via the hybrid model.