Merck & Co., Inc. stock research
FY2025 Q4
Merck & (MRK) Gross Margin — Quarter Ended Dec 31, 2025
Revenue decreased compared to the prior quarter, while cost of revenue increased, causing gross profit to decline and gross margin to weaken. Versus the same quarter last year, revenue was higher but cost of revenue rose more sharply, resulting in lower gross profit and a weakened gross margin.
Gross margin takeaway
Quarter ended Dec 31, 2025 · FY2025 Q4
Revenue decreased compared to the prior quarter, while cost of revenue increased, causing gross profit to decline and gross margin to weaken. Versus the same quarter last year, revenue was higher but cost of revenue rose more sharply, resulting in lower gross profit and a weakened gross margin.
- The most observable driver of the gross margin change is the relationship between revenue and cost of revenue: revenue fell while cost of revenue rose sequentially, compressing margin. Year-over-year, revenue growth was outpaced by cost growth, also pressuring margin.
- Compared to the immediately preceding quarter, gross margin weakened as revenue was lower and cost of revenue was higher. Compared to the same quarter one year earlier, gross margin also weakened, with revenue higher but cost of revenue substantially higher.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
66.2%
Gross profit
$10.8B
Revenue
$16.4B
Cost of revenue
$5.6B
Quarter-over-quarter change
-11.5 pts
Year-over-year change
-9.3 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Mar 31, 2025 | $15.5B | $12.1B | $3.4B | 78.0% |
| Jun 30, 2025 | $15.8B | $12.2B | $3.6B | 77.5% |
| Sep 30, 2025 | $17.3B | $13.4B | $3.9B | 77.7% |
| Dec 31, 2025 | $16.4B | $10.8B | $5.6B | 66.2% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Sep 30, 2025
-11.5 pts
Year-over-year change
Dec 31, 2024
-9.3 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The most observable driver of the gross margin change is the relationship between revenue and cost of revenue: revenue fell while cost of revenue rose sequentially, compressing margin. Year-over-year, revenue growth was outpaced by cost growth, also pressuring margin.
Compared to the immediately preceding quarter, gross margin weakened as revenue was lower and cost of revenue was higher. Compared to the same quarter one year earlier, gross margin also weakened, with revenue higher but cost of revenue substantially higher.
Monitor the trajectory of cost of revenue relative to revenue, as its increase in both comparisons was the primary factor behind margin compression.