ServiceNow Inc. (NYSE:NOW)

The data exhibits several notable trends concerning the company's revenue composition, cost structure, profitability, and expense management over the analyzed periods.

Revenue Composition

Subscription revenue consistently comprises the vast majority of total revenues, generally around 95%, with a gradual rising trend toward approximately 97% in the latest periods. Conversely, Professional services and other revenues correspondingly decrease from near 5% to slightly above 2.5%, indicating an increasing reliance on subscription-based income.

Cost of Revenues and Gross Profit

Cost of revenues remains relatively stable as a percentage of revenues, fluctuating mostly between 20% and 23%. There is a modest downward trend observed in later periods, with costs declining closer to 20%. This reduction supports a generally stable to improving gross profit margin, which hovers around 78% to 80%, with some fluctuations but showing slight improvement in the more recent quarters.

Operating Expenses

Operating expenses demonstrate variability within a range of about 64% to 76% of revenues. Sales and marketing expenses show a notable reduction from near 42% down to roughly 33% to 35% in later periods, suggesting enhanced efficiency or reallocation of resources. Research and development expenses fluctuate slightly but mostly remain between 22% and 25%, showing no clear long-term up or down trend. General and administrative expenses gradually decrease over time from approximately 10% to below 8%, indicating tighter cost control.

Income from Operations

Income from operations varies considerably but generally improves from low single-digit percentages in early periods to a peak near 15% in recent quarters. This improvement reflects the combined effects of stable gross margins and reduced operating expenses.

Other Income and Income Taxes

Interest income improves markedly, moving from negative or near zero values to positive contributions in the range of approximately 3.5% to 4% of revenues in recent periods, enhancing overall profitability. Other income (expense) is negative or near zero with mild fluctuations, imposing minor drag on overall income. The provision for income taxes shows variability, including an extraordinary positive spike in one period, indicating unusual tax-related items. Otherwise, tax expense generally consumes about 2.5% to 3% of revenues.

Net Income

Net income as a percentage of revenues fluctuates substantially but presents an overall upward trend, moving from low single digits to around 15% in some recent quarters. This improvement largely mirrors operational profitability gains and growing interest income, notwithstanding variable tax impacts.

In summary, the company has demonstrated a steady increase in subscription revenue dominance, improving operating efficiencies through reduced sales, marketing, and administrative expenses, and enhanced profitability with rising income from operations and net income margins. Stability in gross margins and favorable interest income contributions further support the positive earnings trajectory observed over the reporting periods.