Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
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- Income Statement
- Balance Sheet: Assets
- Cash Flow Statement
- Analysis of Profitability Ratios
- Analysis of Solvency Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Price to FCFE (P/FCFE)
- Selected Financial Data since 2012
- Price to Operating Profit (P/OP) since 2012
- Price to Sales (P/S) since 2012
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Economic Profit
ServiceNow Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- There is a consistent and significant upward trend in NOPAT over the five-year period. Starting from $886 million in 2020, the figure increases steadily each year, reaching $2,283 million by 2024. The most notable jump occurs between 2022 and 2023, where NOPAT rises sharply from $1,148 million to $1,814 million, indicating improved operating efficiency or higher profitability.
- Cost of Capital
- The cost of capital shows a slight gradual increase over the period analyzed. It starts at 14.63% in 2020 and rises marginally each year to reach 14.8% in 2024. This indicates a relatively stable but mildly increasing cost environment or risk profile for the firm's capital sources.
- Invested Capital
- Invested capital exhibits a marked upward trend, rising from $4,325 million in 2020 to $9,898 million in 2024. The increase is steady and sizable, more than doubling over the five years. This reflects ongoing investment in the company’s assets, possibly to support growth or operational expansion.
- Economic Profit
- Economic profit, calculated as NOPAT minus the cost of capital applied to invested capital, initially demonstrates some volatility. It starts at $253 million in 2020, remains relatively flat at $249 million in 2021, and declines to $196 million in 2022, suggesting a period of diminished value creation or increased capital costs relative to profits. However, this trend reverses dramatically in 2023 and 2024, with economic profit jumping to $614 million and $818 million respectively. This significant improvement corresponds with the sharp increase in NOPAT and indicates enhanced value creation and profitability exceeding the cost of capital by a substantial margin.
- Overall Analysis
- The company’s financial data reveal strong growth in operating profitability and invested capital, alongside a stable but slightly rising cost of capital. Despite a temporary decline in economic profit in the earlier years, the reversal in the latter years points to improved efficiency and value generation. The sizeable increases in NOPAT and economic profit indicate successful leveraging of investments and effective cost management relative to capital expenses, implying that the company is increasingly generating returns above the cost of its capital.
Net Operating Profit after Taxes (NOPAT)
ServiceNow Inc., NOPAT calculation
US$ in millions
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).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in deferred revenue.
3 Addition of increase (decrease) in equity equivalents to net income.
4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net income.
7 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
8 Elimination of after taxes investment income.
- Net Income Trend
- The net income exhibits a significant upward trajectory from 2020 to 2023, increasing from 119 million US dollars in 2020 to a peak of 1,731 million US dollars in 2023. This represents a substantial growth, indicating strong profitability growth during these years. However, a decline is observed in 2024, with net income decreasing to 1,425 million US dollars, suggesting some challenges or changes that impacted earnings in the latest period.
- Net Operating Profit After Taxes (NOPAT) Trend
- NOPAT shows consistent growth over the entire period from 2020 through 2024. Starting at 886 million US dollars in 2020, it rises steadily each year, reaching 2,283 million US dollars by 2024. This consistent upward trend implies improving operating efficiency and profitability before the impact of non-operating items or extraordinary costs that might affect net income.
- Comparison Between Net Income and NOPAT
- While both net income and NOPAT increase over time, NOPAT shows a more uniform upward trend without any decline. The divergence in 2024, where net income falls but NOPAT continues to rise, could indicate increased non-operating expenses, tax variability, or other financial adjustments affecting the bottom line. This difference highlights the importance of separating core operating performance from net profitability, where operating results remain strong despite a setback in net income.
- Overall Financial Performance Insights
- The financial data reveals strong growth and improved operating profitability over the five-year span. The peak in net income followed by a decline in the final year warrants attention to underlying factors outside operating performance. Meanwhile, continued NOPAT growth suggests the company maintains robust operational fundamentals, highlighting resilience and possible growth opportunities despite net income fluctuations.
Cash Operating Taxes
ServiceNow Inc., cash operating taxes calculation
US$ in millions
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).
The financial data reveals significant volatility in the provision for income taxes over the analyzed period. Initially, this provision decreased from 31 million US dollars at the end of 2020 to 19 million in 2021, followed by a marked increase to 74 million in 2022. The most notable fluctuation occurred in 2023, where the provision swung drastically to a negative value of -723 million, indicating a potential income tax benefit or adjustment during that year. In 2024, the provision reverted to a positive figure of 313 million, reflecting a substantial recovery or adjustment in tax expenses.
Conversely, cash operating taxes exhibited a different pattern characterized by gradual increases with some fluctuations. Starting at 56 million in 2020, cash taxes slightly rose to 59 million in 2021, then decreased to 53 million in 2022. From 2022 onwards, a steady upward trend is observable, with an increase to 82 million in 2023 followed by a more pronounced rise to 138 million in 2024. This suggests growing outflows related to operational tax payments, aligning with potential increases in taxable income or changes in tax regulations affecting operational cash tax expenses.
- Provision for income taxes
- Declined from 2020 to 2021, increased in 2022, sharply reversed to a large negative figure in 2023, and rebounded strongly in 2024.
- Cash operating taxes
- Presented a relatively stable trend with minor fluctuations until 2022, followed by a steady and significant increase through 2023 and 2024.
The contrasting behavior between the provision for income taxes and cash operating taxes in 2023 particularly highlights an unusual tax event or accounting adjustment that impacted accrual-based tax provisions but did not reduce the actual cash outflow for taxes. Subsequent normalization in 2024 suggests resolution of this irregularity, with tax provisions and cash taxes both increasing significantly, potentially reflecting higher taxable earnings or adjusted tax liabilities.
Invested Capital
ServiceNow Inc., invested capital calculation (financing approach)
US$ in millions
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).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of deferred revenue.
4 Addition of equity equivalents to stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
7 Subtraction of available-for-sale debt securities.
The financial data reveals distinct patterns in key capital structure and equity metrics over the five-year period ending in 2024.
- Total Reported Debt & Leases
- This metric remained relatively stable, showing a slight increase from 2,135 million USD in 2020 to 2,278 million USD in 2024. The trend suggests that the company maintained a consistent level of debt and lease obligations with only marginal fluctuations throughout the observed timeframe.
- Stockholders’ Equity
- There is a strong upward trend in stockholders’ equity, rising significantly from 2,834 million USD in 2020 to 9,609 million USD in 2024. This represents more than a threefold increase over five years, indicating substantial growth in the company’s net assets attributable to shareholders. The accelerated growth year-over-year suggests active equity accumulation, possibly driven by retained earnings, earnings growth, or additional equity financing.
- Invested Capital
- Invested capital also demonstrated a marked increase, growing from 4,325 million USD in 2020 to 9,898 million USD in 2024. The growth trajectory closely parallels that of stockholders’ equity, implying that the company substantially increased the total capital utilized for its operations. The steady growth in invested capital, supported by stable debt levels, underscores a strategy focused on expanding operational capacity while maintaining manageable leverage.
Cost of Capital
ServiceNow Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
ServiceNow Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Datadog Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibited a fluctuating trend over the period analyzed. Starting at 253 million USD in 2020, it slightly decreased to 249 million USD in 2021 and further declined to 196 million USD in 2022. However, there was a significant rebound in 2023, with economic profit reaching 614 million USD, followed by another increase to 818 million USD in 2024. This suggests an improved ability to generate returns above the cost of capital in the latter years.
- Invested Capital
- The invested capital showed a consistent upward trend throughout the timeframe. It increased from 4,325 million USD in 2020 to 5,871 million USD in 2021, then to 6,490 million USD in 2022. The growth accelerated further in 2023 and 2024, reaching 8,131 million USD and 9,898 million USD respectively. This steady increase indicates ongoing investment in assets or projects potentially aimed at expanding operations or enhancing capabilities.
- Economic Spread Ratio
- The economic spread ratio experienced a downward trend initially, declining from 5.86% in 2020 to 4.24% in 2021 and further to 3.03% in 2022. However, from 2023 onwards, the ratio improved markedly, increasing to 7.55% and then to 8.26% in 2024. This improvement aligns with the resurgence in economic profit and suggests a more efficient use of invested capital in generating returns exceeding the cost of capital.
Economic Profit Margin
ServiceNow Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Datadog Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
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).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Adjusted Revenues
- The adjusted revenues exhibited a consistent upward trajectory over the analyzed period. Starting at 5,302 million US dollars in 2020, revenues increased to 6,787 million in 2021 and continued this growth trend, reaching 8,076 million in 2022. This positive momentum accelerated in the following years, with revenues rising sharply to 10,107 million in 2023 and further to 12,032 million in 2024, indicating robust top-line expansion.
- Economic Profit
- Economic profit showed a fluctuating pattern initially but demonstrated strong improvement in later years. From 253 million US dollars in 2020, it slightly declined to 249 million in 2021 and more notably dropped to 196 million in 2022. However, there was a pronounced recovery in 2023, with economic profit rising substantially to 614 million and further increasing to 818 million in 2024. This suggests enhanced value creation after an initial period of contraction.
- Economic Profit Margin
- The economic profit margin mirrored the trends observed in economic profit despite some deviations in scale. Starting at 4.78% in 2020, it declined to 3.67% in 2021 and reached a low of 2.43% in 2022, reflecting reduced efficiency or profitability relative to revenues during this period. Subsequently, the margin improved significantly to 6.07% in 2023 and further to 6.8% in 2024, surpassing initial levels and indicating stronger profitability relative to the size of the business.
- Summary Insights
- The data outlines a period of steady revenue growth coupled with an initial decline but eventual recovery and improvement in economic profit and profit margin. The decline in 2021 and 2022 suggests challenges in maintaining profitability despite rising revenues. However, the marked improvements in 2023 and 2024 reflect effective management or operational enhancements leading to both increased profitability and economic value generation. Overall, performance in the latter years significantly outpaced early measures, highlighting a turning point in financial efficiency and value creation.