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ServiceNow’s Balance Sheet Looks Strong

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Increasing capital expenditure

ServiceNow’s (NOW) sales have risen at an impressive rate over the last several years. The company has managed to increase sales by 500% from $425 million in 2013 to $2.60 billion in 2018.

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Sales growth has helped the company expand profit margins as well. ServiceNow’s earnings before interest, tax, depreciation, and amortization (or EBITDA) has more than doubled between 2016 and 2018. Its earnings per share have risen at an astonishing rate of 128% over the last five years.

ServiceNow is at the cusp of profitability. To support growing sales, ServiceNow is expected to raise capital expenditure from $224 million in 2018 to $315 million in 2021.

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Debt and cash reserves

The company has debt amounting to $661 million and has a cash balance of $1.5 billion, which is more than enough to cover interest payments and debt obligations. With an increasing bottom line, ServiceNow will be able to allocate net profits for capital expenditure or invest in research and development.

Cash flow per share

ServiceNow had an operating cash flow of $811 million and a levered cash flow of $894 million at the end of fiscal 2018. The company’s cash flow per share has risen from $2.33 in 2016 to $4.30 in 2018. Cash flow is expected to rise to $5.75 in 2019, $7.40 in 2020, and $7.12 in 2021.

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