NOW Financial Analysis

Analysis Date: 1/30/2025

Business Model

ServiceNow generates revenue primarily through subscription-based software licenses and professional services

Revenue Sources

• Subscription revenues (96% of total revenue in Q4 2024)
• Professional services and other revenues (4% of total revenue in Q4 2024)

Revenue Distribution by Channel

• Direct enterprise sales with subscription-based model

Income Statement Analysis

• Strong subscription revenue growth of 21% year-over-year
• Professional services revenue grew 26% year-over-year
• Non-GAAP operating margin maintained at 29.5%

Balance Sheet Analysis

• Strong cash position with $2.3B in cash and cash equivalents
• Total assets increased to $20.4B from $17.4B year-over-year

Cash Flow Analysis

• Strong free cash flow margin of 47.5% in Q4 2024
• Annual free cash flow margin improved to 31.5% in FY 2024

Capital Allocation

Board authorized additional $3B for share repurchase program. Company repurchased approximately 293,000 shares for $296M in Q4 2024.

Management Commentary

ServiceNow exceeded Q4 expectations on top of our 'beat and raise' track record

AI is fueling a top to bottom re-ordering of the enterprise technology landscape

GenAI net new ACV stepped up meaningfully in Q4

Overall Sentiment: Very positive, emphasizing leadership in AI transformation and strong execution

Recommendation

Rating: Buy

Reason for Rating: Strong execution, leadership in enterprise AI, and consistent growth trajectory

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/30/2025, 6:17:06 AM