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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

ServiceNow Inc., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Net operating profit after taxes (NOPAT)¹	2,283)	1,814)	1,148)	1,108)	886)
Cost of capital²	14.37%	14.33%	14.23%	14.21%	14.20%
Invested capital³	9,898)	8,131)	6,490)	5,871)	4,325)

Economic profit⁴	861)	649)	224)	274)	272)

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 NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 2,283 – 14.37% × 9,898 = 861

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	ServiceNow Inc. economic profit increased from 2022 to 2023 and from 2023 to 2024.

ServiceNow Inc., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Net income	1,425)	1,731)	325)	230)	119)
Deferred income tax expense (benefit)¹	98)	(857)	15)	(34)	(23)
Increase (decrease) in deferred revenue²	1,048)	1,136)	831)	891)	782)
Increase (decrease) in equity equivalents³	1,146)	279)	846)	857)	759)
Interest expense	23)	24)	27)	28)	33)
Interest expense, operating lease liability⁴	32)	30)	26)	19)	17)
Adjusted interest expense	55)	54)	53)	47)	50)
Tax benefit of interest expense⁵	(11)	(11)	(11)	(10)	(11)
Adjusted interest expense, after taxes⁶	43)	43)	42)	37)	40)
Interest income	(419)	(302)	(82)	(20)	(39)
Investment income, before taxes	(419)	(302)	(82)	(20)	(39)
Tax expense (benefit) of investment income⁷	88)	63)	17)	4)	8)
Investment income, after taxes⁸	(331)	(239)	(65)	(16)	(31)
Net operating profit after taxes (NOPAT)	2,283)	1,814)	1,148)	1,108)	886)

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 Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in deferred revenue.

³ Addition of increase (decrease) in equity equivalents to net income.

⁴ 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 789 × 4.00% = 32

⁵ 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 55 × 21.00% = 11

⁶ Addition of after taxes interest expense to net income.

⁷ 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 419 × 21.00% = 88

⁸ Elimination of after taxes investment income.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	ServiceNow Inc. NOPAT increased from 2022 to 2023 and from 2023 to 2024.

ServiceNow Inc., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Provision for (benefit from) income taxes	313)	(723)	74)	19)	31)
Less: Deferred income tax expense (benefit)	98)	(857)	15)	(34)	(23)
Add: Tax savings from interest expense	11)	11)	11)	10)	11)
Less: Tax imposed on investment income	88)	63)	17)	4)	8)
Cash operating taxes	138)	82)	53)	59)	56)

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).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	ServiceNow Inc. cash operating taxes increased from 2022 to 2023 and from 2023 to 2024.

ServiceNow Inc., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Current debt, net	—)	—)	—)	92)	—)
Long-term debt, net, less current portion	1,489)	1,488)	1,486)	1,484)	1,640)
Operating lease liability¹	789)	796)	746)	638)	495)
Total reported debt & leases	2,278)	2,284)	2,232)	2,214)	2,135)
Stockholders’ equity	9,609)	7,628)	5,032)	3,695)	2,834)
Net deferred tax (assets) liabilities²	(1,339)	(1,468)	(626)	(683)	(666)
Deferred revenue³	6,914)	5,866)	4,730)	3,899)	3,008)
Equity equivalents⁴	5,575)	4,398)	4,104)	3,216)	2,342)
Accumulated other comprehensive (income) loss, net of tax⁵	68)	37)	102)	(34)	(94)
Adjusted stockholders’ equity	15,252)	12,063)	9,238)	6,877)	5,082)
Construction in progress⁶	(63)	(33)	(53)	(14)	(9)
Available-for-sale debt securities⁷	(7,569)	(6,183)	(4,927)	(3,206)	(2,883)
Invested capital	9,898)	8,131)	6,490)	5,871)	4,325)

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 Addition of capitalized operating leases.

² Elimination of deferred taxes from assets and liabilities. See details »

³ Addition of deferred revenue.

⁴ Addition of equity equivalents to stockholders’ equity.

⁵ Removal of accumulated other comprehensive income.

⁶ Subtraction of construction in progress.

⁷ Subtraction of available-for-sale debt securities.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	ServiceNow Inc. invested capital increased from 2022 to 2023 and from 2023 to 2024.

ServiceNow Inc., cost of capital calculations

Dec 31, 2024

	Capital (fair value)¹	Weights					Cost of capital
Equity²	208,627)	208,627)	÷	210,663)	=	0.99	0.99	×	14.49%	=	14.35%
Long-term debt³	1,247)	1,247)	÷	210,663)	=	0.01	0.01	×	1.53% × (1 – 21.00%)	=	0.01%
Operating lease liability⁴	789)	789)	÷	210,663)	=	0.00	0.00	×	4.00% × (1 – 21.00%)	=	0.01%
Total:	210,663)					1.00					14.37%

Based on: 10-K (reporting date: 2024-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	157,171)	157,171)	÷	159,203)	=	0.99	0.99	×	14.49%	=	14.30%
Long-term debt³	1,236)	1,236)	÷	159,203)	=	0.01	0.01	×	1.53% × (1 – 21.00%)	=	0.01%
Operating lease liability⁴	796)	796)	÷	159,203)	=	0.00	0.00	×	3.80% × (1 – 21.00%)	=	0.02%
Total:	159,203)					1.00					14.33%

Based on: 10-K (reporting date: 2023-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	92,391)	92,391)	÷	94,281)	=	0.98	0.98	×	14.49%	=	14.20%
Long-term debt³	1,144)	1,144)	÷	94,281)	=	0.01	0.01	×	1.53% × (1 – 21.00%)	=	0.01%
Operating lease liability⁴	746)	746)	÷	94,281)	=	0.01	0.01	×	3.50% × (1 – 21.00%)	=	0.02%
Total:	94,281)					1.00					14.23%

Based on: 10-K (reporting date: 2022-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	112,170)	112,170)	÷	114,648)	=	0.98	0.98	×	14.49%	=	14.17%
Long-term debt³	1,840)	1,840)	÷	114,648)	=	0.02	0.02	×	1.72% × (1 – 21.00%)	=	0.02%
Operating lease liability⁴	638)	638)	÷	114,648)	=	0.01	0.01	×	3.00% × (1 – 21.00%)	=	0.01%
Total:	114,648)					1.00					14.21%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	115,952)	115,952)	÷	118,598)	=	0.98	0.98	×	14.49%	=	14.16%
Long-term debt³	2,151)	2,151)	÷	118,598)	=	0.02	0.02	×	1.84% × (1 – 21.00%)	=	0.03%
Operating lease liability⁴	495)	495)	÷	118,598)	=	0.00	0.00	×	3.50% × (1 – 21.00%)	=	0.01%
Total:	118,598)					1.00					14.20%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt. See details »

⁴ Operating lease liability. See details »

ServiceNow Inc., economic spread ratio 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)
Economic profit¹	861)	649)	224)	274)	272)
Invested capital²	9,898)	8,131)	6,490)	5,871)	4,325)
Performance Ratio
Economic spread ratio³	8.70%	7.99%	3.46%	4.67%	6.29%
Benchmarks
Economic Spread Ratio, Competitors⁴
Accenture PLC	4.10%	4.89%	7.75%	9.58%	10.16%
Adobe Inc.	4.38%	4.61%	10.06%	12.46%	4.74%
Cadence Design Systems Inc.	—	9.74%	9.13%	9.36%	10.16%
CrowdStrike Holdings Inc.	-3.35%	0.31%	-2.94%	-5.21%	5.66%
International Business Machines Corp.	—	-1.94%	-9.78%	-4.76%	-4.46%
Intuit Inc.	-5.11%	-7.17%	-6.09%	1.61%	4.97%
Microsoft Corp.	12.46%	15.49%	23.45%	32.46%	30.49%
Oracle Corp.	-0.84%	-1.87%	-1.52%	6.56%	0.89%
Palantir Technologies Inc.	-18.90%	-15.60%	-39.28%	-46.75%	-86.75%
Palo Alto Networks Inc.	7.88%	13.92%	5.81%	-2.87%	-3.85%
Salesforce Inc.	-10.78%	-13.05%	-10.62%	-8.34%	-11.37%
Synopsys Inc.	-4.75%	-4.05%	2.53%	-3.49%	-3.31%

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 Economic profit. See details »

² Invested capital. See details »

³ 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 861 ÷ 9,898 = 8.70%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	ServiceNow Inc. economic spread ratio improved from 2022 to 2023 and from 2023 to 2024.

ServiceNow Inc., economic 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)
Economic profit¹	861)	649)	224)	274)	272)

Revenues	10,984)	8,971)	7,245)	5,896)	4,519)
Add: Increase (decrease) in deferred revenue	1,048)	1,136)	831)	891)	782)
Adjusted revenues	12,032)	10,107)	8,076)	6,787)	5,302)
Performance Ratio
Economic profit margin²	7.16%	6.42%	2.78%	4.04%	5.13%
Benchmarks
Economic Profit Margin, Competitors³
Accenture PLC	2.33%	2.52%	3.73%	4.91%	5.17%
Adobe Inc.	4.96%	5.78%	11.72%	15.53%	6.80%
Cadence Design Systems Inc.	—	9.70%	9.11%	9.50%	10.23%
CrowdStrike Holdings Inc.	-5.25%	0.42%	-4.61%	-10.83%	4.97%
International Business Machines Corp.	—	-3.47%	-16.98%	-9.07%	-7.75%
Intuit Inc.	-7.85%	-11.73%	-11.72%	2.04%	5.60%
Microsoft Corp.	17.41%	17.65%	22.47%	26.94%	22.63%
Oracle Corp.	-1.60%	-3.63%	-2.78%	12.97%	2.03%
Palantir Technologies Inc.	-16.40%	-8.37%	-65.89%	-77.01%	-176.73%
Palo Alto Networks Inc.	8.36%	13.82%	6.77%	-3.87%	-6.26%
Salesforce Inc.	-24.96%	-33.22%	-29.48%	-19.13%	-27.99%
Synopsys Inc.	-7.97%	-5.71%	3.57%	-5.55%	-5.69%

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 Economic profit. See details »

² 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × 861 ÷ 12,032 = 7.16%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	ServiceNow Inc. economic profit margin improved from 2022 to 2023 and from 2023 to 2024.

ServiceNow Inc. (NYSE:NOW)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin