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
- Analysis of Liquidity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2012
- Operating Profit Margin since 2012
- Return on Equity (ROE) since 2012
- Return on Assets (ROA) since 2012
- Aggregate Accruals
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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
= – × =
The analysis of the financial data reveals several key trends regarding profitability, capital efficiency, and value generation over the observed period.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT has shown a consistent upward trend from 2020 to 2024. It increased from $886 million in 2020 to $2283 million in 2024, nearly tripling over five years. This steady growth highlights improving operational profitability and effective cost management.
- Cost of Capital
- The cost of capital has remained relatively stable but shows a slight increasing tendency, moving from 14.45% in 2020 to 14.61% in 2024. This minor increase suggests a marginal rise in the overall risks or required returns associated with the company’s capital structure during the period.
- Invested Capital
- Invested capital expanded significantly over the years, growing from $4325 million in 2020 to $9898 million in 2024. This near doubling indicates substantial investments made by the company, possibly supporting its expansion or operational scaling.
- Economic Profit
- Economic profit fluctuated but exhibited a robust upward trend overall. After a slight decrease from $262 million in 2020 to $209 million in 2022, it surged to $837 million by 2024. This increase reflects enhanced value creation beyond the cost of capital, suggesting improved efficiency in deploying capital and generating returns above expectations.
In summary, the data indicates a company that has successfully increased its operating profits and invested capital to foster growth. Despite rising capital costs, economic profit has improved considerably, demonstrating stronger value generation and effective capital utilization.
Net Operating Profit after Taxes (NOPAT)
ServiceNow Inc., NOPAT calculation
US$ 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 demonstrates a fluctuating yet overall rising trend. Starting at 262 million USD in 2020, it decreased slightly to 260 million USD in 2021 and more notably to 209 million USD in 2022. Subsequently, there was a significant increase in 2023 to 629 million USD, followed by further growth to 837 million USD in 2024. This pattern suggests an improving profitability scenario after a period of decline.
- Invested Capital
- The invested capital consistently increased across all reported periods. It rose from 4,325 million USD in 2020 to 5,871 million USD in 2021, then to 6,490 million USD in 2022. This upward trajectory continued more sharply with 8,131 million USD in 2023 and 9,898 million USD in 2024. The steady increase in invested capital indicates ongoing expansion and growing commitment of resources.
- Economic Spread Ratio
- The economic spread ratio reflects the profitability efficiency relative to invested capital and shows some volatility. It declined from 6.05% in 2020 to 4.43% in 2021 and further to 3.21% in 2022, indicating reduced returns on capital during these years. However, this trend reversed in 2023 with a significant increase to 7.74%, followed by a further improvement to 8.45% in 2024. This rebound indicates enhanced effectiveness in generating returns from the capital invested in the latter periods.
- Summary
- Overall, the financial data reveal an initial period of declining profitability and return on invested capital from 2020 through 2022. Despite continuous growth in invested capital, economic profit and spread ratio fell during this time. Starting in 2023, both economic profit and the economic spread ratio demonstrate a strong recovery and significant improvement, signaling increased profitability and more efficient capital utilization moving forward. The progressive increase in invested capital suggests the company is investing in growth opportunities, which appears to be translating into improved financial performance 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. | ||||||
| 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 demonstrate a consistent upward trajectory over the analyzed periods. Starting at $5,302 million in 2020, the revenues increased to $6,787 million in 2021, continuing to $8,076 million in 2022. The growth accelerated further in subsequent years, reaching $10,107 million in 2023 and $12,032 million in 2024. This trend indicates strong top-line expansion.
- Economic Profit
- The economic profit exhibits some variability but generally follows an increasing pattern. The values remain close between 2020 ($262 million) and 2021 ($260 million), before declining to $209 million in 2022. A significant rebound occurs after this low point, rising sharply to $629 million in 2023 and further to $837 million in 2024. This suggests improving profitability and value creation post-2022.
- Economic Profit Margin
- The economic profit margin shows a decreasing trend from 4.93% in 2020 to 3.83% in 2021 and further to 2.58% in 2022, indicating reduced efficiency or margin contraction during this period. However, from 2023 onward, there is a marked recovery and improvement, with the margin increasing to 6.23% and then to 6.95% in 2024, reflecting enhanced profitability relative to revenues.
- Overall Insights
- Over the five-year span, the company experienced sustained revenue growth paired with fluctuations in economic profit and margin. The decline in economic profit and margin until 2022, despite rising revenues, may imply escalating costs or investments impacting profitability. The subsequent sharp improvement in 2023 and 2024 suggests successful strategies or operational efficiencies implemented to leverage revenue growth into higher economic profit and margins.