Stock Analysis on Net

ServiceNow Inc. (NYSE:NOW)

Analysis of Goodwill and Intangible Assets

Microsoft Excel LibreOffice Calc

Goodwill and Intangible Asset Disclosure

ServiceNow Inc., balance sheet: goodwill and intangible assets

US$ in thousands

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Goodwill 240,764  156,756  148,845  128,728  82,534 
Developed technology 226,290  177,746  114,395  102,349  79,206 
Patents 64,942  67,730  57,180  31,030  17,610 
Other 3,616  3,594  650  1,575  1,775 
Intangible assets, gross 294,848  249,070  172,225  134,954  98,591 
Accumulated amortization (141,481) (105,220) (71,643) (48,038) (32,737)
Intangible assets, net 153,367  143,850  100,582  86,916  65,854 
Goodwill and intangible assets 394,131  300,606  249,427  215,644  148,388 

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

Item Description The company
Goodwill Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. ServiceNow Inc. goodwill increased from 2018 to 2019 and from 2019 to 2020.
Intangible assets, net Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. ServiceNow Inc. intangible assets, net increased from 2018 to 2019 and from 2019 to 2020.
Goodwill and intangible assets Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. ServiceNow Inc. goodwill and intangible assets increased from 2018 to 2019 and from 2019 to 2020.

Adjustments to Financial Statements: Removal of Goodwill

ServiceNow Inc., adjustments to financial statements

US$ in thousands

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Adjustment to Total Assets
Total assets (as reported) 8,715,057  6,022,430  3,879,140  3,397,904  2,033,767 
Less: Goodwill 240,764  156,756  148,845  128,728  82,534 
Total assets (adjusted) 8,474,293  5,865,674  3,730,295  3,269,176  1,951,233 
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported) 2,834,481  2,127,941  1,111,199  584,132  386,961 
Less: Goodwill 240,764  156,756  148,845  128,728  82,534 
Stockholders’ equity (adjusted) 2,593,717  1,971,185  962,354  455,404  304,427 

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).


ServiceNow Inc., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Goodwill (Summary)

ServiceNow Inc., adjusted financial ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Total Asset Turnover
Reported total asset turnover 0.52 0.57 0.67 0.57 0.68
Adjusted total asset turnover 0.53 0.59 0.70 0.59 0.71
Financial Leverage
Reported financial leverage 3.07 2.83 3.49 5.82 5.26
Adjusted financial leverage 3.27 2.98 3.88 7.18 6.41
Return on Equity (ROE)
Reported ROE 4.18% 29.45% -2.40% -25.53% -116.76%
Adjusted ROE 4.57% 31.79% -2.77% -32.75% -148.41%
Return on Assets (ROA)
Reported ROA 1.36% 10.41% -0.69% -4.39% -22.22%
Adjusted ROA 1.40% 10.68% -0.72% -4.56% -23.15%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. ServiceNow Inc. adjusted total asset turnover ratio deteriorated from 2018 to 2019 and from 2019 to 2020.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
ServiceNow Inc. adjusted financial leverage ratio decreased from 2018 to 2019 but then slightly increased from 2019 to 2020.
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. ServiceNow Inc. adjusted ROE improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020 not reaching 2018 level.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. ServiceNow Inc. adjusted ROA improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020 not reaching 2018 level.

ServiceNow Inc., Financial Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in thousands)
Revenues 4,519,484  3,460,437  2,608,816  1,933,026  1,390,513 
Total assets 8,715,057  6,022,430  3,879,140  3,397,904  2,033,767 
Activity Ratio
Total asset turnover1 0.52 0.57 0.67 0.57 0.68
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Revenues 4,519,484  3,460,437  2,608,816  1,933,026  1,390,513 
Adjusted total assets 8,474,293  5,865,674  3,730,295  3,269,176  1,951,233 
Activity Ratio
Adjusted total asset turnover2 0.53 0.59 0.70 0.59 0.71

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

2020 Calculations

1 Total asset turnover = Revenues ÷ Total assets
= 4,519,484 ÷ 8,715,057 = 0.52

2 Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= 4,519,484 ÷ 8,474,293 = 0.53

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. ServiceNow Inc. adjusted total asset turnover ratio deteriorated from 2018 to 2019 and from 2019 to 2020.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in thousands)
Total assets 8,715,057  6,022,430  3,879,140  3,397,904  2,033,767 
Stockholders’ equity 2,834,481  2,127,941  1,111,199  584,132  386,961 
Solvency Ratio
Financial leverage1 3.07 2.83 3.49 5.82 5.26
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Adjusted total assets 8,474,293  5,865,674  3,730,295  3,269,176  1,951,233 
Adjusted stockholders’ equity 2,593,717  1,971,185  962,354  455,404  304,427 
Solvency Ratio
Adjusted financial leverage2 3.27 2.98 3.88 7.18 6.41

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

2020 Calculations

1 Financial leverage = Total assets ÷ Stockholders’ equity
= 8,715,057 ÷ 2,834,481 = 3.07

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 8,474,293 ÷ 2,593,717 = 3.27

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
ServiceNow Inc. adjusted financial leverage ratio decreased from 2018 to 2019 but then slightly increased from 2019 to 2020.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in thousands)
Net income (loss) 118,503  626,698  (26,704) (149,130) (451,804)
Stockholders’ equity 2,834,481  2,127,941  1,111,199  584,132  386,961 
Profitability Ratio
ROE1 4.18% 29.45% -2.40% -25.53% -116.76%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net income (loss) 118,503  626,698  (26,704) (149,130) (451,804)
Adjusted stockholders’ equity 2,593,717  1,971,185  962,354  455,404  304,427 
Profitability Ratio
Adjusted ROE2 4.57% 31.79% -2.77% -32.75% -148.41%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

2020 Calculations

1 ROE = 100 × Net income (loss) ÷ Stockholders’ equity
= 100 × 118,503 ÷ 2,834,481 = 4.18%

2 Adjusted ROE = 100 × Net income (loss) ÷ Adjusted stockholders’ equity
= 100 × 118,503 ÷ 2,593,717 = 4.57%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. ServiceNow Inc. adjusted ROE improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020 not reaching 2018 level.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in thousands)
Net income (loss) 118,503  626,698  (26,704) (149,130) (451,804)
Total assets 8,715,057  6,022,430  3,879,140  3,397,904  2,033,767 
Profitability Ratio
ROA1 1.36% 10.41% -0.69% -4.39% -22.22%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net income (loss) 118,503  626,698  (26,704) (149,130) (451,804)
Adjusted total assets 8,474,293  5,865,674  3,730,295  3,269,176  1,951,233 
Profitability Ratio
Adjusted ROA2 1.40% 10.68% -0.72% -4.56% -23.15%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

2020 Calculations

1 ROA = 100 × Net income (loss) ÷ Total assets
= 100 × 118,503 ÷ 8,715,057 = 1.36%

2 Adjusted ROA = 100 × Net income (loss) ÷ Adjusted total assets
= 100 × 118,503 ÷ 8,474,293 = 1.40%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. ServiceNow Inc. adjusted ROA improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020 not reaching 2018 level.