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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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)
- The net operating profit after taxes displays a consistent upward trajectory over the five-year period. Starting at 886 million USD in 2020, it increased to 1108 million USD in 2021, followed by a moderate rise to 1148 million USD in 2022. The growth accelerated in 2023 and 2024, reaching 1814 million USD and 2283 million USD respectively. This indicates improving operational efficiency and profitability.
- Cost of Capital
- The cost of capital remains relatively stable but shows a slight gradual increase from 14.48% in 2020 to 14.65% in 2024. This marginal rise suggests that the company’s financing costs or required rates of return have slightly increased, which could reflect market conditions or changes in risk profile.
- Invested Capital
- Invested capital exhibits a steady increase each year, reflecting the company’s ongoing investments to support growth. Beginning at 4325 million USD in 2020, it grew to 5871 million USD in 2021, then to 6490 million USD in 2022. The growth pace intensified in the subsequent years with 8131 million USD in 2023 and 9898 million USD in 2024, indicating significant capital deployment likely aimed at expansion or capacity enhancement.
- Economic Profit
- Economic profit, which represents value creation beyond the cost of capital, shows some variability but with an overall positive trend. It remained relatively stable around 260 million USD in 2020 and 258 million USD in 2021, then declined to 206 million USD in 2022. However, there was a notable improvement in 2023 and 2024, with economic profit rising sharply to 627 million USD and then to 833 million USD. This suggests enhanced value generation driven by higher NOPAT growth outpacing the increase in invested capital and cost of 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. | ||||||
| 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 analyzed periods. It initially declined slightly from 260 million US dollars in 2020 to 258 million in 2021, followed by a more considerable decrease to 206 million in 2022. However, a significant recovery occurred afterward, with economic profit rising sharply to 627 million in 2023 and continuing to increase to 833 million in 2024. This suggests increased value creation and efficiency in the latter years.
- Invested capital
- The invested capital showed a consistent upward trajectory throughout the periods. It increased from 4,325 million US dollars in 2020 to 5,871 million in 2021 and further expanded steadily to 6,490 million in 2022. Growth accelerated in the following years, reaching 8,131 million in 2023 and 9,898 million in 2024. This indicates ongoing investment and expansion activities within the company.
- Economic spread ratio
- The economic spread ratio demonstrated a downward trend initially, decreasing from 6.01% in 2020 to 4.39% in 2021, and further declining to 3.18% in 2022. Nonetheless, from 2023 onwards, the economic spread ratio improved markedly, increasing to 7.71% and then to 8.42% in 2024. This pattern suggests that the company initially experienced declining returns on invested capital but managed to enhance profitability and operational efficiency in recent years.
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. | ||||||
| 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 demonstrate a consistent and substantial upward trend over the observed periods. Starting from $5,302 million in 2020, revenues increased annually, reaching $12,032 million by 2024. This indicates robust growth in the company's revenue-generating capacity, more than doubling over the five-year span.
- Economic Profit
- The economic profit experienced some fluctuation in the earlier years but shows significant improvement in the latter years. It initially declined slightly from $260 million in 2020 to $206 million in 2022, then surged to $627 million in 2023 and further to $833 million in 2024. This suggests that the company's profitability, when considering the cost of capital, improved notably in recent years.
- Economic Profit Margin
- The economic profit margin follows a varied pattern, starting at 4.91% in 2020, then declining to its lowest point of 2.56% in 2022. Subsequent years reveal a recovery and strengthening of this margin, rising to 6.2% in 2023 and 6.93% in 2024. The margin improvement aligns with the increase in economic profit, indicating enhanced efficiency and value creation relative to revenues.
- Overall Analysis
- Over the five-year period, the financial indicators jointly reflect a positive trajectory. Despite an initial dip in economic profit and margin, the company managed to achieve significant revenue growth and subsequently improved its economic profit and profitability margins. The substantial increase in economic profit and margin in the final years may indicate better cost management, higher operational efficiency, or a more profitable business mix during 2023 and 2024.