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.
Paying user area
Try for free
ServiceNow Inc. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2012
- Operating Profit Margin since 2012
- Return on Assets (ROA) since 2012
- Analysis of Revenues
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to ServiceNow Inc. for $24.99.
This is a one-time payment. There is no automatic renewal.
We accept:
Economic Profit
ServiceNow Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
An analysis of the financial performance reveals a consistent expansion in operational profitability and capital deployment over the five-year period. While net operating profit has grown substantially, the resulting economic profit exhibits a non-linear trajectory, reflecting the interplay between increasing earnings and the cost of scaling the capital base.
- Net Operating Profit After Taxes (NOPAT)
- A strong upward trend is observed in NOPAT, which grew from US$ 1,108 million in 2021 to US$ 3,210 million by 2025. The most significant acceleration occurred between 2022 and 2023, indicating a marked improvement in operational efficiency and scale.
- Cost of Capital
- The cost of capital remained remarkably stable throughout the period, fluctuating narrowly between 16.99% and 17.18%. This stability suggests a consistent risk profile and steady expectations regarding the required rate of return.
- Invested Capital
- There is a continuous increase in invested capital, rising from US$ 5,871 million in 2021 to US$ 16,322 million in 2025. A notable surge is evident in the final year, where invested capital increased by approximately 65%, indicating aggressive reinvestment or expansion of the asset base.
- Economic Profit
- Economic profit demonstrates significant volatility. After a decline in 2022, it experienced a period of robust growth, peaking at US$ 583 million in 2024. However, a contraction to US$ 427 million is observed in 2025. This decline occurs because the growth in NOPAT was insufficient to offset the substantial increase in the capital charge associated with the expanded invested capital base.
Net Operating Profit after Taxes (NOPAT)
ServiceNow Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
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 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2025 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 2025 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 operating profit after taxes (NOPAT) demonstrates a consistent upward trajectory over the observed period. While net income fluctuates, NOPAT exhibits a more stable and positive growth pattern, suggesting increasing operational efficiency and profitability. The period begins with NOPAT at US$1,108 million in 2021 and culminates in US$3,210 million by 2025.
- Overall Trend
- A clear increasing trend is evident in NOPAT from 2021 to 2025. The growth is not linear, with acceleration observed between 2022 and 2024. The largest absolute increase occurs between 2024 and 2025, adding US$927 million to NOPAT.
- Year-over-Year Changes
- From 2021 to 2022, NOPAT increased by US$40 million, representing a 3.6% growth rate. A more substantial increase of US$666 million (58.1%) occurred between 2022 and 2023. The growth rate continued with an increase of US$469 million (25.8%) from 2023 to 2024. Finally, NOPAT grew by US$927 million (40.6%) from 2024 to 2025.
- Relationship to Net Income
- While net income shows volatility, with a decrease from US$325 million in 2022 to US$1,425 million in 2024, NOPAT consistently increases. This divergence suggests that non-operating factors significantly influence net income, while core operational performance, as reflected in NOPAT, remains strong. The difference between NOPAT and net income indicates substantial interest expense and other non-operating costs.
The sustained growth in NOPAT indicates a strengthening ability to generate profit from core operations. This positive trend is a key indicator of financial health and suggests effective management of operational costs and revenue generation.
Cash Operating Taxes
ServiceNow Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
The provision for (benefit from) income taxes exhibits significant volatility over the observed period. Beginning at US$19 million in 2021, it increased substantially to US$74 million in 2022 before experiencing a large negative swing to a benefit of negative US$723 million in 2023. This was followed by a return to a provision of US$313 million in 2024 and a further increase to US$513 million in 2025.
In contrast, cash operating taxes demonstrate a consistent upward trend, albeit at a more moderate pace. The amount rose from US$59 million in 2021 to US$53 million in 2022, then increased to US$82 million in 2023, US$138 million in 2024, and finally reached US$180 million in 2025.
- Provision for Income Taxes Trend
- The substantial negative provision in 2023 warrants further investigation. This could be attributable to various factors, including changes in tax laws, utilization of net operating loss carryforwards, or adjustments related to deferred tax assets and liabilities. The subsequent positive provisions in 2024 and 2025 suggest a normalization of tax obligations following the 2023 event.
- Cash Operating Taxes Trend
- The steady increase in cash operating taxes aligns with the overall growth in the business, indicating a higher tax burden associated with increased profitability. The consistent upward movement suggests a predictable relationship between operating performance and cash tax outflows.
- Relationship Between Provision and Cash Taxes
- A divergence is apparent between the provision for income taxes and cash operating taxes. While the provision fluctuates significantly, cash taxes demonstrate a more stable, increasing pattern. This discrepancy highlights the impact of non-cash tax items included in the provision, such as deferred taxes, which do not represent immediate cash outflows. The large benefit in 2023 significantly reduced the effective tax rate, while cash taxes continued to rise, though at a slower rate than the provision would suggest.
The differing trends between the provision for income taxes and cash operating taxes suggest that the company’s reported tax expense is significantly influenced by non-cash accounting adjustments. A detailed analysis of the deferred tax components would be necessary to fully understand the drivers behind these variations.
Invested Capital
ServiceNow Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
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 reported invested capital demonstrates a consistent upward trend over the five-year period. A review of the components reveals increases in both total reported debt & leases and stockholders’ equity, contributing to this overall growth.
- Total Reported Debt & Leases
- Total reported debt & leases exhibits a modest increase from US$2,214 million in 2021 to US$2,403 million in 2025. While generally increasing, a slight decrease is observed between 2022 and 2023, and again between 2023 and 2024, before resuming an upward trajectory in the final year.
- Stockholders’ Equity
- Stockholders’ equity shows substantial growth throughout the period, rising from US$3,695 million in 2021 to US$12,964 million in 2025. The rate of increase accelerates significantly from 2022 onwards, indicating a growing reinvestment of earnings or successful equity fundraising activities.
- Invested Capital
- Invested capital, calculated as the sum of total reported debt & leases and stockholders’ equity, increases steadily from US$5,871 million in 2021 to US$16,322 million in 2025. The growth in invested capital mirrors the growth in stockholders’ equity, as the latter component represents the larger portion of the total. The most significant increase in invested capital occurs between 2024 and 2025, reflecting the substantial rise in stockholders’ equity during that period.
The consistent expansion of invested capital suggests ongoing investment in the business and its operations. The increasing stockholders’ equity component indicates a strengthening financial position and potentially increased capacity for future growth initiatives.
Cost of Capital
ServiceNow Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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: 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 »
Economic Spread Ratio
ServiceNow Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| AppLovin Corp. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Datadog Inc. | ||||||
| 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: 2025-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial trajectory from 2021 to 2025 is characterized by a substantial expansion of the capital base coupled with volatile economic returns. While the organization managed to increase its absolute economic profit over the period, the efficiency of the capital deployed, as measured by the economic spread ratio, experienced significant fluctuations, peaking in 2024 before contracting in 2025.
- Economic Profit Trends
- Economic profit exhibited a non-linear progression, beginning at US$ 111 million in 2021 and dipping to a period low of US$ 44 million in 2022. A sharp recovery followed, with profit increasing to US$ 421 million in 2023 and reaching a peak of US$ 583 million in 2024. However, 2025 saw a reversal of this trend, with economic profit declining to US$ 427 million.
- Invested Capital Expansion
- There is a consistent and accelerating upward trend in invested capital. The capital base grew from US$ 5,871 million in 2021 to US$ 9,898 million by 2024. A significant surge occurred in 2025, where invested capital rose to US$ 16,322 million, representing a substantial increase in the resources deployed into the business.
- Economic Spread Ratio Analysis
- The economic spread ratio reflects the volatility of value creation relative to the cost of capital. After a decline to 0.68% in 2022, the ratio improved markedly to 5.18% in 2023 and 5.89% in 2024, indicating a period of high capital efficiency. In 2025, the ratio dropped sharply to 2.61%. This contraction is primarily driven by the disproportionate increase in invested capital relative to the decrease in economic profit, suggesting a diminishing marginal return on the latest capital investments.
Economic Profit Margin
ServiceNow Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| 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. | ||||||
| AppLovin Corp. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Datadog Inc. | ||||||
| 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: 2025-12-31), 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).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial trajectory from 2021 through 2025 is characterized by consistent revenue expansion contrasted with significant volatility in economic profit and the resulting economic profit margin. While adjusted revenues grew steadily every year, the ability to generate economic value above the cost of capital fluctuated considerably.
- Revenue Growth Trends
- Adjusted revenues exhibited a continuous upward trend, increasing from 6,787 million USD in 2021 to 14,798 million USD by 2025. This represents a sustained growth pattern, with the most substantial absolute increase occurring between 2024 and 2025.
- Economic Profit Fluctuations
- Economic profit demonstrated a non-linear progression. After an initial decline from 111 million USD in 2021 to 44 million USD in 2022, a period of rapid acceleration followed, peaking at 583 million USD in 2024. However, this growth reversed in 2025, with economic profit falling to 427 million USD despite the continued rise in revenues.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the volatility of absolute economic profit. The margin contracted to a low of 0.54% in 2022, suggesting a period where value creation barely exceeded the cost of capital. A strong recovery occurred in 2023 and 2024, with the margin reaching its apex at 4.84%. By 2025, the margin declined to 2.88%, indicating a decrease in the efficiency of converting adjusted revenue into economic value.
- Correlation Between Revenue and Value Creation
- An inverse relationship between revenue growth and economic profit is observed in the final period of analysis. Between 2024 and 2025, adjusted revenues grew by approximately 23%, yet economic profit declined by roughly 26.7%. This divergence suggests that the costs associated with the 2025 revenue expansion, or the cost of the capital employed to achieve it, outpaced the incremental operating gains.