ServiceNow Inc. (NYSE:NOW)

The financial data reveals notable fluctuations in both reported and adjusted net income over the five-year period ending December 31, 2024. Both measures demonstrate an overall upward trajectory with some variation in growth rates.

Reported Net Income

The reported net income started at US$119 million in 2020 and showed a steady increase to US$230 million in 2021 and further to US$325 million in 2022. A significant surge occurred in 2023, with reported net income rising sharply to US$1,731 million, representing substantial growth compared to prior years. However, in 2024, reported net income decreased to US$1,425 million, though it remained at a much higher level than in the earlier years.

Adjusted Net Income

Adjusted net income also increased from US$121 million in 2020 to US$211 million in 2021 and US$259 million in 2022, reflecting a growth pattern similar to reported net income but with slightly higher values in 2021 and 2022. Adjusted net income peaked in 2023 at US$1,769 million, slightly surpassing the reported net income for the same year. In 2024, adjusted net income declined to US$1,437 million, but maintained a margin above reported net income.

Comparative Insights

The close alignment of reported and adjusted net income across all years suggests effective adjustment methods with minor divergences primarily in the years of peak income. The large increases in 2023 for both figures suggest a significant positive event or operational improvement that year. The subsequent decline in 2024 indicates some moderation or retrenchment, though the income levels remain substantially elevated compared to the pre-2023 period.

Net Profit Margin

The reported net profit margin shows a gradual increase from 2.62% in 2020 to 4.49% in 2022, followed by a significant spike to 19.3% in 2023, then a decrease to 12.97% in 2024. The adjusted net profit margin follows a similar trajectory, starting at 2.68% in 2020, rising modestly to around 3.57%-3.58% between 2021 and 2022, then sharply increasing to 19.72% in 2023 before declining to 13.08% in 2024. This pattern indicates a period of stable, low single-digit profitability margins pre-2023, succeeded by a temporary surge and subsequent normalization.

Return on Equity (ROE)

Reported ROE rises steadily from 4.18% in 2020 to 6.46% in 2022, then surges to 22.69% in 2023 and falls to 14.83% in 2024. Adjusted ROE shows a slightly different trend, with a modest increase from 4.28% in 2020 peaking at 5.71% in 2021, before declining to 5.15% in 2022. It then sharply increases to 23.19% in 2023, followed by a decline to 14.95% in 2024. This suggests that both reported and adjusted ROE reflect a notable performance improvement in 2023, which partially reverses in the following year.

Return on Assets (ROA)

Reported ROA grows from 1.36% in 2020 to 2.44% in 2022, then rises markedly to 9.96% in 2023 before dropping to 6.99% in 2024. Adjusted ROA is relatively flat at around 1.39% to 1.95% between 2020 and 2022, then experiences a significant jump to 10.17% in 2023 and declines slightly to 7.05% in 2024. This indicates improved asset utilization and profitability starting in 2023, followed by a moderation in the subsequent year.

Overall Trends and Insights

The data reflects a consistent improvement in profitability and returns from 2020 through 2022 at a moderate pace, with all key ratios exhibiting steady growth. The year 2023 stands out as an exceptional performance period, with all metrics—reported and adjusted—showing dramatic increases, more than tripling in some cases. This spike suggests either an extraordinary event or enhanced operational efficiency during that year. In 2024, all profitability and return metrics decrease relative to 2023 but remain significantly higher than the pre-2023 levels, indicating a partial reversion yet maintaining stronger performance than earlier years. Adjusted metrics tend to be slightly lower than reported figures in most periods, implying some adjustments that reduce reported profitability and returns but preserve the overall trend direction.

Net Income Trends

The reported net income shows an overall upward trajectory from 119 million US$ in 2020 to a peak of 1,731 million US$ in 2023, followed by a decline to 1,425 million US$ in 2024. Similarly, the adjusted net income increases from 121 million US$ in 2020 to 1,769 million US$ in 2023, then decreases slightly to 1,437 million US$ in 2024. The increase through 2023 indicates strong growth in profitability, while the decrease in 2024 suggests some moderation in earnings.

Net Profit Margins

Both reported and adjusted net profit margins exhibit similar trend patterns. From 2020 through 2022, margins gradually improve from approximately 2.6–2.7% up to around 4.5% reported and approximately 3.6% adjusted. A substantial increase occurs in 2023, with margins exceeding 19%, followed by a decrease in 2024 to roughly 13%. This sharp rise and subsequent decline indicate atypical factors influencing profitability margins during the 2023 financial year.

Comparison of Reported and Adjusted Figures

The reported and adjusted net income and profit margins closely track each other over the five-year period, with only minor differences. Adjusted figures tend to be slightly lower than reported values in margin percentages during the early years but surpass reported margins in 2023 before aligning closely again in 2024. This consistency suggests that non-recurring adjustments or one-off items do not significantly distort overall profit trends.

Insights and Implications

The data reflects significant growth in earnings and profitability margins through the 2023 fiscal year, indicating improved operational performance or favorable market conditions. However, both net income and margins decrease in 2024, potentially signaling a normalization after an unusually high-margin period or increased costs impacting profitability. The close alignment between reported and adjusted results implies that core business performance underpinning earnings remained relatively stable, despite any accounting adjustments.

Net Income Trends

Reported net income shows a steady increase from 119 million USD in 2020 to 325 million USD in 2022, followed by a sharp rise to 1731 million USD in 2023. In 2024, it declines slightly to 1425 million USD. Adjusted net income follows a similar pattern, increasing from 121 million USD in 2020 to 259 million USD in 2022, then rising significantly to 1769 million USD in 2023, and decreasing to 1437 million USD in 2024. Overall, net income exhibits strong growth with a peak in 2023 before a moderate reduction in 2024.

Return on Equity (ROE) Trends

Reported ROE increases gradually from 4.18% in 2020 to 6.46% in 2022, then experiences a remarkable surge to 22.69% in 2023, followed by a decline to 14.83% in 2024. Adjusted ROE similarly rises from 4.28% in 2020 to 5.71% in 2021, but dips slightly to 5.15% in 2022, before sharply increasing to 23.19% in 2023 and decreasing to 14.95% in 2024. The data indicates a period of strong profitability and capital efficiency peaking in 2023, with some reduction in performance in the subsequent year.

Comparative Observations

Adjusted figures for net income and ROE closely track the reported figures but tend to be slightly lower in some years, suggesting that adjustments moderately impact profitability measures. Both reported and adjusted metrics reveal a consistent upward trajectory until 2023, marked by substantial growth, followed by a decline in 2024, which may warrant further investigation to identify underlying causes.

Net Income Trends

The reported net income exhibited a consistent increase from 2020 through 2022, rising from 119 million US dollars to 325 million. In 2023, there was a substantial surge to 1,731 million, followed by a decline to 1,425 million in 2024. The adjusted net income data follows a closely similar pattern, starting at 121 million in 2020 and escalating to 259 million in 2022, then sharply increasing to 1,769 million in 2023, before decreasing slightly to 1,437 million in 2024.

Return on Assets (ROA) Trends

The reported ROA showed a gradual improvement from 1.36% in 2020 to 2.44% in 2022, then experienced a pronounced jump to 9.96% in 2023, followed by a decrease to 6.99% in 2024. Adjusted ROA exhibited a similar trend, rising from 1.39% in 2020 to 1.95% in 2022, then sharply increasing to 10.17% in 2023 and declining to 7.05% in 2024.

Comparative Observations Between Reported and Adjusted Figures

Both reported and adjusted net income and ROA metrics display nearly identical directional trends over time, with adjusted figures typically being slightly higher in net income and closely similar in ROA values. The adjustments appear to have minimal impact on overall trend analysis, suggesting consistency in the underlying financial performance measures.

Insights

The data reflects a period of strong growth culminating in 2023, before a partial retreat in 2024 across both net income and ROA. The significant increase in 2023 suggests possible extraordinary factors or operational improvements during that year. The subsequent decline in 2024, while notable, still maintains performance levels substantially above those observed before 2023, indicating sustained improvement relative to earlier years.