ServiceNow Inc. (NYSE:NOW)

The operating profit margin exhibited a volatile trajectory over the observed period. Initially, the company experienced substantial operating losses, resulting in negative operating profit margins from 2012 through 2017. However, a clear upward trend in operating profit margin became apparent from 2018 onwards, culminating in significant positive margins by the end of the period.

Initial Operating Losses (2012-2017)

From 2012 to 2016, the operating profit margin consistently declined, reaching a low of -30.41% in 2016. This indicates that operating expenses significantly exceeded income from operations during these years. A slight improvement was observed in 2017, with the margin increasing to -5.25%, suggesting some progress in controlling costs or increasing operational income, though still resulting in a net operating loss.

Transition to Profitability (2018-2019)

2018 marked a turning point, with the operating profit margin becoming positive, albeit marginally at -1.63%. This positive trend continued into 2019, with the margin increasing to 1.22%. This suggests the company achieved a level of operational efficiency where income from operations began to surpass operating expenses.

Sustained Margin Expansion (2020-2025)

The period from 2020 to 2025 demonstrates a consistent and accelerating expansion of the operating profit margin. The margin increased from 4.40% in 2020 to 13.74% in 2025. This indicates a strengthening of the company’s core business, improved cost management, and/or increased pricing power. The rate of increase also accelerated over this period, suggesting increasing operational leverage.

Revenue Correlation

Revenues increased consistently throughout the period. While revenue growth alone does not explain the margin improvement, it likely contributed by providing a larger base over which to spread fixed operating costs. The substantial increase in income from operations, alongside revenue growth, is the primary driver of the observed margin expansion.

In summary, the company transitioned from a period of significant operating losses to sustained profitability and margin expansion. The latter half of the period is characterized by a robust and accelerating improvement in the operating profit margin, indicating a strengthening financial performance.