ServiceNow Inc. (NYSE:NOW)

Goodwill and intangible assets experienced significant changes over the five-year period. A notable increase in both goodwill and certain intangible asset categories occurred, particularly towards the end of the observed timeframe. The composition of intangible assets also shifted, with customer relationships becoming a more substantial component.

Goodwill

Goodwill demonstrated a consistent, albeit moderate, increase from 2021 to 2023, rising from US$777 million to US$1,231 million. However, a substantial surge is evident in 2025, reaching US$3,578 million. This indicates potentially significant acquisitions or revaluations during or prior to that year. The increase in 2024 was minimal, suggesting a pause in significant goodwill-generating events before the large jump in 2025.

Developed Technology

Developed technology consistently increased throughout the period, growing from US$415 million in 2021 to US$1,316 million in 2025. The rate of increase accelerated in the later years, mirroring the trend observed in goodwill. This suggests ongoing investment in research and development or acquisitions of companies with valuable developed technologies.

Customer Relationships

Customer relationships were not initially reported, appearing for the first time in 2024 at US$5 million. A substantial increase to US$238 million is observed by 2025. This suggests the recognition of customer relationships as a distinct intangible asset, potentially through acquisitions or internal development initiatives. The rapid growth indicates a growing emphasis on the value of customer bases.

Patents & Other Intangible Assets

Patents exhibited a modest, steady increase from US$69 million in 2021 to US$83 million in 2025. Other intangible assets fluctuated, remaining relatively low until a significant increase to US$72 million in 2025. This suggests a potential acquisition or recognition of other intangible assets during or prior to 2025.

Intangible Assets – Gross & Net

Gross intangible assets increased consistently, from US$498 million in 2021 to US$1,709 million in 2025. Accumulated amortization also increased steadily, from -US$211 million to -US$588 million, reflecting the ongoing consumption of the economic benefits of these assets. Despite the increasing amortization, net intangible assets rose significantly, from US$287 million in 2021 to US$1,121 million in 2025, driven by the growth in gross intangible assets.

Total Goodwill and Intangible Assets

The combined value of goodwill and intangible assets increased from US$1,064 million in 2021 to US$4,699 million in 2025. The most substantial increase occurred between 2024 and 2025, driven by the significant growth in both goodwill and developed technology, as well as the emergence of customer relationships and other intangible assets. This represents a considerable portion of the company’s asset base and warrants further investigation into the underlying drivers of these increases.

The overall trend indicates a substantial expansion of goodwill and intangible assets, particularly in the later years of the period. The increases appear to be concentrated in goodwill, developed technology, and customer relationships, suggesting a strategy of acquisitions and investment in innovation and customer base development.

The information presents a five-year trend of reported and adjusted total assets, alongside reported and adjusted stockholders’ equity. The adjustments appear to relate to the removal of goodwill and associated intangible assets, as evidenced by the consistent difference between the reported and adjusted figures. A general upward trend is observed in both reported and adjusted asset and equity values over the period.

Total Assets

Reported total assets increased steadily from US$10,798 million in 2021 to US$26,038 million in 2025. The adjusted total assets, reflecting the removal of goodwill, also increased over the same period, moving from US$10,021 million to US$22,460 million. The difference between reported and adjusted total assets narrowed slightly from US$777 million in 2021 to US$3,578 million in 2025, indicating a potentially decreasing reliance on goodwill as a component of total assets, or potentially new acquisitions adding to goodwill.

Stockholders’ Equity

Reported stockholders’ equity demonstrated substantial growth, rising from US$3,695 million in 2021 to US$12,964 million in 2025. Adjusted stockholders’ equity also increased, but at a slower pace, progressing from US$2,918 million to US$9,386 million. The gap between reported and adjusted stockholders’ equity widened considerably from US$777 million in 2021 to US$3,578 million in 2025, mirroring the trend observed in total assets. This suggests that a significant portion of the reported equity growth is attributable to items removed in the adjustment, likely related to goodwill and associated intangible assets.

The consistent difference between reported and adjusted figures across both total assets and stockholders’ equity highlights the material impact of goodwill on the company’s reported financial position. The increasing divergence between the reported and adjusted equity values suggests that the impact of goodwill adjustments on equity is becoming more pronounced over time. Further investigation into the nature and magnitude of these adjustments would be necessary to fully understand their implications.

The financial metrics demonstrate a consistent impact from adjusting for goodwill and intangible assets. Generally, removing goodwill from the asset base results in improved ratios across the observed period, suggesting that a significant portion of the reported asset base does not contribute proportionally to operational performance. Trends observed in the adjusted ratios offer a potentially more insightful view of underlying business efficiency and profitability.

Total Asset Turnover

Reported total asset turnover exhibited relative stability, fluctuating between 0.51 and 0.55 over the five-year period. In contrast, the adjusted total asset turnover consistently registered higher values, ranging from 0.56 to 0.59. This indicates that the company generates more sales revenue per dollar of assets when goodwill is excluded from the calculation. A slight upward trend is observable in the adjusted ratio from 2024 to 2025.

Financial Leverage

Reported financial leverage decreased steadily from 2.92 in 2021 to 2.01 in 2025, indicating a declining reliance on debt financing relative to equity. The adjusted financial leverage figures were notably higher than their reported counterparts throughout the period, ranging from 2.29 to 3.43. This suggests that the company’s actual leverage, excluding the non-operating asset of goodwill, is greater than what is reflected in standard reporting. The rate of decline in the adjusted leverage mirrors that of the reported leverage, though the absolute values differ.

Return on Equity (ROE)

Reported ROE experienced significant volatility, with a substantial increase in 2023 followed by declines in 2024 and 2025. The adjusted ROE consistently exceeded the reported ROE, ranging from 7.72% to 7.88% in the earlier years and increasing to 17.09% and 18.62% in the later years. The adjusted ROE demonstrates a more pronounced increase in 2023 and a less severe decline in subsequent years, suggesting that the impact of goodwill on reported equity is substantial. The adjusted ROE shows an upward trend from 2024 to 2025.

Return on Assets (ROA)

Similar to ROE, reported ROA showed considerable fluctuation, peaking in 2023 before decreasing in the following two years. Adjusted ROA consistently surpassed reported ROA, ranging from 2.30% to 2.61% in the initial years and rising to 7.46% and 7.78% in the later years. The adjusted ROA, like the adjusted ROE, exhibits a more stable and pronounced increase in 2023 and a less dramatic decrease in subsequent periods. An upward trend is observed in the adjusted ROA from 2024 to 2025.

In summary, the adjustments for goodwill and intangible assets consistently reveal a different financial picture than standard reporting. The adjusted ratios suggest a more efficient use of assets, a higher degree of financial leverage, and a stronger underlying profitability when goodwill is excluded. The trends observed in the adjusted ratios appear more stable and potentially more indicative of the company’s core operational performance.

An examination of the financial information reveals trends in total assets and associated turnover ratios over a five-year period. Reported total assets demonstrate a consistent upward trajectory, increasing from US$10,798 million in 2021 to US$26,038 million in 2025. Adjusted total assets, which exclude certain items, also exhibit growth, albeit at a slightly lower magnitude, rising from US$10,021 million to US$22,460 million over the same timeframe.

Reported Total Asset Turnover

The reported total asset turnover ratio shows relative stability with a slight downward trend. Beginning at 0.55 in 2021, the ratio fluctuates, reaching 0.54 in 2022, declining to 0.52 in 2023, increasing slightly to 0.54 in 2024, and concluding at 0.51 in 2025. This suggests a modestly decreasing efficiency in generating revenue relative to reported total assets.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio presents a different pattern. It begins at 0.59 in 2021, decreases to 0.58 in 2022, then to 0.56 in 2023. A slight recovery is observed in 2024, with the ratio reaching 0.57, followed by an increase to 0.59 in 2025. This indicates that when certain asset components are excluded from the calculation, the efficiency in generating revenue relative to assets is comparatively higher and demonstrates a recent positive trend.

The divergence between the reported and adjusted turnover ratios suggests that the components excluded in the adjusted calculation—likely including goodwill and intangible assets—are impacting the overall reported asset turnover. The increasing proportion of these assets relative to revenue generation appears to be a key driver of this difference. The stabilization and slight increase in the adjusted ratio in the later years may indicate improved efficiency in utilizing the core operating assets of the business.

An examination of the financial information reveals trends in total assets, stockholders’ equity, and associated leverage ratios over a five-year period. Reported total assets demonstrate consistent growth annually, increasing from US$10,798 million in 2021 to US$26,038 million in 2025. Reported stockholders’ equity also exhibits a positive trend, rising from US$3,695 million to US$12,964 million over the same timeframe. However, adjusted figures for both total assets and stockholders’ equity are lower than their reported counterparts, and their growth patterns differ slightly.

Total Assets

Reported total assets increased each year, with the largest absolute increase occurring between 2023 and 2024 (US$2,996 million). Adjusted total assets also increased annually, but at a slower pace than reported assets, particularly in the later years. The difference between reported and adjusted total assets suggests the presence of items impacting the reported figures, such as goodwill or intangible assets.

Stockholders’ Equity

Reported stockholders’ equity shows consistent annual growth. Adjusted stockholders’ equity also increases, but the rate of increase decelerates between 2024 and 2025. The gap between reported and adjusted stockholders’ equity remains relatively stable throughout the period, indicating a consistent impact from adjustments.

Reported Financial Leverage

Reported financial leverage, calculated as total assets divided by stockholders’ equity, exhibits a decreasing trend from 2.92 in 2021 to 2.01 in 2025. This indicates that the company is becoming less reliant on assets relative to equity financing, or that equity is growing at a faster rate than assets.

Adjusted Financial Leverage

Adjusted financial leverage initially decreases from 3.43 in 2021 to 2.29 in 2024, mirroring the trend in reported leverage. However, it increases slightly to 2.39 in 2025. This suggests that the adjustments to assets and equity have a stabilizing effect on the leverage ratio, but the 2025 increase warrants further investigation. The adjusted leverage ratio is consistently higher than the reported ratio, indicating that the adjustments result in a higher level of financial risk when considering the adjusted figures.

The divergence between reported and adjusted financial leverage highlights the significance of the adjustments made to total assets and stockholders’ equity. The slight increase in adjusted financial leverage in 2025, after a period of decline, could be a point of focus for further analysis to understand the underlying drivers and potential implications.

Reported stockholders’ equity demonstrated consistent growth over the five-year period, increasing from US$3,695 million in 2021 to US$12,964 million in 2025. Adjusted stockholders’ equity also exhibited a similar upward trajectory, albeit at a lower magnitude, rising from US$2,918 million to US$9,386 million during the same timeframe. The difference between reported and adjusted equity suggests the presence of items impacting reported equity that are excluded in the adjusted calculation, potentially related to intangible assets or goodwill.

Reported Return on Equity (ROE)

Reported ROE experienced considerable fluctuation. It began at 6.22% in 2021, increased to 6.46% in 2022, and then surged to 22.69% in 2023. Subsequently, reported ROE decreased to 14.83% in 2024 and further to 13.48% in 2025. This volatility suggests that reported net income is significantly influenced by factors impacting the equity base, or potentially by non-recurring items.

Adjusted Return on Equity (ROE)

Adjusted ROE presented a more stable, though still increasing, trend. Starting at 7.88% in 2021, it decreased slightly to 7.72% in 2022 before increasing substantially to 27.06% in 2023. Adjusted ROE then moderated to 17.09% in 2024 and rose again to 18.62% in 2025. The consistently higher adjusted ROE compared to reported ROE indicates that the adjustments made to stockholders’ equity positively impact profitability metrics. The peak in 2023 for both reported and adjusted ROE warrants further investigation into the underlying drivers of that performance.

The divergence between reported and adjusted ROE highlights the importance of understanding the composition of stockholders’ equity. The adjustments made to arrive at adjusted equity appear to provide a clearer picture of underlying operational profitability, as the adjusted ROE demonstrates a more consistent upward trend. The substantial increase in both ROE metrics in 2023, followed by a moderation in subsequent years, suggests a potential one-time boost to earnings or a change in capital structure during that period.

The reported and adjusted total assets exhibited a consistent upward trend from 2021 through 2025. Reported total assets increased from US$10,798 million in 2021 to US$26,038 million in 2025, while adjusted total assets grew from US$10,021 million to US$22,460 million over the same period. The difference between reported and adjusted total assets narrowed over time, suggesting a decreasing impact from the adjustments made.

Reported Return on Assets (ROA)

Reported ROA demonstrated initial growth, rising from 2.13% in 2021 to 2.44% in 2022. A significant increase was then observed in 2023, reaching 9.96%, followed by declines in both 2024 (6.99%) and 2025 (6.71%). Despite the declines in the latter two years, the 2025 ROA remained substantially higher than the levels recorded in 2021 and 2022.

Adjusted Return on Assets (ROA)

Adjusted ROA mirrored the trend of the reported ROA, with an increase from 2.30% in 2021 to 2.61% in 2022. A substantial rise to 10.71% occurred in 2023, followed by decreases to 7.46% in 2024 and 7.78% in 2025. The adjusted ROA consistently exceeded the reported ROA across all observed years, indicating that the adjustments positively impacted profitability relative to asset base. The 2025 adjusted ROA, while lower than the 2023 peak, remained considerably above the 2021 and 2022 figures.

The convergence of the reported and adjusted ROA trends suggests that the factors necessitating the adjustments to total assets may be becoming less significant. The substantial increase in both reported and adjusted ROA in 2023, followed by subsequent declines, warrants further investigation to determine the underlying drivers of these fluctuations. The relatively stable ROA levels in 2024 and 2025, despite the continued growth in total assets, indicate a potential moderation in the rate of profitability expansion.