Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
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- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Common-Size Income Statement
- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to Earnings (P/E) since 2012
- Analysis of Debt
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Return on Invested Capital (ROIC)
ServiceNow Inc., ROIC 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, 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 NOPAT. See details »
2 Invested capital. See details »
3 2024 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes experienced a steady upward trend over the analyzed period. Starting at 886 million USD in 2020, NOPAT increased significantly each year, reaching 2283 million USD by 2024. The most pronounced growth occurred between 2022 and 2023, where the profit jumped from 1148 million USD to 1814 million USD, indicating an improving operational efficiency or favorable market conditions.
- Invested Capital
- Invested capital showed consistent growth throughout the years, rising from 4325 million USD in 2020 to 9898 million USD in 2024. This indicates ongoing investment in assets or resources essential for the company's operations. The incremental increases suggest a strategy of capital expansion, with relatively larger investments made in more recent years, particularly between 2022 and 2024.
- Return on Invested Capital (ROIC)
- The return on invested capital demonstrates a generally positive but fluctuating pattern. Initially, ROIC declined from 20.49% in 2020 to 17.69% in 2022, reflecting a decreasing efficiency in generating profits from the invested capital. However, in subsequent years, ROIC improved markedly, rising to 22.31% in 2023 and further to 23.07% in 2024. This recovery and growth in ROIC suggest enhanced profitability and more effective use of invested capital in the latter years.
- Overall Insights
- The data indicates strong growth in both profitability and investment over the five-year period. While the company increased its capital base, it managed to improve its returns in the final years, implying effective capital allocation and operational improvements. The initial decline in ROIC may signal challenges during the early period, but the subsequent rebound highlights resilience and improved financial performance.
Decomposition of ROIC
ServiceNow Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × |
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 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
- Operating Profit Margin (OPM)
- The operating profit margin shows a fluctuating but overall upward trend. It decreased from 17.77% in 2020 to 14.87% in 2022, indicating a reduction in operating efficiency or increased costs during this period. However, from 2022 onwards, there was a significant recovery and improvement, rising to 18.76% in 2023 and further to 20.13% in 2024, which suggests enhanced operational performance and profitability in the most recent years.
- Turnover of Capital (TO)
- The turnover of capital remained relatively stable over the five-year period, with slight fluctuations around the range of 1.16 to 1.24. Starting at 1.23 in 2020, it dipped slightly to 1.16 in 2021, then rebounded to 1.24 in 2022 and 2023, before a minor decrease to 1.22 in 2024. This stability suggests consistent efficiency in utilizing capital to generate revenue without significant improvements or declines.
- 1 – Effective Cash Tax Rate (CTR)
- The 1 minus effective cash tax rate metric maintained a high level throughout the period, ranging narrowly between approximately 94.1% and 95.68%. This indicates that the proportion of pre-tax profits not paid as cash taxes remained very high and stable, implying favorable tax conditions or efficient tax management.
- Return on Invested Capital (ROIC)
- The return on invested capital displayed a generally decreasing trend from 2020 to 2022, declining from 20.49% to 17.69%. Nevertheless, there was a marked recovery and improvement in the last two years, with ROIC increasing to 22.31% in 2023 and 23.07% in 2024. This pattern suggests an initial weakening in the returns generated on the company's capital invested, followed by notable enhancements in capital efficiency and profitability in the later years.
Operating Profit Margin (OPM)
ServiceNow Inc., OPM 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenues | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, 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 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
OPM = 100 × NOPBT ÷ Adjusted revenues
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes demonstrated a consistent upward trajectory over the five-year period. Starting at $942 million in 2020, it increased to $1,167 million in 2021, followed by a modest rise to $1,201 million in 2022. A more pronounced growth was observed in 2023 and 2024, reaching $1,896 million and $2,422 million respectively. This indicates strong profitability expansion, particularly in the latter two years.
- Adjusted Revenues
- Adjusted revenues increased steadily year over year, beginning at $5,302 million in 2020 and rising to $6,787 million in 2021 and $8,076 million in 2022. The growth accelerated further in 2023 and 2024, with revenues reaching $10,107 million and $12,032 million respectively. The data suggests robust top-line growth, with an increasing rate of revenue generation in recent years.
- Operating Profit Margin (OPM)
- The operating profit margin displayed some variability over the period. It started at 17.77% in 2020, followed by a slight decrease to 17.2% in 2021 and a more noticeable decline to 14.87% in 2022. However, the margin recovered in 2023 to 18.76% and further improved to 20.13% in 2024. This pattern indicates an initial margin compression but a subsequent recovery and improvement, suggesting better cost management or operational efficiencies in the latest years.
- Overall Summary
- The financial data reveals a clear growth pattern in both revenue and profitability over the five-year span. Revenues consistently increased, with an accelerating growth rate, while net operating profit before taxes also rose, particularly sharply in the last two years. Although the operating profit margin showed some decline in the middle years, it rebounded strongly afterward, reaching the highest margin in 2024. These trends suggest improved operational performance and effective scaling of the business in recent periods.
Turnover of Capital (TO)
ServiceNow Inc., TO calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenues | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, 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 Invested capital. See details »
2 2024 Calculation
TO = Adjusted revenues ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Adjusted Revenues
- The adjusted revenues exhibit a consistent upward trend over the analyzed period. Starting at $5,302 million in 2020, revenues have increased each year, reaching $12,032 million by 2024. This represents more than a twofold growth within five years, indicating robust sales expansion and potentially successful market strategies.
- Invested Capital
- Invested capital also shows a steady increase, rising from $4,325 million in 2020 to $9,898 million in 2024. This near doubling of invested capital aligns with the increase in adjusted revenues, suggesting sustained investment in assets or resources to support the company’s growing operations.
- Turnover of Capital (TO)
- The turnover of capital ratio fluctuates slightly but remains relatively stable throughout the period. It starts at 1.23 in 2020, dips to 1.16 in 2021, then stabilizes around 1.24 in 2022 and 2023 before a minor decline to 1.22 in 2024. This steadiness suggests that despite increased invested capital and revenues, the efficiency with which the company utilizes its capital has been maintained without significant deterioration or improvement.
- Summary of Trends
- The data reflects strong growth in financial scale, with both revenues and invested capital doubling over five years. The relatively stable turnover of capital indicates that the growth in invested resources is proportionate to revenue growth, maintaining operational efficiency. Overall, the financial profile suggests a company expanding its operations while effectively managing capital utilization.
Effective Cash Tax Rate (CTR)
ServiceNow Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, 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 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- The cash operating taxes exhibit an overall upward trend from 2020 to 2024. Starting at $56 million in 2020, there is a modest increase to $59 million in 2021, followed by a slight decline to $53 million in 2022. Subsequently, the amount rises significantly to $82 million in 2023 and experiences a sharp increase to $138 million in 2024. This pattern suggests a growing cash tax burden, particularly during the last two years of the period.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes shows consistent growth throughout the five-year span. Beginning at $942 million in 2020, it climbs steadily to $1167 million in 2021 and $1201 million in 2022. The profit margin sees a marked increase in 2023, reaching $1896 million, and continues to grow to $2422 million by 2024. This upward trajectory indicates improving operating performance and profitability over the years.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate fluctuates moderately within a narrow range across the period, starting at 5.9% in 2020 and decreasing gradually to a low of 4.32% in 2023. In 2024, the rate experiences a rebound to 5.72%. Despite these variations, the tax rate remains relatively low, signaling efficient tax management and favorable tax positions throughout the timeframe analyzed.