Stock Analysis on Net

ServiceNow Inc. (NYSE:NOW)

Income Statement 

ServiceNow Inc., consolidated income statement

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Subscription 10,646 8,680 6,891 5,573 4,286
Professional services and other 338 291 354 323 234
Revenues 10,984 8,971 7,245 5,896 4,519
Subscription (1,942) (1,606) (1,187) (1,022) (731)
Professional services and other (345) (315) (386) (331) (256)
Cost of revenues (2,287) (1,921) (1,573) (1,353) (987)
Gross profit 8,697 7,050 5,672 4,543 3,532
Sales and marketing (3,854) (3,301) (2,814) (2,292) (1,855)
Research and development (2,543) (2,124) (1,768) (1,397) (1,024)
General and administrative (936) (863) (735) (597) (454)
Operating expenses (7,333) (6,288) (5,317) (4,286) (3,334)
Income from operations 1,364 762 355 257 199
Interest income 419 302 82 20 39
Interest expense (23) (24) (27) (28) (33)
Other (22) (32) (11) (56)
Other expense, net (45) (56) (38) (28) (89)
Income before income taxes 1,738 1,008 399 249 149
(Provision for) benefit from income taxes (313) 723 (74) (19) (31)
Net income 1,425 1,731 325 230 119

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 and Subscription Trends
The total revenues have shown a consistent upward trend from 2020 through 2024, increasing from $4,519 million in 2020 to $10,984 million in 2024, indicating strong growth in the company’s business. Subscription revenues, which form the majority of total revenues, have increased significantly each year, nearly doubling over the period, from $4,286 million in 2020 to $10,646 million in 2024. This highlights the growing importance and success of the core subscription service model.
The professional services and other revenues have shown some variability but overall modest growth, with a slight decrease in 2023 before recovering in 2024. This suggests that while this segment remains a smaller part of total revenues, it has not experienced the same robust growth as subscription revenues.
Cost of Revenues and Gross Profit
Cost of revenues has steadily increased from $987 million in 2020 to $2,287 million in 2024, reflecting the scaling of operations in line with revenue growth. Despite the rising costs, gross profit has increased markedly, from $3,532 million in 2020 to $8,697 million in 2024, demonstrating improved profitability and efficient cost management relative to revenue increases.
Operating Expenses
Operating expenses have risen each year, from $3,334 million in 2020 to $7,333 million in 2024, driven by increases across sales and marketing, research and development, and general and administrative costs. Sales and marketing expenses are the largest component and have grown substantially, reflecting ongoing investments in customer acquisition and brand development. Research and development expenditures have also increased significantly, indicating continued emphasis on product innovation and enhancement. General and administrative expenses have grown more moderately but consistently.
Operating Income
Income from operations has improved steadily over the five-year period, more than doubling from $199 million in 2020 to $1,364 million in 2024. This signifies effective operational leverage and the company’s ability to scale profitably as revenues grow.
Interest and Other Income/Expenses
Interest income has notably increased over the years, from $39 million in 2020 to $419 million in 2024, which has positively contributed to overall earnings. Interest expense has decreased slightly, reflecting reduced cost of debt or improved financing conditions. Other expenses have fluctuated but remain relatively minor compared to primary operation components, with a slight reduction from -$89 million in 2020 to -$45 million in 2024.
Income Before Taxes and Net Income
Income before income taxes has risen markedly from $149 million in 2020 to $1,738 million in 2024, mirroring improvements in operational and non-operational income components. The provision for income taxes shows volatility, including a notable tax benefit reported in 2023, which significantly increased net income that year. Net income increased substantially over the period, from $119 million in 2020 to $1,425 million in 2024, with a peak of $1,731 million in 2023, reflective of both operational success and tax-related factors.
Summary
Overall, the financial data demonstrates strong revenue growth primarily driven by the subscription segment, effective cost management resulting in expanding gross profit and operating income, and increasing investment in growth initiatives such as sales and marketing and research and development. The company’s profitability has improved significantly, supported by growing operational efficiency and increased interest income. Volatility in income taxes has impacted net income figures, yet the overall trend in earnings is positive, highlighting sustainable financial performance and expansion.