ServiceNow Inc. (NYSE:NOW)

The financial performance presented demonstrates a consistent growth trajectory in revenue, driven primarily by subscription services, alongside increasing operating expenses. Gross profit has also shown a positive trend, though not always proportionally to revenue growth. Net income exhibits significant volatility, particularly influenced by tax provisions.

Revenue Growth

Total revenues have generally increased over the observed period, moving from US$1,360 million in March 2021 to US$3,568 million in December 2025. Subscription revenue consistently constitutes the vast majority of total revenue, exhibiting a strong upward trend from US$1,293 million to US$3,466 million over the same period. Professional services and other revenue shows a more modest increase, with some quarterly fluctuations, ending at US$102 million. A notable acceleration in revenue growth is observed from March 2024 onwards.

Profitability Analysis

Gross profit has increased from US$1,061 million in March 2021 to US$2,734 million in December 2025. However, the rate of gross profit growth appears to be slower than revenue growth in certain periods, suggesting potential pressure on gross margins. Cost of revenues has consistently increased, mirroring revenue growth. Income from operations shows a fluctuating pattern, with a significant increase in later periods, reaching US$443 million in December 2025. The impact of interest income and other income/expense is relatively small compared to core operational results, though other income/expense demonstrates some volatility.

Expense Management

Operating expenses have steadily risen throughout the period, from US$964 million in March 2021 to US$2,291 million in December 2025. Sales and marketing expenses represent the largest component of operating expenses, consistently accounting for a substantial portion of revenue. Research and development expenses also contribute significantly and have increased over time. General and administrative expenses have also increased, with a particularly large increase in December 2025. The increasing operating expenses are a key factor influencing net income.

Net Income and Tax Impact

Net income demonstrates considerable variability. While initially modest, it experienced a substantial surge in June 2023, reaching US$1,044 million, largely attributable to a significant benefit from income taxes. This benefit appears to be an outlier, as subsequent quarters show more typical tax provisions. Excluding the June 2023 anomaly, net income generally trends upward, but remains sensitive to tax fluctuations. The provision for (or benefit from) income taxes has a substantial impact on reported net income, swinging between positive and negative values.

In summary, the financial performance indicates a growing business with increasing revenue and gross profit. However, rising operating expenses and the significant influence of tax provisions on net income warrant continued monitoring. The acceleration in revenue growth in the most recent quarters suggests positive momentum, but maintaining profitability will depend on effective expense management and a stable tax environment.