Common-Size Income Statement
Quarterly Data
ServiceNow Inc., common-size consolidated income statement (quarterly data)
Based on: 10-Q (reporting date: 2026-06-30), 10-Q (reporting date: 2026-03-31), 10-K (reporting date: 2025-12-31), 10-Q (reporting date: 2025-09-30), 10-Q (reporting date: 2025-06-30), 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31).
Revenue composition demonstrates a consistent shift toward a subscription-based model. Subscription revenue increased from 95.07% of total revenues in March 2021 to 97.24% by June 2026. Conversely, professional services and other revenues declined from 4.93% to 2.76% over the same period, indicating a strategic pivot toward recurring revenue streams and a reduced reliance on service-based income.
- Gross Profitability and Cost Structure
- Gross profit margins remained relatively stable between 76% and 80% for the majority of the period, peaking at 80.02% in March 2024. However, a significant contraction occurred in the final two quarters, with the margin dropping to 75.07% in March 2026 and further to 70.68% in June 2026. This decline is directly attributable to a sharp increase in the cost of revenues, which rose from approximately 21% to 29.32% of revenues in the final period.
- Operating Expense Optimization
- Operating expenses as a percentage of revenue showed a general downward trend, suggesting improved operational leverage. Sales and marketing expenses, which peaked at 41.21% in June 2022, generally decreased to range between 31% and 35% in later periods. Research and development expenses remained stable, typically fluctuating between 21% and 25%. General and administrative expenses also trended downward, moving from peaks near 11% to lows around 7%.
- Operating Income Trends
- Income from operations exhibited substantial growth, rising from a low of 1.26% in June 2022 to a peak of 16.79% in September 2025. This expansion was driven by the reduction in operating expenses relative to revenue growth. However, the final quarter ending June 2026 saw a sharp contraction in operating income to 4.06%, coinciding with the aforementioned increase in the cost of revenues.
- Net Income and Non-Operating Items
- Net income patterns were marked by a significant anomaly in June 2023, where it surged to 48.56% of revenues due to a substantial tax benefit of 40.47%. Excluding this outlier, net income generally improved from low single digits in 2021 to a range of 11% to 15% between 2023 and 2025. Interest income also grew significantly, rising from negative values in 2021 to peaks of nearly 4% of revenues, reflecting a stronger cash position or higher yield environments.
The overall financial trajectory indicates a successful scale-up of the subscription business and enhanced operational efficiency through 2025. The sudden compression of both gross and operating margins in the first half of 2026 represents a notable reversal of the previous multi-year trend of margin expansion.
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