ServiceNow Inc. (NYSE:NOW)

The investment activity ratios demonstrate varying trends over the observed period. Generally, a slight decline in asset utilization efficiency is apparent across most metrics, although fluctuations exist within the timeframe. The analysis below details observations for each ratio individually.

Net Fixed Asset Turnover

This ratio exhibits a general downward trend from 7.84 in March 2022 to 5.80 in December 2025. While some quarterly variations occur, the overall direction indicates decreasing revenue generation per dollar of net fixed assets. The decline is not precipitous, but consistent. A slight recovery is observed in the earlier quarters of 2023, but this is not sustained.

Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)

Similar to the standard net fixed asset turnover, this ratio also shows a declining trend, moving from 4.53 in March 2022 to 4.29 in December 2025. The inclusion of operating lease assets moderates the decline compared to the standard ratio, suggesting that leased assets contribute to revenue generation. The fluctuations are less pronounced than those observed in the standard net fixed asset turnover.

Total Asset Turnover

The total asset turnover ratio fluctuates between 0.51 and 0.62 throughout the period. An initial increase is seen from March 2022 to September 2022, followed by a decline to December 2023. The ratio stabilizes somewhat in the latter half of the observed period, with a slight decrease in the final quarter. The overall trend is relatively flat, but a subtle downward pressure is noticeable.

Equity Turnover

This ratio demonstrates a consistent downward trend, decreasing from 1.57 in March 2022 to 1.02 in December 2025. This indicates a decreasing ability to generate revenue from shareholder equity. The decline is more pronounced in the latter half of the period, particularly from March 2023 onwards. This suggests a potential shift in capital structure or operational efficiency impacting revenue generation relative to equity.

In summary, the observed trends suggest a gradual decrease in the efficiency with which assets and equity are utilized to generate revenue. While the declines are not dramatic, they warrant further investigation to understand the underlying drivers and potential implications for future performance.

The net fixed asset turnover ratio exhibits a generally declining trend over the observed period, spanning from March 31, 2022, to December 31, 2025. Initially, the ratio fluctuates between 7.54 and 7.84 during the first half of the period, before demonstrating a more consistent downward trajectory.

Overall Trend

From a high of 7.84 in March 2022, the ratio decreased to 5.80 by December 2025. This represents a cumulative decline of approximately 26.1%. The rate of decline appears to accelerate in the latter half of the period.

Initial Period (Mar 31, 2022 – Dec 31, 2022)

The ratio begins at 7.84 and experiences moderate fluctuations, decreasing to 6.88 by the end of 2022. This initial decline may be attributable to the increasing investment in property and equipment, net, outpacing revenue growth during this timeframe.

Intermediate Period (Mar 31, 2023 – Dec 31, 2023)

The ratio continues to decline, albeit at a slower pace, ranging from 6.82 to 6.61. Revenue growth remains positive, but the growth in property and equipment, net, continues to exert downward pressure on the turnover ratio.

Recent Period (Mar 31, 2024 – Dec 31, 2025)

A more pronounced downward trend is observed, with the ratio decreasing from 6.54 to 5.80. This suggests that investments in fixed assets are growing at a faster rate than revenue generation. The ratio demonstrates minimal fluctuation during this period, indicating a consistent pattern of asset investment relative to revenue.

The consistent decline in the net fixed asset turnover ratio suggests that the company is becoming less efficient in generating revenue from its fixed assets. This could be due to several factors, including increased capital expenditures, slower revenue growth, or a shift in business strategy towards less asset-intensive operations. Further investigation into the underlying drivers of these trends is warranted.

The net fixed asset turnover ratio, calculated using property and equipment inclusive of operating leases and right-of-use assets, demonstrates a generally stable performance over the observed period, spanning from March 31, 2022, to December 31, 2025. While fluctuations exist, the ratio consistently remains above 4.0, indicating efficient asset utilization in generating revenue.

Overall Trend

From March 31, 2022, to December 31, 2025, the ratio exhibits a relatively narrow range, fluctuating between 4.18 and 4.63. This suggests a consistent ability to generate sales relative to the investment in fixed assets. There isn't a clear, sustained upward or downward trend over the entire period.

Initial Period (Mar 31, 2022 – Dec 31, 2022)

The ratio begins at 4.53 in March 2022, decreases to 4.46 in June 2022, then increases to 4.63 in September 2022 before declining to 4.18 by December 2022. This initial period shows the largest single decrease in the ratio, potentially indicating a slower growth in revenue relative to asset investment during that timeframe.

Subsequent Stability (Mar 31, 2023 – Dec 31, 2024)

From March 2023 through December 2024, the ratio remains relatively stable, oscillating between 4.24 and 4.47. This suggests a period of consistent operational efficiency and a balanced relationship between revenue generation and fixed asset investment. The fluctuations within this period are less pronounced than those observed in 2022.

Recent Period (Mar 31, 2025 – Dec 31, 2025)

The ratio shows a slight downward trend in the most recent period, moving from 4.26 in March 2025 to 4.29 in December 2025. While the change is minimal, it warrants monitoring to determine if this represents the beginning of a more significant shift in asset utilization efficiency.

In summary, the net fixed asset turnover ratio indicates a generally efficient use of fixed assets to generate revenue. The observed fluctuations appear to be within a reasonable range, and the ratio remains consistently above 4.0 throughout the analyzed period. The slight decline in the final period should be monitored for potential implications.

The total asset turnover ratio for the analyzed period demonstrates a generally stable pattern with some fluctuation. Revenues consistently increased throughout the period, while total assets experienced more significant variability, impacting the ratio’s behavior.

Overall Trend

The total asset turnover ratio fluctuated between 0.51 and 0.62 over the observed timeframe. There isn't a clear, sustained upward or downward trend. The ratio generally remained within a relatively narrow range, suggesting consistent efficiency in asset utilization, despite changes in asset levels.

Initial Period (Mar 31, 2022 – Dec 31, 2022)

The ratio began at 0.57 and increased to 0.62 by September 30, 2022, indicating improving asset utilization during this period. However, a subsequent decrease to 0.54 was observed by December 31, 2022, potentially due to a larger increase in total assets compared to revenue growth.

Subsequent Period (Mar 31, 2023 – Dec 31, 2024)

From March 31, 2023, to December 31, 2024, the ratio exhibited continued fluctuation, remaining largely between 0.54 and 0.57. This suggests a period of relatively stable asset utilization, despite ongoing revenue and asset growth. A slight increase to 0.57 was noted in September 2024.

Recent Period (Mar 31, 2025 – Dec 31, 2025)

The ratio decreased to 0.58 in September 2025, followed by a more pronounced decline to 0.51 by December 31, 2025. This decrease coincides with a substantial increase in total assets, suggesting that the company may be investing in assets that have not yet translated into proportional revenue gains. This is the lowest point in the observed period.

Relationship to Revenue and Assets

The observed fluctuations in the total asset turnover ratio appear closely linked to the growth rates of both revenues and total assets. Periods of relatively stable ratios correspond to balanced growth in both areas, while significant changes in the ratio are often associated with disproportionate growth in either revenues or assets. The recent decline suggests asset growth is outpacing revenue generation.

In conclusion, the total asset turnover ratio indicates generally consistent asset utilization, but the recent decrease warrants further investigation to determine the effectiveness of recent asset investments.

The equity turnover ratio for the analyzed period demonstrates a consistent, albeit gradual, declining trend. Initially, the ratio exhibited stability before experiencing a more pronounced decrease over the observed timeframe.

Overall Trend

The equity turnover ratio decreased from 1.57 in the first quarter of 2022 to 1.02 in the final quarter of 2025. This indicates a diminishing ability to generate revenue relative to the amount of stockholders’ equity.

Initial Stability (Q1 2022 - Q4 2022)

From March 31, 2022, through December 31, 2022, the ratio remained relatively stable, fluctuating between 1.57 and 1.44. This suggests a consistent relationship between revenue generation and equity investment during this period. Revenues increased steadily, while stockholders’ equity grew at a faster pace, resulting in a slight decrease in the ratio.

Moderate Decline (Q1 2023 - Q4 2023)

The period from March 31, 2023, to December 31, 2023, saw a continued decline, moving from 1.36 to 1.18. This suggests that the company was becoming less efficient in utilizing equity to generate sales. Stockholders’ equity experienced significant growth, while revenue increases were comparatively smaller.

Continued Decrease (Q1 2024 - Q4 2025)

The downward trend persisted through the remainder of the analyzed period, with the ratio decreasing from 1.17 in March 2024 to 1.02 in December 2025. This indicates a further reduction in the efficiency of equity utilization. The growth in stockholders’ equity significantly outpaced revenue growth, driving the ratio lower. The most substantial decrease occurred between September 2025 and December 2025.

The consistent decline in the equity turnover ratio warrants further investigation. While growth in stockholders’ equity is generally positive, the disproportionate increase relative to revenue suggests potential inefficiencies in asset utilization or a shift in business strategy that requires a larger equity base.