Common-Size Income Statement
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ServiceNow Inc., common-size consolidated income statement
Based on: 10-K (reporting date: 2025-12-31), 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).
The common-size income statement reveals a significant evolution in the company’s financial performance between 2021 and 2025. Revenue composition shifted notably, with a consistent increase in the proportion derived from subscription services and a corresponding decrease in professional services and other revenue. Profitability experienced substantial fluctuations, culminating in a strong performance in 2023, followed by a moderation in subsequent years. Expense management demonstrated improvement over the period, contributing to increased operating income.
- Revenue Composition
- Subscription revenue consistently increased as a percentage of total revenues, rising from 94.52% in 2021 to 97.03% in 2025. Conversely, professional services and other revenue decreased from 5.48% to 2.97% over the same period. This indicates a strategic focus on recurring subscription-based revenue.
- Gross Profit
- Gross profit as a percentage of revenue exhibited an upward trend from 77.05% in 2021 to a peak of 79.18% in 2024, before slightly declining to 77.53% in 2025. This suggests improving cost management relative to revenue, although the 2025 decrease warrants further investigation.
- Operating Expenses
- Operating expenses decreased steadily as a percentage of revenue, moving from 72.69% in 2021 to 63.80% in 2025. This improvement was driven by reductions in all major expense categories: sales and marketing, research and development, and general and administrative expenses. The most significant reduction occurred in sales and marketing expenses.
- Profitability
- Income from operations increased dramatically as a percentage of revenue, from 4.36% in 2021 to 13.74% in 2025. A particularly strong increase occurred between 2022 and 2023, reaching 8.49% and 12.42% respectively. Net income followed a similar pattern, rising from 3.90% in 2021 to 13.16% in 2025, with a peak of 19.30% in 2023. However, the impact of income taxes fluctuated significantly, moving from a provision in 2021 and 2022 to a benefit in 2023, and then back to a provision in 2024 and 2025.
- Interest and Other Income/Expenses
- Interest income increased as a percentage of revenue from 0.34% to 3.40% between 2021 and 2025. Interest expense remained relatively stable, decreasing slightly from -0.47% to -0.17%. Other expense, net, decreased from -0.47% to -0.11% over the same period. These factors collectively contributed positively to income before income taxes.
Overall, the company demonstrated a successful transition towards a subscription-based revenue model and improved operational efficiency. While profitability experienced a peak in 2023, it remained strong in 2024 and 2025, indicating a sustainable improvement in financial performance. The fluctuations in income tax provision/benefit require further scrutiny to understand the underlying drivers.