Common-Size Income Statement
Quarterly Data
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ServiceNow Inc., common-size consolidated income statement (quarterly data)
Based on: 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).
The common-size income statement reveals a consistent evolution in the company’s revenue composition and profitability over the observed period. Subscription revenue consistently represents the vast majority of total revenues, exhibiting a general upward trend from 95.07% in March 2021 to 97.14% in September 2025. Conversely, professional services and other revenue has decreased as a percentage of total revenues, falling from 4.93% to 2.86% over the same timeframe. Cost of revenues as a percentage of revenue has fluctuated, with a general increase towards the end of the period. Operating expenses have also shown considerable variation, impacting overall profitability.
- Revenue Composition
- The increasing dominance of subscription revenue suggests a successful transition towards a recurring revenue model. The decline in professional services and other revenue may indicate a shift in business strategy or a greater reliance on automated solutions, reducing the need for bespoke services. Total revenues are consistently represented as 100% across all periods, as expected.
- Profitability Analysis
- Gross profit as a percentage of revenues generally increased over the period, peaking at 80.02% in March 2023, before declining slightly to 76.63% in September 2025. This suggests improvements in cost management or pricing strategies, at least initially. Income from operations as a percentage of revenues demonstrates significant volatility, with a low of 2.17% in December 2021 and a high of 16.79% in September 2025. This fluctuation is likely influenced by changes in operating expenses.
- Expense Management
- Sales and marketing expenses consistently represent a substantial portion of revenues, fluctuating between approximately 31% and 41%. Research and development expenses also remain significant, generally ranging from 21% to 25%. General and administrative expenses have decreased as a percentage of revenue over time, from nearly 10% to around 7-10%. Overall, operating expenses as a percentage of revenue decreased significantly from 74.61% in December 2021 to 64.21% in September 2025, contributing to improved operating income.
- Net Income and Taxes
- Net income as a percentage of revenues shows substantial variation, largely driven by fluctuations in income before income taxes and the provision for income taxes. The significant spike in net income percentage in June 2023 (48.56%) is noteworthy and warrants further investigation. The provision for (benefit from) income taxes also exhibits considerable volatility, including a significant benefit in June 2023, which contributed to the high net income percentage. The effective tax rate appears to fluctuate considerably.
- Other Income/Expense
- Interest income and other income (expense), net, represent relatively small percentages of revenues, but their fluctuations can contribute to overall profitability. Interest income increased over time, while other income (expense), net, showed more variability.
In summary, the company demonstrates a strengthening focus on subscription-based revenue, coupled with evolving expense management practices. While profitability fluctuates, there is a general trend towards improved operating income and net income, particularly towards the end of the observed period. The significant variations in net income and tax provisions suggest potential areas for further scrutiny.