Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
ServiceNow Inc., FCFF calculation
US$ in millions
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).
The annual financial data reveals a consistent upward trend in both operating cash flow and free cash flow to the firm over the five-year period.
- Net Cash Provided by Operating Activities
- This figure shows a strong and steady increase each year, starting at 1,787 million US dollars in 2020 and rising to 4,267 million US dollars by 2024. The growth appears to be accelerating, with the annual increase becoming larger over time, indicating improved efficiency and robust cash generation from core business operations.
- Free Cash Flow to the Firm (FCFF)
- Similarly, FCFF exhibits a consistent growth trajectory, escalating from 1,367 million US dollars in 2020 to 3,394 million US dollars in 2024. This rise parallels the increase in operating cash flow, although FCFF amounts are slightly lower each year, reflecting capital expenditures or other investments. The expanding free cash flow suggests healthy cash availability for debt servicing, reinvestment, or distribution to investors.
Interest Paid, Net of Tax
ServiceNow Inc., interest paid, net of tax calculation
US$ in millions
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).
2 2024 Calculation
Interest paid, tax = Interest paid × EITR
= 23 × 18.01% = 4
- Effective Income Tax Rate (EITR)
- The effective income tax rate experienced fluctuations over the analyzed period. It began at 20.57% in 2020, then significantly decreased to 7.63% in 2021. Following this dip, the rate increased again to 18.55% in 2022, reaching its highest point at 21% in 2023 before declining to 18.01% in 2024. This pattern indicates variability in the tax burden, with a notable low in 2021 potentially due to tax benefits or adjustments, followed by stabilization around an approximate 18-21% range in recent years.
- Interest Paid, Net of Tax
- Interest paid, net of tax, shows a clear decreasing trend from 2021 to 2023, starting at 38 million US dollars in 2021 and dropping to 20 million in 2022, then further declining to 18 million in 2023. In 2024, there is a minor increase to 19 million US dollars. The absence of data for 2020 precludes any trend analysis for the earlier period, but from the available figures, the overall interest expense after tax is on a downward trend before stabilizing slightly in the last year.
Enterprise Value to FCFF Ratio, Current
ServiceNow Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 137,521) |
| Free cash flow to the firm (FCFF) | 3,394) |
| Valuation Ratio | |
| EV/FCFF | 40.52 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Accenture PLC | 15.24 |
| Adobe Inc. | 12.40 |
| AppLovin Corp. | 103.55 |
| Cadence Design Systems Inc. | 75.90 |
| CrowdStrike Holdings Inc. | 105.49 |
| Datadog Inc. | 58.43 |
| International Business Machines Corp. | 22.84 |
| Intuit Inc. | 25.01 |
| Microsoft Corp. | 47.86 |
| Oracle Corp. | 236.80 |
| Palantir Technologies Inc. | 345.25 |
| Palo Alto Networks Inc. | 36.16 |
| Salesforce Inc. | 16.63 |
| Synopsys Inc. | 63.22 |
| Workday Inc. | 19.81 |
| EV/FCFF, Sector | |
| Software & Services | 41.58 |
| EV/FCFF, Industry | |
| Information Technology | 54.85 |
Based on: 10-K (reporting date: 2024-12-31).
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, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 204,354) | 153,785) | 89,601) | 110,442) | 114,502) | |
| Free cash flow to the firm (FCFF)2 | 3,394) | 2,719) | 2,193) | 1,837) | 1,367) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 60.21 | 56.56 | 40.87 | 60.13 | 83.74 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Accenture PLC | 25.76 | 20.26 | 16.99 | 24.76 | 17.90 | |
| Adobe Inc. | 21.98 | 37.75 | 20.82 | 33.61 | 40.43 | |
| AppLovin Corp. | 63.01 | 19.50 | 13.94 | 43.78 | — | |
| Cadence Design Systems Inc. | 61.26 | 63.83 | 44.54 | 35.05 | 44.13 | |
| CrowdStrike Holdings Inc. | 81.46 | 38.65 | 96.35 | 141.44 | 807.14 | |
| Datadog Inc. | 52.45 | 68.76 | 66.00 | 198.40 | 346.45 | |
| International Business Machines Corp. | 20.11 | 15.27 | 16.47 | 13.10 | 9.35 | |
| Intuit Inc. | 36.79 | 31.28 | 32.85 | 48.64 | 37.90 | |
| Microsoft Corp. | 41.70 | 39.61 | 30.26 | 36.19 | 31.49 | |
| Oracle Corp. | 31.24 | 35.83 | 31.60 | 16.36 | 14.99 | |
| Palantir Technologies Inc. | 251.61 | 69.13 | 82.97 | 66.45 | — | |
| Palo Alto Networks Inc. | 34.69 | 28.15 | 29.30 | 32.74 | 26.50 | |
| Salesforce Inc. | 29.95 | 28.41 | 35.97 | 44.91 | 39.63 | |
| Synopsys Inc. | 56.95 | 55.87 | 30.82 | 38.59 | 42.88 | |
| Workday Inc. | 32.57 | 33.40 | 45.74 | 57.52 | 72.44 | |
| EV/FCFF, Sector | ||||||
| Software & Services | 38.23 | 34.89 | 28.82 | 32.02 | — | |
| EV/FCFF, Industry | ||||||
| Information Technology | 39.08 | 33.99 | 26.34 | 27.38 | — | |
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).
3 2024 Calculation
EV/FCFF = EV ÷ FCFF
= 204,354 ÷ 3,394 = 60.21
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value exhibited a declining trend from 2020 through 2022, decreasing from $114,502 million to $89,601 million. However, this pattern reversed in 2023 and 2024, with substantial increases to $153,785 million and $204,354 million, respectively. This significant rebound suggests increased market valuation or capital market activity in the most recent years.
- Free Cash Flow to the Firm (FCFF)
- The free cash flow to the firm showed consistent growth throughout the entire period, rising steadily from $1,367 million in 2020 to $3,394 million in 2024. This trend indicates improving operational cash generation capability over time, contributing positively to the firm’s value proposition.
- EV/FCFF Ratio
- The EV/FCFF ratio declined markedly between 2020 and 2022, falling from 83.74 to 40.87, reflecting a relative decrease in valuation multiples possibly due to a combination of lower enterprise value and increasing free cash flow. In 2023 and 2024, the ratio increased to 56.56 and 60.21, respectively, indicating that the enterprise value grew at a faster pace than free cash flow during these years. Despite the uptick, the ratio remains below the initial 2020 level, suggesting an overall more favorable valuation in relation to free cash flow compared to the start of the period.