Stock Analysis on Net
Stock Analysis on Net

ServiceNow Inc. (NYSE:NOW)

Common-Size Income Statement 

ServiceNow Inc., common-size consolidated income statement

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Subscription 96.92 96.76 95.11 94.52 94.83
Professional services and other 3.08 3.24 4.89 5.48 5.17
Revenues 100.00% 100.00% 100.00% 100.00% 100.00%
Subscription -17.68 -17.90 -16.38 -17.33 -16.17
Professional services and other -3.14 -3.51 -5.33 -5.61 -5.67
Cost of revenues -20.82% -21.41% -21.71% -22.95% -21.84%
Gross profit 79.18% 78.59% 78.29% 77.05% 78.16%
Sales and marketing -35.09 -36.80 -38.84 -38.87 -41.04
Research and development -23.15 -23.68 -24.40 -23.69 -22.66
General and administrative -8.52 -9.62 -10.14 -10.13 -10.05
Operating expenses -66.76% -70.09% -73.39% -72.69% -73.76%
Income from operations 12.42% 8.49% 4.90% 4.36% 4.40%
Interest income 3.81 3.37 1.13 0.34 0.87
Interest expense -0.21 -0.27 -0.37 -0.47 -0.72
Other -0.20 -0.36 -0.15 0.00 -1.25
Other expense, net -0.41% -0.62% -0.52% -0.47% -1.97%
Income before income taxes 15.82% 11.24% 5.51% 4.22% 3.30%
(Provision for) benefit from income taxes -2.85 8.06 -1.02 -0.32 -0.68
Net income 12.97% 19.30% 4.49% 3.90% 2.62%

Based on: 10-K (reporting date: 2024-12-31), 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).

Revenue Composition Trends
The subscription segment consistently accounts for the vast majority of total revenues, with its proportion gradually increasing from 94.83% in 2020 to 96.92% in 2024. Conversely, the professional services and other segment shows a declining trend, decreasing from 5.17% to 3.08% over the same period.
Cost of Revenues and Gross Profit
The cost of revenues remains relatively stable as a percentage of total revenues, hovering around 21% to 23%, with a slight decrease to 20.82% by 2024. Consequently, gross profit margins exhibit a modest upward trend, improving from 78.16% in 2020 to 79.18% in 2024, indicating improved efficiency in managing direct costs relative to revenues.
Operating Expenses
Overall operating expenses as a percentage of revenues show a marked decrease, declining from 73.76% in 2020 to 66.76% in 2024. This reduction is contributed to by decreases in sales and marketing expenses (from 41.04% to 35.09%), and general and administrative expenses (from 10.05% to 8.52%). Research and development expenses remain more stable around 22.66% to 24.4%, with a slight reduction to 23.15% by 2024.
Profitability Metrics
Income from operations as a percentage of revenues shows a substantial increase from 4.4% in 2020 to 12.42% in 2024, demonstrating improved operating efficiency. Interest income also increases significantly, from 0.87% in 2020 to 3.81% in 2024, while interest expense decreases, suggesting more favorable financing conditions or better cash management.
Other Income and Expenses
Other expenses display mixed behavior, with fluctuations but generally remaining negative. The net effect of other income and expense is relatively small, though there is no clear upward or downward trend.
Income Before Taxes and Net Income
Income before income taxes exhibits a strong positive trend, rising from 3.3% of revenues in 2020 to 15.82% in 2024. The provision for income taxes shows volatility, with a notable positive spike in 2023 and a negative figure in 2024, possibly indicating tax benefits or adjustments. Net income increases significantly from 2.62% in 2020, peaking at 19.3% in 2023 and settling at 12.97% in 2024, reflecting improved overall profitability despite some variability in tax impacts.
Summary Insight
The data reflects a strengthening profitability profile characterized by increased revenue concentration in higher-margin subscription services, effective cost control particularly in sales and general administrative areas, and favorable financing conditions. Although tax provisions fluctuate, overall net income margins improve substantially over the period analyzed, indicating enhanced operational and financial performance.