AI Drove the Largest New Bookings of Any New Product
Tomasz TunguzVenture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. AI Drove the Largest New Bookings of Any New Product
ServiceNow, a $150b market cap company, made this statement yesterday in their earnings call :
That’s pretty sensational for a company with 3 massive business lines & enough acronyms to fill a dictionary :
Like every major technology wave, AI runs the risk of overhype. But many large companies are beating predictions & raising their growth expectations because of AI. OpenAI & Microsoft each have multi-billion dollar ARR businesses. Mongo & Snowflake announced accelerations in their businesses as a result of AI. ServiceNow is the most recent. ServiceNow finds customers are willing to pay more for the software & the CEO Bill McDermott cites a few examples. Here’s one for the appliance repair software category :
McDermott also mentioned the benefits within their developers teams from AI code-generation. It’s unclear what developer innovation speed means (lines of code written? features shipped?) but even if it’s directionally accurate, the R&D cost savings for a business of ServiceNow’s scale should be significant. “ServiceNow’s developers have been using text to code for several months. They are generating high-quality code using text to describe the type of code they won. This has increased our developer innovation speed by 52%.” Improving customer demand drives greater revenue growth. Better engineering efficiency should improve the cost structure. With statements like these : “We are raising our subscription revenue’s outlook by $165 million at the midpoint to a range”… …software companies have a bright future. |
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