ServiceNow, Inc. (NYSE: NOW)-ROCE Insights of Service

See the third quarter Current service (New York Stock Exchange code: NOW) Revenue was $69.33 million, an increase of 11.35% over the previous quarter. ServiceNow also announced a total of $1.15 billion in sales, an increase of 7.56% since the second quarter. ServiceNow’s revenue in the second quarter was $62.27 million, with sales totaling $1.07 billion.

Why is ROCE so important

Changes in revenue and sales indicate that ServiceNow’s return on capital used has changed. ServiceNow’s return on capital used is a measure of the annual pre-tax profit relative to the capital used by the enterprise. Generally, a higher ROCE indicates that the company has successfully grown and indicates higher future earnings per share. In the third quarter, ServiceNow’s ROCE was 0.03%.

It is important to remember that ROCE assesses past performance and cannot be used as a predictive tool. This is a good indicator of the company’s recent performance, but there are several factors that may affect earnings and sales in the near future.

When comparing companies engaged in the same industry, the return on capital used is an important indicator of efficiency and a useful tool. A relatively high ROCE indicates that the company may generate profits, which can be reinvested into more capital, resulting in higher returns and shareholder EPS growth.

As far as ServiceNow is concerned, investors need to pay attention to the positive ROCE ratio before making long-term financial decisions.

Third quarter earnings review

ServiceNow reports earnings per share for the third quarter of US$1.21, higher than analysts’ expectations of US$1.03.