Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Paying user area
Try for free
ServiceNow Inc. pages available for free this week:
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2012
- Current Ratio since 2012
- Price to Operating Profit (P/OP) since 2012
- Price to Book Value (P/BV) since 2012
- Price to Sales (P/S) since 2012
- Aggregate Accruals
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:
Profitability Ratios (Summary)
ServiceNow Inc., profitability ratios
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 profitability metrics demonstrate a significant positive trend over the observed period, followed by some moderation in the most recent year. Gross profit margin exhibited initial improvement, peaking in 2024 before experiencing a slight decline in 2025. However, operating and net profit margins showed more substantial and sustained growth, particularly between 2022 and 2024. Returns on equity and assets also followed this pattern of improvement, with notable increases in 2023, before stabilizing in the subsequent years.
- Gross Profit Margin
- The gross profit margin increased from 77.05% in 2021 to 79.18% in 2024, indicating improving efficiency in production or procurement. A slight decrease to 77.53% in 2025 suggests potential pressures on cost of goods sold or pricing.
- Operating Profit Margin
- Operating profit margin experienced a considerable increase, rising from 4.36% in 2021 to 12.42% in 2024. This suggests effective management of operating expenses relative to revenue. The margin then increased slightly to 13.74% in 2025, indicating continued operational efficiency.
- Net Profit Margin
- The net profit margin demonstrated the most dramatic improvement, increasing from 3.90% in 2021 to 19.30% in 2023. While it decreased to 12.97% in 2024 and 13.16% in 2025, it remained substantially higher than the levels observed in the earlier years. This suggests a significant improvement in overall profitability, potentially driven by factors beyond core operations, such as tax benefits or non-operating income, followed by a normalization.
- Return on Equity (ROE)
- ROE increased significantly from 6.22% in 2021 to 22.69% in 2023, indicating improved profitability relative to shareholder equity. The metric then decreased to 14.83% in 2024 and 13.48% in 2025, suggesting a stabilization of returns to shareholders.
- Return on Assets (ROA)
- ROA followed a similar trend to ROE, increasing from 2.13% in 2021 to 9.96% in 2023, demonstrating improved efficiency in utilizing assets to generate profit. A subsequent decline to 6.99% in 2024 and 6.71% in 2025 indicates a leveling off of asset utilization efficiency.
Overall, the period from 2021 to 2023 was characterized by substantial improvements in all measured profitability ratios. The years 2024 and 2025 show a moderation of these gains, with margins and returns stabilizing at levels still considerably above those of 2021 and 2022. Further investigation may be warranted to understand the factors contributing to the recent stabilization.
Return on Sales
Return on Investment
Gross Profit Margin
ServiceNow Inc., gross 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) | ||||||
| Gross profit | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| 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 2025 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The gross profit margin exhibited an overall positive trend from 2021 to 2024, followed by a slight decrease in the most recent year presented. Gross profit increased consistently across the period, while revenues also demonstrated continuous growth. The relationship between these two metrics resulted in fluctuations in the gross profit margin.
- Gross Profit Margin Trend
- The gross profit margin increased from 77.05% in 2021 to 79.18% in 2024, indicating improving efficiency in managing the cost of goods sold relative to revenue. This suggests the company was able to either increase prices, reduce production costs, or both, over this timeframe. However, in 2025, the gross profit margin decreased to 77.53%, representing a decline of 1.65 percentage points from the peak in 2024. This decrease warrants further investigation to determine the underlying cause, such as increased costs of goods sold, pricing pressures, or a shift in product mix.
- Gross Profit and Revenue Growth
- Gross profit increased from US$4,543 million in 2021 to US$10,295 million in 2025, representing substantial growth over the five-year period. Revenues mirrored this growth, increasing from US$5,896 million in 2021 to US$13,278 million in 2025. The consistent growth in both metrics suggests strong demand for the company’s offerings and effective revenue generation strategies.
The observed increase in gross profit margin from 2021 to 2024 is a positive indicator of financial health. The slight decline in 2025, while not drastic, should be monitored closely in future periods to assess whether it represents a temporary fluctuation or the beginning of a more sustained trend.
Operating Profit Margin
ServiceNow Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Income from operations | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| 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. | ||||||
| Operating Profit Margin, Sector | ||||||
| Software & Services | ||||||
| Operating Profit Margin, Industry | ||||||
| Information Technology | ||||||
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 2025 Calculation
Operating profit margin = 100 × Income from operations ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The operating profit margin demonstrates a consistent upward trend over the five-year period. This indicates improving operational efficiency and profitability. Income from operations and revenues both increased year-over-year, but the operating profit margin’s growth suggests that the company is becoming more effective at converting revenue into operating profit.
- Operating Profit Margin Trend
- The operating profit margin increased from 4.36% in 2021 to 4.90% in 2022, representing a moderate initial improvement. The rate of increase accelerated significantly between 2022 and 2023, rising to 8.49%. This momentum continued into 2024, with the margin reaching 12.42%, and further increased to 13.74% in 2025. This sustained growth suggests successful implementation of cost control measures or pricing strategies, or a combination of both.
The growth in income from operations, from US$257 million in 2021 to US$1,824 million in 2025, directly supports the observed increase in the operating profit margin. Revenues also experienced substantial growth, increasing from US$5,896 million to US$13,278 million over the same period. However, the operating profit margin’s expansion indicates that revenue growth was accompanied by improved profitability, rather than simply increased scale.
- Revenue and Operating Income Relationship
- While both revenues and income from operations increased each year, the operating profit margin’s consistent rise suggests a strengthening relationship between revenue generation and operational profitability. The company appears to be leveraging its revenue growth to enhance its core operational performance.
The substantial increase in the operating profit margin from 2022 onwards warrants further investigation to identify the specific drivers of this improvement. Potential factors could include economies of scale, improved pricing power, enhanced operational efficiencies, or a shift in the company’s product or service mix towards higher-margin offerings.
Net Profit Margin
ServiceNow Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| 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. | ||||||
| Net Profit Margin, Sector | ||||||
| Software & Services | ||||||
| Net Profit Margin, Industry | ||||||
| Information Technology | ||||||
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 2025 Calculation
Net profit margin = 100 × Net income ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The net profit margin exhibited significant fluctuation over the five-year period. Initial values were relatively low, followed by substantial growth and subsequent stabilization. A clear pattern of increasing profitability emerges, though with some volatility.
- Net Profit Margin - Overall Trend
- The net profit margin began at 3.90% in 2021 and increased to 4.49% in 2022, indicating a modest improvement in profitability. A dramatic increase was then observed in 2023, reaching 19.30%. While remaining high, the margin decreased to 12.97% in 2024 before stabilizing at 13.16% in 2025. This suggests a period of rapid expansion in profitability followed by a leveling off.
- Net Income and Revenue Relationship
- The substantial increase in net profit margin in 2023 correlates with a significant rise in net income, from US$325 million in 2022 to US$1,731 million. Revenues also increased considerably during this period, but not at the same rate as net income, suggesting improved cost management or pricing strategies. The subsequent decrease in margin in 2024, despite continued revenue growth, indicates that net income did not increase proportionally with revenue.
- Recent Performance (2024-2025)
- From 2024 to 2025, the net profit margin remained relatively stable, fluctuating only slightly between 12.97% and 13.16%. This suggests a mature phase where profitability is consistent, even with continued revenue expansion. The increase in net income from US$1,425 million to US$1,748 million, coupled with the stable margin, indicates that revenue growth is translating into incremental profit.
In summary, the company experienced a period of rapid profitability improvement, peaking in 2023, followed by a period of stabilization at a still-elevated level. The relationship between revenue and net income suggests effective cost control and pricing power, particularly evident in the 2023 performance.
Return on Equity (ROE)
ServiceNow Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Stockholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| 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. | ||||||
| ROE, Sector | ||||||
| Software & Services | ||||||
| ROE, Industry | ||||||
| Information Technology | ||||||
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 2025 Calculation
ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Equity (ROE) exhibited significant fluctuation over the five-year period. Net income and stockholders’ equity both demonstrated consistent growth, but the resulting ROE experienced substantial variation, indicating a changing relationship between profitability and equity financing.
- ROE Trend
- In 2021, ROE stood at 6.22%. A modest increase was observed in 2022, reaching 6.46%. A dramatic surge occurred in 2023, with ROE climbing to 22.69%. This substantial increase suggests a significant improvement in the efficiency with which equity was used to generate profits. However, ROE subsequently declined in 2024 to 14.83% and further decreased to 13.48% in 2025. These decreases, despite continued growth in both net income and stockholders’ equity, suggest that the rate of profit generation relative to equity investment diminished in the latter two years.
- Net Income and Stockholders’ Equity Relationship
- Net income increased from US$230 million in 2021 to US$1,748 million in 2025, representing substantial growth. Stockholders’ equity also increased considerably, moving from US$3,695 million in 2021 to US$12,964 million in 2025. The disproportionate growth in equity relative to net income in 2024 and 2025 likely contributed to the observed decline in ROE. While profits were increasing, the equity base was expanding at a faster rate, diluting the return on each dollar of equity.
The initial increase in ROE in 2023 was particularly noteworthy, but the subsequent decline warrants further investigation. Factors contributing to this decline could include increased equity issuance, changes in asset utilization, or shifts in profit margins. Continued monitoring of these underlying drivers is recommended to understand the sustainability of profitability relative to equity investment.
Return on Assets (ROA)
ServiceNow Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| 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. | ||||||
| ROA, Sector | ||||||
| Software & Services | ||||||
| ROA, Industry | ||||||
| Information Technology | ||||||
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 2025 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Assets (ROA) exhibited a significant upward trend between 2021 and 2023, followed by a moderation in subsequent years. Net income demonstrated consistent growth over the period, although with a slight decrease from 2023 to 2024 before recovering in 2025. Total assets increased steadily throughout the five-year period.
- ROA Trend
- In 2021, the ROA stood at 2.13%. It increased to 2.44% in 2022, representing a modest improvement. A substantial increase was then observed in 2023, with the ROA reaching 9.96%. This significant rise indicates a considerably improved efficiency in utilizing assets to generate profit. However, the ROA decreased to 6.99% in 2024 and further to 6.71% in 2025. While still representing a healthy return, these later figures suggest a diminishing ability to generate earnings relative to the asset base compared to the peak in 2023.
- Net Income and Asset Relationship
- Net income increased from US$230 million in 2021 to US$325 million in 2022, contributing to the initial ROA improvement. The substantial growth in net income to US$1,731 million in 2023 was the primary driver of the dramatic ROA increase. The slight decline in net income to US$1,425 million in 2024, coupled with continued asset growth, explains the subsequent decrease in ROA. The recovery in net income to US$1,748 million in 2025 was not sufficient to fully restore the ROA to its 2023 level, as asset growth continued.
- Asset Growth
- Total assets grew consistently from US$10,798 million in 2021 to US$26,038 million in 2025. This consistent expansion of the asset base, while supporting revenue growth, appears to have partially offset the positive impact of net income increases on ROA in the later years of the period.
The observed trends suggest that while the company has demonstrated strong growth in both net income and total assets, the efficiency of asset utilization, as measured by ROA, has fluctuated. The peak ROA in 2023 was followed by a period of moderation, indicating that asset growth has outpaced the growth in earnings relative to the asset base.