ServiceNow Inc (NOW)

Cash conversion cycle

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Days of inventory on hand (DOH)	days	—	—	—	—	87.59	83.63	84.90	87.14	85.62	—	—	—	81.80	77.82	80.31	82.75	84.66	80.54	80.72	80.14
Days of sales outstanding (DSO)	days	74.44	45.62	55.66	50.29	82.84	50.31	49.76	53.13	86.90	47.37	47.17	48.07	86.06	51.21	55.13	48.71	81.53	54.58	58.34	60.41
Number of days of payables	days	10.85	27.73	51.84	40.64	23.94	13.84	36.20	50.68	63.58	46.46	65.27	42.61	24.03	18.58	30.86	37.43	12.57	20.44	36.08	32.39
Cash conversion cycle	days	63.58	17.90	3.81	9.66	146.49	120.10	98.46	89.58	108.95	0.91	-18.09	5.46	143.84	110.45	104.57	94.04	153.62	114.68	102.98	108.16

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 74.44 – 10.85
= 63.58

The cash conversion cycle of ServiceNow Inc has shown fluctuations over the past few years. In the period from March 31, 2020, to December 31, 2020, the cycle increased significantly from 108.16 days to 153.62 days, indicating a longer period required to convert investments in inventory and other resources into cash flows.

However, from March 31, 2021, to September 30, 2021, the cash conversion cycle decreased to a range of 94.04 days to 110.45 days, implying a more efficient management of operating capital during that period.

The trend continued as of December 31, 2021, with the cycle increasing to 143.84 days, suggesting potential challenges in working capital management again. Following this, there was a significant improvement in the cycle, with only 5.46 days as of March 31, 2022, likely indicating more effective strategies in converting investments into cash.

The cycle turned negative in the following quarter, June 30, 2022, and remained close to zero until September 30, 2022, indicating a period of quick cash conversion. Subsequently, the cash conversion cycle increased to 146.49 days by December 31, 2023, possibly due to changes in operational efficiency or market conditions.

By March 31, 2024, the cash conversion cycle showed a significant improvement, decreasing to 9.66 days, followed by further reduction to 3.81 days by June 30, 2024, signifying efficient management of working capital.

The cycle then slightly increased to 17.90 days by September 30, 2024, but remained relatively low compared to previous periods. Overall, the cash conversion cycle of ServiceNow Inc has exhibited variability, reflecting changes in the company's ability to manage its working capital efficiently over the analyzed periods.