Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Statement of Comprehensive Income
- Common-Size Balance Sheet: Assets
- Analysis of Liquidity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2012
- Current Ratio since 2012
- Analysis of Revenues
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Profitability Ratios (Summary)
ServiceNow Inc., profitability ratios
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).
- Gross Profit Margin
- The gross profit margin exhibited a generally positive trend, increasing steadily from 78.16% in 2020 to 79.18% in 2024. This indicates a gradual improvement in the efficiency of production or service delivery relative to revenue over the observed period.
- Operating Profit Margin
- The operating profit margin showed a marked upward trend. Starting at 4.4% in 2020, it remained relatively stable in 2021 with a slight dip to 4.36%, before increasing to 4.9% in 2022. Significant growth is evident from 2022 onwards, rising to 8.49% in 2023 and further to 12.42% in 2024, indicating enhanced operational efficiency and better control over operating expenses.
- Net Profit Margin
- Net profit margin demonstrated a strong upward trajectory, rising from 2.62% in 2020 to a peak of 19.3% in 2023. However, this was followed by a decline to 12.97% in 2024. Despite the drop in the final year, the overall increase over the period suggests improved profitability and possibly effective management of non-operating items and taxes until 2023, with some adjustment occurring in 2024.
- Return on Equity (ROE)
- The return on equity improved steadily from 4.18% in 2020 to 6.46% in 2022. There was a significant jump to 22.69% in 2023, indicating a strong increase in shareholder value generated by the company. This was followed by a decline to 14.83% in 2024, though it remained substantially higher than the earlier years, reflecting favorable utilization of equity capital overall.
- Return on Assets (ROA)
- Return on assets increased consistently from 1.36% in 2020 to 2.44% in 2022, with a marked surge to 9.96% in 2023. A subsequent decrease to 6.99% in 2024 was observed. The significant improvement in ROA during 2023 indicates more effective use of the company's assets to generate profit, despite a moderate reduction in 2024, which still reflects better asset efficiency compared to the initial years.
Return on Sales
Return on Investment
Gross Profit Margin
ServiceNow Inc., gross 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) | ||||||
| Gross profit | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings 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: 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 2024 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
- Revenue Growth
- There is a consistent upward trend in revenues over the five-year period. The revenues increased from 4,519 million USD in 2020 to 10,984 million USD in 2024, more than doubling during this timeframe. This indicates robust business expansion and successful market penetration or sales growth strategies.
- Gross Profit Trends
- Gross profit also shows a strong and consistent increase, rising from 3,532 million USD in 2020 to 8,697 million USD in 2024. This growth aligns closely with the revenue increases, suggesting effective cost management relative to sales volume and scale economies.
- Gross Profit Margin Stability and Improvement
- The gross profit margin percentage demonstrates stability with a mild upward trend. Starting at 78.16% in 2020, it slightly fluctuated but generally increased to 79.18% by 2024. This improvement indicates that the company is either reducing cost of goods sold relative to revenues or increasing pricing power, thus enhancing profitability at the gross level.
- Overall Financial Performance Insights
- The simultaneous growth in revenues and gross profit, accompanied by a steady gross profit margin, reflects a positive financial performance trajectory. The company appears to be growing its sales while maintaining or improving operational efficiency, which bodes well for sustainability and profitability moving forward.
Operating Profit Margin
ServiceNow Inc., operating 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) | ||||||
| Income from operations | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings 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: 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 2024 Calculation
Operating profit margin = 100 × Income from operations ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
- Revenue Growth
- The revenues exhibit a consistent upward trajectory over the five-year period. Starting from US$4,519 million in 2020, revenues increased steadily each year, reaching US$10,984 million by the end of 2024. This reflects a significant and sustained expansion, more than doubling over the timeframe analyzed.
- Income from Operations
- Income from operations follows a similar upward trend, growing from US$199 million in 2020 to US$1,364 million in 2024. The growth in operating income is notably faster than revenue growth, indicating operational improvements or increased profitability.
- Operating Profit Margin
- The operating profit margin shows a positive improvement throughout the period. It started relatively low at 4.4% in 2020, experiencing minor fluctuation in 2021 before gaining steady momentum. By 2024, the margin more than doubled to 12.42%, evidencing enhanced operational efficiency and cost management that favorably impacted profitability.
- Overall Trends and Insights
- The data reveals robust financial health with accelerating growth in both revenue and income from operations. The improving operating margin is indicative of scalable business operations and better expense control. This combination suggests that the company is not only expanding its market reach or sales volume but also managing resources effectively to maximize profit generation.
Net Profit Margin
ServiceNow Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings 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: 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 2024 Calculation
Net profit margin = 100 × Net income ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
- Revenue Growth
- Revenues show a consistent upward trend over the five-year period, increasing from $4,519 million in 2020 to $10,984 million in 2024. The growth rate is steady and demonstrates substantial expansion, particularly notable between 2022 and 2024.
- Net Income Development
- Net income exhibits a strong increase from 2020 to 2022, rising from $119 million to $325 million, followed by a significant jump to $1,731 million in 2023. However, in 2024, net income decreases to $1,425 million, indicating some volatility after the sharp rise.
- Net Profit Margin Trends
- The net profit margin improves steadily from 2.62% in 2020 to 4.49% in 2022. A dramatic increase occurs in 2023, with the margin reaching 19.3%, followed by a decline to 12.97% in 2024. This pattern suggests improved operational efficiency or other favorable factors in 2023, with partial normalization thereafter.
- Overall Insights
- The financial data reflects robust revenue growth accompanying increased profitability in the early years. The spike in net income and profit margin during 2023 points to an exceptional year, possibly due to extraordinary events or operational improvements. The subsequent decrease in net income and margin in 2024 suggests a return to a more sustainable profitability level, though still significantly higher than in the initial years.
Return on Equity (ROE)
ServiceNow Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Stockholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings 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: 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 2024 Calculation
ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals a distinct upward trajectory in several key performance indicators over the five-year period.
- Net Income
- There is a notable increase from $119 million in 2020 to a peak of $1731 million in 2023, marking a significant growth in profitability. However, in 2024, net income declines moderately to $1425 million, which, despite the drop, remains considerably higher than in earlier years.
- Stockholders’ Equity
- Stockholders’ equity shows consistent and strong growth throughout the period, rising steadily from $2834 million in 2020 to $9609 million in 2024. This trend indicates a strengthening financial position and increased value attributable to shareholders.
- Return on Equity (ROE)
- ROE increases steadily from 4.18% in 2020 to a high of 22.69% in 2023, reflecting improving efficiency in generating earnings from equity. In 2024, ROE decreases to 14.83%, which, while lower than the previous year, still represents a substantial improvement compared to the early years.
Overall, the data indicates robust growth in profitability and equity, with a peak in performance metrics around 2023. The slight declines in net income and ROE in 2024 suggest a need for monitoring potential changes in operational efficiency or market conditions affecting profitability. Nonetheless, the company demonstrates a solid upward trend in value creation over the period analyzed.
Return on Assets (ROA)
ServiceNow Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings 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: 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 2024 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- The net income exhibited consistent growth from 2020 through 2022, increasing from 119 million US dollars in 2020 to 325 million in 2022. A significant surge occurred in 2023, with net income reaching 1,731 million US dollars, followed by a slight decline to 1,425 million US dollars in 2024.
- Total Assets
- Total assets showed a steady upward trend across the provided periods. The value grew from 8,715 million US dollars at the end of 2020 to 20,383 million US dollars by the end of 2024, indicating consistent asset expansion over these years.
- Return on Assets (ROA)
- ROA increased progressively from 1.36% in 2020 to 2.44% in 2022, suggesting improving efficiency in asset utilization. A marked increase occurred in 2023, where ROA peaked at 9.96%, correlating with the spike in net income and asset growth. However, in 2024, ROA decreased to 6.99%, which, despite the drop, remains significantly higher than the levels observed before 2023.
- Overall Analysis
- The data reflect an overall positive performance trajectory from 2020 to 2023, characterized by increasing profitability, asset growth, and improved asset utilization. The sharp increases in net income and ROA in 2023 suggest a period of enhanced operational efficiency or one-time gains, followed by a normalization phase in 2024, evidenced by a moderate decline in net income and ROA while assets continued to grow. This pattern indicates a potentially transformative year in 2023 with sustained asset expansion into 2024.