ServiceNow, Inc. stock research
FY2023 Q3
ServiceNow (NOW) Gross Margin — Quarter Ended Sep 30, 2023
Revenue, gross profit, and cost of revenue were all higher than in the preceding quarter and the year-ago quarter. Gross margin improved slightly compared to both periods.
Gross margin takeaway
Quarter ended Sep 30, 2023 · FY2023 Q3
Revenue, gross profit, and cost of revenue were all higher than in the preceding quarter and the year-ago quarter. Gross margin improved slightly compared to both periods.
- The filing notes a subscription-based business model with a high renewal rate over the past three years, which underpins the stability of gross margins. This recurring revenue structure is the strongest observable driver of margin consistency.
- Compared to the immediately preceding quarter, gross margin was higher, while revenue and gross profit also increased. Versus the same quarter one year earlier, all three metrics were higher, with gross margin showing a similar improvement.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
78.3%
Gross profit
$1.8B
Revenue
$2.3B
Cost of revenue
$496.0M
Quarter-over-quarter change
+0.2 pts
Year-over-year change
+0.2 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% |
| Sep 30, 2023 | $2.3B | $1.8B | $496.0M | 78.3% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Jun 30, 2023
+0.2 pts
Year-over-year change
Sep 30, 2022
+0.2 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The filing notes a subscription-based business model with a high renewal rate over the past three years, which underpins the stability of gross margins. This recurring revenue structure is the strongest observable driver of margin consistency.
Compared to the immediately preceding quarter, gross margin was higher, while revenue and gross profit also increased. Versus the same quarter one year earlier, all three metrics were higher, with gross margin showing a similar improvement.
Monitor changes in deferred revenue, as it represents future subscription revenue and is a key indicator of margin sustainability.