Stock Analysis on Net
Stock Analysis on Net

ServiceNow Inc. (NYSE:NOW)

Analysis of Income Taxes

Microsoft Excel

Income Tax Expense (Benefit)

ServiceNow Inc., income tax expense (benefit), continuing operations

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Federal 2 — — — —
State 31 13 1 — —
Foreign 101 46 52 53 16
Current provision 134 59 53 53 16
Federal (750) (1) (3) (5) (3)
State (135) (1) (3) (1) (1)
Foreign 28 17 (28) (16) (571)
Deferred provision (857) 15 (34) (23) (576)
Provision for (benefit from) income taxes (723) 74 19 31 (560)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Item Description The company
Current provision Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. ServiceNow Inc. current provision increased from 2021 to 2022 and from 2022 to 2023.
Deferred provision Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. ServiceNow Inc. deferred provision increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.
Provision for (benefit from) income taxes Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. ServiceNow Inc. provision for (benefit from) income taxes increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Effective Income Tax Rate (EITR)

ServiceNow Inc., effective income tax rate (EITR) reconciliation

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
U.S. federal statutory income tax rate 21.00% 21.00% 21.00% 21.00% 21.00%
Effective income tax rate -71.73% 18.55% 7.63% 20.57% -832.79%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Item Description The company
Effective income tax rate Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. ServiceNow Inc. effective income tax rate increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Components of Deferred Tax Assets and Liabilities

ServiceNow Inc., components of deferred tax assets and liabilities

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net operating loss carryforwards 257 605 1,061 882 735
Credit carryforwards 476 388 318 236 172
Lease liability 184 178 152 115 108
Capitalized research and development 324 262 — — —
Depreciation and amortization 552 553 587 636 578
Other 167 159 126 103 97
Deferred tax assets 1,960 2,145 2,244 1,971 1,689
Valuation allowance (196) (1,228) (1,326) (1,129) (919)
Deferred tax assets, less valuation allowance 1,764 917 918 842 770
Right of use asset (165) (162) (141) (106) (101)
Other (131) (129) (94) (71) (74)
Deferred tax liabilities (296) (291) (235) (176) (175)
Net deferred tax assets (liabilities) 1,468 626 683 666 595

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Item Description The company
Deferred tax assets Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. ServiceNow Inc. deferred tax assets decreased from 2021 to 2022 and from 2022 to 2023.
Deferred tax assets, less valuation allowance Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. ServiceNow Inc. deferred tax assets, less valuation allowance decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.
Net deferred tax assets (liabilities) Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting. ServiceNow Inc. net deferred tax assets (liabilities) decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Deferred Tax Assets and Liabilities, Classification

ServiceNow Inc., deferred tax assets and liabilities, classification

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Deferred tax assets 1,508 636 692 673 600
Deferred tax liabilities 40 10 9 7 4

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Item Description The company
Deferred tax assets Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent. ServiceNow Inc. deferred tax assets decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.
Deferred tax liabilities Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent. ServiceNow Inc. deferred tax liabilities increased from 2021 to 2022 and from 2022 to 2023.

Adjustments to Financial Statements: Removal of Deferred Taxes

ServiceNow Inc., adjustments to financial statements

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Adjustment to Total Assets
Total assets (as reported) 17,387 13,299 10,798 8,715 6,022
Less: Noncurrent deferred tax assets, net 1,508 636 692 673 600
Total assets (adjusted) 15,879 12,663 10,106 8,042 5,423
Adjustment to Total Liabilities
Total liabilities (as reported) 9,759 8,267 7,103 5,881 3,894
Less: Noncurrent deferred tax liabilities, net 40 10 9 7 4
Total liabilities (adjusted) 9,719 8,257 7,094 5,873 3,890
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported) 7,628 5,032 3,695 2,834 2,128
Less: Net deferred tax assets (liabilities) 1,468 626 683 666 595
Stockholders’ equity (adjusted) 6,160 4,406 3,012 2,169 1,532
Adjustment to Net Income
Net income (as reported) 1,731 325 230 119 627
Add: Deferred income tax expense (benefit) (857) 15 (34) (23) (576)
Net income (adjusted) 874 340 196 96 51

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

ServiceNow Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

ServiceNow Inc., adjusted financial ratios

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net Profit Margin
Reported net profit margin 19.30% 4.49% 3.90% 2.62% 18.11%
Adjusted net profit margin 9.74% 4.69% 3.32% 2.12% 1.47%
Total Asset Turnover
Reported total asset turnover 0.52 0.54 0.55 0.52 0.57
Adjusted total asset turnover 0.56 0.57 0.58 0.56 0.64
Financial Leverage
Reported financial leverage 2.28 2.64 2.92 3.07 2.83
Adjusted financial leverage 2.58 2.87 3.36 3.71 3.54
Return on Equity (ROE)
Reported ROE 22.69% 6.46% 6.22% 4.18% 29.45%
Adjusted ROE 14.19% 7.72% 6.51% 4.42% 3.32%
Return on Assets (ROA)
Reported ROA 9.96% 2.44% 2.13% 1.36% 10.41%
Adjusted ROA 5.50% 2.68% 1.94% 1.19% 0.94%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Financial ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. ServiceNow Inc. adjusted net profit margin ratio improved from 2021 to 2022 and from 2022 to 2023.
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 2021 to 2022 and from 2022 to 2023.
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 2021 to 2022 and from 2022 to 2023.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. ServiceNow Inc. adjusted ROE improved from 2021 to 2022 and from 2022 to 2023.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. ServiceNow Inc. adjusted ROA improved from 2021 to 2022 and from 2022 to 2023.

ServiceNow Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income 1,731 325 230 119 627
Revenues 8,971 7,245 5,896 4,519 3,460
Profitability Ratio
Net profit margin1 19.30% 4.49% 3.90% 2.62% 18.11%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income 874 340 196 96 51
Revenues 8,971 7,245 5,896 4,519 3,460
Profitability Ratio
Adjusted net profit margin2 9.74% 4.69% 3.32% 2.12% 1.47%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Net profit margin = 100 × Net income ÷ Revenues
= 100 × 1,731 ÷ 8,971 = 19.30%

2 Adjusted net profit margin = 100 × Adjusted net income ÷ Revenues
= 100 × 874 ÷ 8,971 = 9.74%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. ServiceNow Inc. adjusted net profit margin ratio improved from 2021 to 2022 and from 2022 to 2023.

Adjusted Total Asset Turnover

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Revenues 8,971 7,245 5,896 4,519 3,460
Total assets 17,387 13,299 10,798 8,715 6,022
Activity Ratio
Total asset turnover1 0.52 0.54 0.55 0.52 0.57
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Revenues 8,971 7,245 5,896 4,519 3,460
Adjusted total assets 15,879 12,663 10,106 8,042 5,423
Activity Ratio
Adjusted total asset turnover2 0.56 0.57 0.58 0.56 0.64

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Total asset turnover = Revenues ÷ Total assets
= 8,971 ÷ 17,387 = 0.52

2 Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= 8,971 ÷ 15,879 = 0.56

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 2021 to 2022 and from 2022 to 2023.

Adjusted Financial Leverage

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Total assets 17,387 13,299 10,798 8,715 6,022
Stockholders’ equity 7,628 5,032 3,695 2,834 2,128
Solvency Ratio
Financial leverage1 2.28 2.64 2.92 3.07 2.83
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets 15,879 12,663 10,106 8,042 5,423
Adjusted stockholders’ equity 6,160 4,406 3,012 2,169 1,532
Solvency Ratio
Adjusted financial leverage2 2.58 2.87 3.36 3.71 3.54

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Financial leverage = Total assets ÷ Stockholders’ equity
= 17,387 ÷ 7,628 = 2.28

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 15,879 ÷ 6,160 = 2.58

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 2021 to 2022 and from 2022 to 2023.

Adjusted Return on Equity (ROE)

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income 1,731 325 230 119 627
Stockholders’ equity 7,628 5,032 3,695 2,834 2,128
Profitability Ratio
ROE1 22.69% 6.46% 6.22% 4.18% 29.45%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income 874 340 196 96 51
Adjusted stockholders’ equity 6,160 4,406 3,012 2,169 1,532
Profitability Ratio
Adjusted ROE2 14.19% 7.72% 6.51% 4.42% 3.32%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 1,731 ÷ 7,628 = 22.69%

2 Adjusted ROE = 100 × Adjusted net income ÷ Adjusted stockholders’ equity
= 100 × 874 ÷ 6,160 = 14.19%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. ServiceNow Inc. adjusted ROE improved from 2021 to 2022 and from 2022 to 2023.

Adjusted Return on Assets (ROA)

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income 1,731 325 230 119 627
Total assets 17,387 13,299 10,798 8,715 6,022
Profitability Ratio
ROA1 9.96% 2.44% 2.13% 1.36% 10.41%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income 874 340 196 96 51
Adjusted total assets 15,879 12,663 10,106 8,042 5,423
Profitability Ratio
Adjusted ROA2 5.50% 2.68% 1.94% 1.19% 0.94%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 1,731 ÷ 17,387 = 9.96%

2 Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × 874 ÷ 15,879 = 5.50%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. ServiceNow Inc. adjusted ROA improved from 2021 to 2022 and from 2022 to 2023.