ServiceNow, Inc. stock research
FY2023 Q2
ServiceNow (NOW) Gross Margin — Quarter Ended Jun 30, 2023
Revenue increased from the prior quarter and from the same quarter a year ago. Gross profit was level with the prior quarter but higher year-over-year, while cost of revenue rose in both comparisons, resulting in a gross margin that weakened sequentially but improved from the year-ago period.
Gross margin takeaway
Quarter ended Jun 30, 2023 · FY2023 Q2
Revenue increased from the prior quarter and from the same quarter a year ago. Gross profit was level with the prior quarter but higher year-over-year, while cost of revenue rose in both comparisons, resulting in a gross margin that weakened sequentially but improved from the year-ago period.
- The strongest observable driver is the change in cost of revenue relative to revenue. Compared with the prior quarter, cost of revenue grew faster than revenue, which pressured margin; year-over-year, revenue growth exceeded cost growth, supporting margin improvement.
- Quarter-over-quarter, gross margin declined as cost of revenue increased more than revenue. Year-over-year, gross margin rose as revenue growth outpaced cost of revenue growth.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
78.1%
Gross profit
$1.7B
Revenue
$2.1B
Cost of revenue
$471.0M
Quarter-over-quarter change
-1.0 pts
Year-over-year change
+0.3 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, 2023 | $2.1B | $1.7B | $438.0M | 79.1% |
| Jun 30, 2023 | $2.1B | $1.7B | $471.0M | 78.1% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Mar 31, 2023
-1.0 pts
Year-over-year change
Jun 30, 2022
+0.3 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The strongest observable driver is the change in cost of revenue relative to revenue. Compared with the prior quarter, cost of revenue grew faster than revenue, which pressured margin; year-over-year, revenue growth exceeded cost growth, supporting margin improvement.
Quarter-over-quarter, gross margin declined as cost of revenue increased more than revenue. Year-over-year, gross margin rose as revenue growth outpaced cost of revenue growth.
Monitor the quarterly trend of cost of revenue relative to revenue, as it directly influenced margin direction. The filing notes a high subscription renewal rate, which supports recurring revenue stability.