ServiceNow Inc. (NYSE:NOW)

The financial metrics presented demonstrate notable differences between reported and adjusted values across several key ratios over the five-year period. Generally, adjustments result in improved profitability and solvency figures. Several trends are observable when examining both reported and adjusted ratios.

Asset Turnover

Reported total asset turnover exhibits a slight decline from 0.55 in 2021 to 0.51 in 2025, with some fluctuation. The adjusted total asset turnover mirrors this trend, decreasing from 0.67 to 0.59 over the same period. This suggests that, even with adjustments, the company generates less revenue per dollar of assets over time.

Liquidity

The reported current ratio remains relatively stable, fluctuating between 1.05 and 1.11, before decreasing to 1.00 in 2025. In contrast, the adjusted current ratio shows a significant increase from 4.69 in 2021 to 5.97 in 2024, followed by a slight decrease to 4.92 in 2025. The substantial difference between reported and adjusted current ratios indicates that adjustments significantly improve the company’s short-term liquidity position.

Leverage

Reported debt to equity, debt to capital, and financial leverage all demonstrate a consistent downward trend from 2021 to 2025, indicating decreasing reliance on debt financing. The adjusted ratios follow similar decreasing trends, though the magnitudes are smaller. Adjusted debt to equity decreases from 0.32 to 0.12, adjusted debt to capital from 0.24 to 0.11, and adjusted financial leverage from 1.46 to 1.23. These adjustments suggest a more conservative capital structure than initially reported.

Profitability

Reported net profit margin experiences substantial volatility, increasing dramatically from 3.90% in 2021 to 19.30% in 2023, then decreasing to 13.16% in 2025. The adjusted net profit margin also shows an increasing trend, rising from 15.13% in 2021 to 24.37% in 2025, but with less fluctuation. The difference between reported and adjusted net profit margins is significant, suggesting that adjustments substantially increase reported profitability. This pattern is also observed in return on equity (ROE) and return on assets (ROA). Reported ROE increases significantly in 2023 before declining, while adjusted ROE shows a more moderate increase over the period. Similarly, reported ROA shows a large increase in 2023, while adjusted ROA demonstrates a more consistent upward trend. The adjusted ROE increases from 14.86% to 17.69% and the adjusted ROA increases from 10.16% to 14.43%.

In summary, the adjustments made to these financial ratios consistently present a more favorable financial picture, particularly regarding profitability and liquidity. While reported ratios show some volatility, the adjusted ratios demonstrate more stable and generally improving trends. The decreasing leverage ratios, both reported and adjusted, suggest a strengthening financial position over the observed period.

The adjusted total asset turnover ratio exhibited a generally declining trend over the five-year period from 2021 to 2025. While fluctuations occurred, the overall movement suggests decreasing efficiency in asset utilization to generate revenue.

Adjusted Total Asset Turnover – Trend Analysis

In 2021, the adjusted total asset turnover ratio stood at 0.67. This figure decreased to 0.64 in both 2022 and 2023, indicating a slight reduction in the revenue generated per dollar of adjusted assets. A further decline to 0.63 was observed in 2024, and the ratio continued to fall to 0.59 in 2025. This represents the most significant year-over-year decrease within the observed timeframe.

Revenues consistently increased throughout the period, rising from US$6,787 million in 2021 to US$14,798 million in 2025. However, adjusted total assets grew at a proportionally faster rate, increasing from US$10,106 million to US$24,982 million over the same period. This disparity in growth rates is the primary driver behind the observed decline in the adjusted total asset turnover ratio.

Revenue and Asset Growth

The growth rate of adjusted revenues averaged approximately 21.5% annually. Conversely, adjusted total assets experienced an average annual growth rate of approximately 18.8%. While both metrics demonstrated positive growth, the faster expansion of assets relative to revenues contributed to the decreasing efficiency in asset utilization.

The reported total asset turnover ratio also showed a declining trend, though less pronounced than the adjusted ratio. This suggests that the adjustments made to revenues and assets have a material impact on the calculated turnover, and that the observed trend is not solely attributable to the reported figures.

Comparison with Reported Ratio

The reported total asset turnover ratio moved from 0.55 in 2021 to 0.51 in 2025. The adjusted ratio consistently exceeded the reported ratio throughout the period, indicating that the adjustments increased the calculated turnover. However, both ratios demonstrate a similar downward trajectory.

The decreasing adjusted total asset turnover ratio warrants further investigation to determine the underlying causes. Potential factors could include increased investment in long-term assets, changes in working capital management, or a shift in business strategy that prioritizes growth over immediate asset efficiency.

The reported current ratio exhibits relative stability over the observed period, fluctuating between 1.00 and 1.11. However, the adjusted current ratio demonstrates a significantly different pattern, indicating a substantially stronger liquidity position when considering adjustments to current liabilities.

Current Assets & Liabilities

Current assets increased consistently from US$5,220 million in 2021 to US$10,471 million in 2025. Current liabilities also increased over the same period, rising from US$4,949 million to US$10,443 million. This parallel increase contributes to the relatively stable reported current ratio.

Reported Current Ratio

The reported current ratio began at 1.05 in 2021, increased to 1.11 in 2022, decreased to 1.06 in 2023, rose again to 1.10 in 2024, and then declined to 1.00 in 2025. These fluctuations suggest a modest change in the company’s ability to cover short-term liabilities with short-term assets based on standard accounting definitions.

Adjusted Current Liabilities

Adjusted current liabilities have also increased over the period, moving from US$1,113 million in 2021 to US$2,129 million in 2025. However, the magnitude of these liabilities remains considerably smaller than the total current assets.

Adjusted Current Ratio

The adjusted current ratio shows a marked increase from 4.69 in 2021 to 4.95 in 2022, followed by a slight decrease to 4.92 in 2023. A substantial jump to 5.97 is observed in 2024, before decreasing to 4.92 in 2025. This indicates a consistently strong ability to meet short-term obligations when adjusted current liabilities are considered. The significant increase in 2024 suggests a notable improvement in liquidity based on the adjustments made to current liabilities.

The divergence between the reported and adjusted current ratios highlights the impact of the adjustments made to current liabilities. The consistently high adjusted current ratio suggests that the company possesses a robust short-term liquidity position, even after accounting for these adjustments.

The adjusted debt to equity ratio demonstrates a consistent downward trend over the five-year period from December 31, 2021, to December 31, 2025. This indicates a strengthening financial position with respect to leverage. While total debt remained relatively stable, stockholders’ equity experienced substantial growth, driving the decrease in the ratio.

Adjusted Debt to Equity Ratio Trend

The adjusted debt to equity ratio decreased from 0.32 in 2021 to 0.12 in 2025. This represents a 62.5% reduction over the period. The decline was most pronounced between 2021 and 2022 (0.08 decrease), and between 2023 and 2024 (0.04 decrease), with more moderate decreases in subsequent years.

Adjusted Total Debt

Adjusted total debt exhibited a modest increase over the period, rising from US$2,214 million in 2021 to US$2,403 million in 2025. The increase was not linear, with a slight decrease observed between 2023 and 2024. However, the overall growth remained contained, suggesting disciplined debt management.

Adjusted Stockholders’ Equity

Adjusted stockholders’ equity experienced significant growth, increasing from US$6,911 million in 2021 to US$20,384 million in 2025. This represents a nearly threefold increase over the five-year period. The rate of growth accelerated in later years, particularly between 2024 and 2025, indicating substantial equity accumulation.

The combination of relatively stable adjusted debt and rapidly growing adjusted stockholders’ equity resulted in the observed decline in the adjusted debt to equity ratio. This suggests the company is financing its growth increasingly through equity rather than debt, which generally improves its financial risk profile.

Comparison to Reported Debt to Equity

The reported debt to equity ratio also decreased over the same period, from 0.43 in 2021 to 0.12 in 2025. The adjusted ratio consistently reports lower values than the reported ratio, indicating that adjustments are reducing the reported debt and/or increasing the reported equity. This suggests the adjustments are having a material impact on the leverage calculation.

The information presents a five-year trend of debt and capital figures, culminating in calculated ratios. Both total debt and total capital experienced increases over the period, though at differing rates. A comparison of reported and adjusted figures reveals modifications to both debt and capital calculations, resulting in a consistently higher adjusted debt-to-capital ratio than the reported ratio for each year.

Total Debt

Total debt remained relatively stable between 2021 and 2025, fluctuating within a narrow range of approximately $1.486 billion to $1.576 billion. The variation over the five-year period is minimal, indicating a consistent approach to debt financing.

Total Capital

Total capital demonstrates a consistent upward trend throughout the period. Beginning at $5.271 billion in 2021, it increased to $14.455 billion by 2025. This substantial growth suggests increasing investment in the business and/or retained earnings accumulation.

Reported Debt to Capital

The reported debt-to-capital ratio exhibits a clear downward trend, decreasing from 0.30 in 2021 to 0.10 in 2025. This decline indicates that capital is growing at a faster rate than debt, suggesting improving financial leverage.

Adjusted Total Debt

Adjusted total debt shows a general increasing trend, rising from $2.214 billion in 2021 to $2.403 billion in 2025. While increasing, the rate of increase is less pronounced than that of adjusted total capital.

Adjusted Total Capital

Adjusted total capital mirrors the trend of total capital, displaying significant growth from $9.125 billion in 2021 to $22.787 billion in 2025. This substantial increase suggests the adjustments made to capital have a considerable impact on the overall capital base.

Adjusted Debt to Capital

The adjusted debt-to-capital ratio also demonstrates a downward trend, decreasing from 0.24 in 2021 to 0.11 in 2025. This trend, while present, is less dramatic than the decline observed in the reported debt-to-capital ratio. The adjusted ratio consistently remains higher than the reported ratio, indicating the adjustments to debt and capital calculations result in a more conservative leverage position when assessed using these adjusted figures.

In summary, while both reported and adjusted debt-to-capital ratios indicate improving leverage, the adjusted figures present a slightly different perspective due to the modifications made to the underlying debt and capital components. The consistent growth in total and adjusted capital suggests a strong financial position and capacity for future investment.

The financial leverage metrics demonstrate a consistent trend over the five-year period. Reported financial leverage decreased steadily from 2.92 in 2021 to 2.01 in 2025. Simultaneously, adjusted financial leverage exhibited a similar, though less pronounced, declining pattern, moving from 1.46 in 2021 to 1.23 in 2025.

Total Assets & Stockholders’ Equity

Both total assets and stockholders’ equity increased consistently throughout the period. Total assets grew from US$10,798 million in 2021 to US$26,038 million in 2025, representing a substantial expansion of the company’s asset base. Stockholders’ equity mirrored this growth, increasing from US$3,695 million to US$12,964 million over the same timeframe. The adjusted values for these items also show consistent growth, though at slightly lower magnitudes.

Reported Financial Leverage

Reported financial leverage experienced a notable decrease each year. The decline suggests a strengthening of the company’s financial position, as the ratio indicates a decreasing reliance on debt financing relative to assets. The rate of decrease slowed from 0.28 in 2022 to 0.11 in 2025.

Adjusted Financial Leverage

Adjusted financial leverage also decreased annually, though the magnitude of the decline was smaller than that observed in the reported leverage ratio. This suggests that the adjustments made to total assets and stockholders’ equity have a moderating effect on the leverage calculation. The decrease in adjusted leverage was most pronounced between 2021 and 2022 (0.07) and gradually slowed to 0.02 between 2024 and 2025.

The convergence of the reported and adjusted financial leverage ratios indicates that the adjustments applied are consistently impacting both components of the calculation, resulting in a parallel reduction in both metrics. The overall trend suggests a strengthening financial structure and a decreasing level of financial risk.

The adjusted net profit margin demonstrates a generally positive trend over the five-year period. While fluctuations are present, the metric exhibits overall growth, indicating increasing profitability relative to adjusted revenues.

Overall Trend

The adjusted net profit margin increased from 15.13% in 2021 to 24.37% in 2025. This represents a substantial improvement in profitability over the observed timeframe.

Year-over-Year Changes

From 2021 to 2022, the adjusted net profit margin experienced a decrease, moving from 15.13% to 12.82%. This represents a contraction in profitability. However, 2023 saw a significant rebound, with the margin increasing to 20.53%. Continued growth was observed in 2024, reaching 21.11%, followed by a further increase to 24.37% in 2025. The largest single-year increase occurred between 2024 and 2025.

Comparison to Reported Net Profit Margin

The adjusted net profit margin consistently exceeds the reported net profit margin across all observed years. This suggests that adjustments made to net income and revenues have a significant positive impact on the profitability picture. The difference between the two margins varied, but was particularly pronounced in 2021, 2022, and 2023.

Revenue Impact

Adjusted revenues also demonstrate a consistent upward trend, increasing from US$6,787 million in 2021 to US$14,798 million in 2025. The growth in adjusted net profit margin appears to be supported by this revenue expansion, although the margin improvements suggest increasing efficiency in converting revenue to profit.

Profitability Improvement

The increase in adjusted net income, from US$1,027 million in 2021 to US$3,606 million in 2025, is a key driver of the margin expansion. The rate of adjusted net income growth accelerated in the later years of the period, contributing to the more substantial margin gains observed in 2024 and 2025.

The adjusted return on equity (ROE) exhibited fluctuations over the five-year period. While net income and stockholders’ equity generally increased, the adjusted ROE presented a more nuanced picture of performance. A review of the adjusted figures reveals trends distinct from those observed in the reported ROE.

Adjusted ROE Trend

The adjusted ROE began at 14.86% in 2021, decreased to 11.33% in 2022, and then increased to 17.25% in 2023. This upward momentum continued into 2024, reaching 16.73%, before concluding at 17.69% in 2025. The initial decline in 2022 appears to be an outlier, as the subsequent years demonstrate consistent growth.

Relationship to Adjusted Net Income

Adjusted net income increased steadily throughout the period, moving from US$1,027 million in 2021 to US$3,606 million in 2025. The adjusted ROE generally tracked this increase, suggesting a positive correlation between profitability and returns to equity holders. However, the ROE increase from 2022 to 2023 was proportionally larger than the increase in adjusted net income, indicating a change in the efficiency with which equity was utilized.

Relationship to Adjusted Stockholders’ Equity

Adjusted stockholders’ equity also demonstrated consistent growth, rising from US$6,911 million in 2021 to US$20,384 million in 2025. The growth in equity, while contributing to higher overall returns, also partially offset the impact of increasing adjusted net income on the adjusted ROE. The rate of equity growth was substantial, and the adjusted ROE’s ability to remain relatively stable despite this dilution suggests strong underlying profitability.

Comparison to Reported ROE

The adjusted ROE consistently differed from the reported ROE. The reported ROE experienced a significant peak in 2023 at 22.69%, followed by declines in 2024 and 2025. The adjusted ROE, while also fluctuating, maintained a more moderate range between 11.33% and 17.69%. This divergence highlights the impact of the adjustments made to net income and stockholders’ equity, suggesting that the reported ROE may not fully reflect the underlying economic performance.

In summary, the adjusted ROE indicates a generally positive trend in profitability relative to equity, despite substantial growth in equity itself. The adjustments to net income and equity significantly altered the ROE calculation compared to the reported figures, suggesting the adjusted ROE provides a potentially more representative view of performance.

The adjusted return on assets (ROA) exhibited a generally increasing trend over the five-year period. While fluctuations were present, the metric demonstrated consistent improvement from 2021 to 2025. This suggests increasing efficiency in utilizing assets to generate profit, as measured by adjusted figures.

Adjusted ROA Trend

In 2021, the adjusted ROA stood at 10.16%. A decrease was observed in 2022, with the adjusted ROA falling to 8.17%. However, a substantial increase followed in 2023, reaching 13.07%. This upward momentum continued into 2024, with the adjusted ROA reaching 13.37%, and further strengthened in 2025, culminating in a value of 14.43%.

Relationship to Adjusted Net Income

The growth in adjusted ROA correlates with the increasing trend in adjusted net income. Adjusted net income rose from US$1,027 million in 2021 to US$3,606 million in 2025. This indicates that the improvements in asset utilization are contributing to higher profitability, as reflected in the adjusted net income.

Relationship to Adjusted Total Assets

Adjusted total assets also increased consistently throughout the period, moving from US$10,106 million in 2021 to US$24,982 million in 2025. Despite this growth in the asset base, the adjusted ROA continued to improve, suggesting that the company effectively deployed these additional assets to generate higher returns.

The difference between reported and adjusted ROA is significant, particularly in earlier years. The adjustments made to net income and total assets appear to substantially alter the profitability and efficiency picture. The consistent increase in adjusted ROA suggests that the adjustments are revealing a more accurate representation of the company’s underlying performance than the reported figures alone.