Enterprise Value to FCFF (EV/FCFF)
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- 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
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Free Cash Flow to The Firm (FCFF)
ServiceNow Inc., FCFF calculation
US$ in millions
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).
Net cash provided by operating activities and free cash flow to the firm (FCFF) both demonstrate consistent growth over the five-year period. The growth in FCFF appears to be closely aligned with the growth in operating cash flow, suggesting a stable relationship between core business operations and available free cash.
- Operating Cash Flow Trend
- Net cash provided by operating activities increased from US$2,191 million in 2021 to US$5,444 million in 2025. This represents a compound annual growth rate (CAGR) of approximately 20.8%. The increase is substantial and indicates improving operational efficiency and/or revenue generation.
- FCFF Trend
- Free cash flow to the firm increased from US$1,837 million in 2021 to US$4,550 million in 2025. This also represents a CAGR of approximately 20.1%. The consistent growth in FCFF suggests the company is effectively converting operating cash flow into cash available to all investors (debt and equity holders).
- Relationship between Operating Cash Flow and FCFF
- The difference between net cash from operations and FCFF remains relatively consistent across the observed period. This suggests that capital expenditure and other non-cash items impacting FCFF are growing in proportion to operating cash flow. The ratio of FCFF to operating cash flow fluctuates between approximately 83% and 89% throughout the period, indicating a stable capital allocation strategy.
- Growth Rates
- Year-over-year growth rates for both metrics are positive throughout the period. Growth decelerated slightly from 2022 to 2023, but then re-accelerated in 2024 and 2025. This pattern could warrant further investigation to understand the underlying drivers of these fluctuations.
Overall, the observed trends indicate a healthy and improving financial position with respect to cash generation. The consistent growth in both operating cash flow and FCFF provides the company with increased financial flexibility for investments, debt repayment, or shareholder returns.
Interest Paid, Net of Tax
ServiceNow Inc., interest paid, net of tax calculation
US$ in millions
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).
2 2025 Calculation
Interest paid, tax = Interest paid × EITR
= × =
The analysis reveals a fluctuating pattern in interest expense, net of tax, alongside variations in the effective income tax rate over the five-year period. Interest paid, net of tax, generally decreased from 2021 to 2023, before exhibiting a slight increase in 2024 and a further decrease in 2025. The effective income tax rate demonstrates a more pronounced increase from 2021 to 2023, followed by a decrease in 2024 and another increase in 2025.
- Interest Paid, Net of Tax
- Interest paid, net of tax, began at US$38 million in 2021. A substantial decrease was observed in 2022, falling to US$20 million. This downward trend continued into 2023, with interest expense reaching US$18 million. A modest increase to US$19 million occurred in 2024, but this was followed by a further decline to US$17 million in 2025. The overall trend suggests a reduction in net interest expense over the period, although not consistently.
- Effective Income Tax Rate
- The effective income tax rate experienced significant volatility. Starting at 7.60% in 2021, it rose considerably to 18.60% in 2022. This increase continued in 2023, reaching 21.00%. A decrease to 18.00% was noted in 2024, before rising again to 22.70% in 2025. The fluctuations in the effective income tax rate could be attributable to changes in tax laws, the geographic distribution of profits, or the recognition of tax benefits or liabilities.
The interplay between interest paid, net of tax, and the effective income tax rate suggests a complex financial landscape. While net interest expense decreased overall, the varying effective income tax rate introduces an additional layer of analysis. Further investigation into the factors driving these changes would be beneficial for a comprehensive understanding of the company’s financial performance.
Enterprise Value to FCFF Ratio, Current
ServiceNow Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | |
| Free cash flow to the firm (FCFF) | |
| Valuation Ratio | |
| EV/FCFF | |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| 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. | |
| EV/FCFF, Sector | |
| Software & Services | |
| EV/FCFF, Industry | |
| Information Technology | |
Based on: 10-K (reporting date: 2025-12-31).
1 Click competitor name to see calculations.
If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.
Enterprise Value to FCFF Ratio, Historical
ServiceNow Inc., historical EV/FCFF 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) | ||||||
| Enterprise value (EV)1 | ||||||
| Free cash flow to the firm (FCFF)2 | ||||||
| Valuation Ratio | ||||||
| EV/FCFF3 | ||||||
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| 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. | ||||||
| EV/FCFF, Sector | ||||||
| Software & Services | ||||||
| EV/FCFF, 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).
3 2025 Calculation
EV/FCFF = EV ÷ FCFF
= ÷ =
4 Click competitor name to see calculations.
The Enterprise Value to Free Cash Flow to the Firm (EV/FCFF) ratio exhibits considerable fluctuation over the observed period. Initial values demonstrate a decrease followed by an increase, and then a significant decline. Enterprise Value and Free Cash Flow to the Firm both generally increased over the period, but the EV/FCFF ratio’s movement is not solely dictated by these individual trends.
- Enterprise Value (EV)
- Enterprise Value decreased from US$110,442 million in 2021 to US$89,601 million in 2022, representing a substantial decline. It then increased significantly to US$153,785 million in 2023 and further to US$204,354 million in 2024, reaching its highest point during the analyzed timeframe. A considerable decrease is then observed in 2025, falling to US$117,307 million.
- Free Cash Flow to the Firm (FCFF)
- Free Cash Flow to the Firm consistently increased throughout the period. Starting at US$1,837 million in 2021, it rose to US$2,193 million in 2022, US$2,719 million in 2023, US$3,394 million in 2024, and reached US$4,550 million in 2025. This represents a consistent upward trend in cash flow generation.
- EV/FCFF Ratio
- The EV/FCFF ratio began at 60.12 in 2021, decreased to 40.87 in 2022, and then increased to 56.56 in 2023. It peaked at 60.21 in 2024 before experiencing a dramatic decrease to 25.78 in 2025. The ratio’s volatility suggests a changing market perception of the firm’s value relative to its cash flow generation. The decline in 2025, despite continued FCFF growth, indicates a significant decrease in Enterprise Value relative to the cash flow produced.
The observed fluctuations in the EV/FCFF ratio suggest that factors beyond simply the absolute levels of Enterprise Value and Free Cash Flow to the Firm are influencing valuation. These factors could include changes in market interest rates, investor sentiment, or perceived risk associated with the firm. The substantial decrease in the ratio in 2025 warrants further investigation to understand the drivers behind the reduced Enterprise Value.