ServiceNow Inc FY2024 Financial Report: Revenue $10.984B Up 22%, Net Income $1.425B Down 18%

Executive Summary

ServiceNow, Inc. reported strong revenue growth for FY2024, reaching $10.984 billion, a 22% increase compared to FY2023 driven by expanding digital transformation adoption across industries. Despite revenue gains, net income declined by 18% from $1.731 billion to $1.425 billion, reflecting increased operating expenses and investments. The company’s cash and cash equivalents rose to $2.310 billion, supporting ongoing growth initiatives. The balance sheet remains robust with total assets of $20.383 billion and total stockholders’ equity of $9.609 billion. Operating cash flow improved to $4.267 billion, underpinning strong liquidity and financial stability. Management emphasizes continued investments in product innovation and strategic acquisitions to sustain long-term growth amid macroeconomic challenges.

Key Metrics

Management Discussion and Analysis

ServiceNow, Inc. experienced robust revenue expansion driven by increased customer adoption of its cloud-based workflow solutions. The company’s focus on AI-enhanced automation and enterprise integrations has boosted subscription revenues, which totaled $10.646 billion, up 22% YoY. Operating expenses increased due to higher research and development and sales and marketing costs, totaling $7.333 billion, reflecting strategic investments in product development and market expansion. Despite a slight decrease in net income, the company maintained strong cash flows, with operating cash flow rising by 25% to $4.267 billion, enabling ongoing R&D, acquisitions, and share repurchases. The balance sheet remains solid, with total liabilities of $10.774 billion and leverage ratios within manageable limits. Management remains optimistic about long-term growth prospects, emphasizing innovation and strategic acquisitions to sustain market leadership.

Income Statement Analysis

Revenue for FY2024 was $10.984 billion, representing a 22% increase from FY2023’s $8.971 billion, primarily driven by increased subscription-based services. Gross profit grew by 23%, from $7.050 billion to $8.697 billion, maintaining healthy gross margins. Operating expenses rose by 17%, from $6.288 billion to $7.333 billion, mainly due to elevated sales, marketing, and R&D expenditures. Operating income increased marginally to $1.364 billion from $762 million, reflecting efficiency gains. Net income decreased by 18%, from $1.731 billion to $1.425 billion, impacted by higher operating costs and tax provisions. Earnings per share (diluted) declined slightly to $6.84 from $8.42 YoY, after accounting for share repurchases and increased share count. The decline in net income despite revenue growth indicates margin pressure from increased investments and operational costs.

Balance Sheet Analysis

As of December 31, 2024, total assets increased by 17%, reaching $20.383 billion, primarily due to higher investments and property and equipment. Cash and cash equivalents increased to $2.310 billion, supporting liquidity. Accounts receivable grew by 10%, from $2.036 billion to $2.240 billion, aligned with revenue growth. Total liabilities rose by 10%, from $9.759 billion to $10.774 billion, with current deferred revenue at $6.819 billion, up 18% reflecting strong subscription billing. Shareholders’ equity increased by 26%, from $7.628 billion to $9.609 billion, driven by retained earnings and stock issuance. The company maintains a low debt level with long-term debt at $1.489 billion, ensuring financial flexibility for strategic initiatives.

Cash Flow Analysis

Operating cash flow for FY2024 reached $4.267 billion, up 25% YoY, primarily driven by higher net income and working capital improvements. Investing activities used $2.501 billion, mainly due to investments in property, equipment, and strategic acquisitions, including the purchase of G2K Group GmbH. Financing activities involved share repurchases totaling $696 million, reducing shares outstanding to 206.5 million, with an additional authorized repurchase program of $3 billion announced in January 2025. Debt repayments remained minimal, with long-term debt stable at $1.489 billion. Capital expenditures increased slightly to support data center expansion and product development. The company’s strong cash flow supports reinvestment, debt management, and shareholder returns.

Ratios & DuPont Analysis

Net profit margin stood at 13% (Net income of $1.425B over revenue of $10.984B). Return on assets (ROA) was approximately 7%, calculated as net income divided by total assets. Return on equity (ROE) reached 14.8%, driven by retained earnings and equity growth. Asset turnover ratio was 0.54, indicating efficient use of assets to generate revenue. The equity multiplier was 2.12, reflecting moderate leverage. The DuPont analysis suggests that profitability is driven mainly by revenue growth and operational efficiency, with manageable leverage levels supporting sustainable expansion. Continued focus on margin improvement and cost control will be key to enhancing profitability.

Risk Factors

ServiceNow faces risks including market competition from established and emerging cloud service providers, regulatory challenges related to data privacy and security, macroeconomic uncertainties impacting customer spending, and operational risks from rapid product innovation. Potential disruptions in supply chain or data center operations could impact service delivery. Additionally, global economic volatility and currency fluctuations pose foreign exchange risks. The company’s reliance on subscription revenue makes it sensitive to customer retention and pricing pressures. Strategic investments and compliance adherence are critical to mitigate these risks and sustain long-term growth.

Notes & Additional Commentary

FY2024 results include strategic acquisitions such as G2K Group GmbH, contributing approximately $112 million in purchase consideration. The company faced increased operating expenses, partly due to higher R&D and sales efforts, impacting net income. Share repurchase activity reduced outstanding shares by 0.8 million, and an additional $3 billion repurchase authorization was announced in January 2025, signaling confidence in long-term value. The balance sheet remains strong, with total assets surpassing $20 billion. Unusual items include a minor impact from currency translation adjustments and deliberate strategic investments aimed at future growth. The company continues to leverage its cash position to fund innovation and shareholder returns.

Investment Implications

ServiceNow, Inc. demonstrates robust revenue growth supported by expanding digital transformation markets. While profitability has declined slightly, the company’s strong cash flows, low leverage, and strategic acquisitions position it well for sustained long-term growth. Investors should monitor margin trends and operational costs, but the company’s innovation pipeline and market leadership provide attractive opportunities. Caution is advised concerning macroeconomic headwinds and competitive pressures, but the company’s financial resilience and strategic focus favor a balanced outlook for both short-term gains and long-term value creation.