ServiceNow, Inc. stock research
FY2024 Q2
ServiceNow (NOW) Gross Margin — Quarter Ended Jun 30, 2024
For the current quarter, revenue remained stable while cost of revenue rose compared to the prior quarter, causing gross profit to remain flat and gross margin to narrow. Versus the same quarter a year ago, both revenue and gross profit increased, and the gross margin widened as cost of revenue grew at a slower rate than revenue.
Gross margin takeaway
Quarter ended Jun 30, 2024 · FY2024 Q2
For the current quarter, revenue remained stable while cost of revenue rose compared to the prior quarter, causing gross profit to remain flat and gross margin to narrow. Versus the same quarter a year ago, both revenue and gross profit increased, and the gross margin widened as cost of revenue grew at a slower rate than revenue.
- The year-over-year improvement in gross margin was accompanied by higher revenue and a proportionally smaller increase in cost of revenue. The sequential decline in gross margin was associated with a rise in cost of revenue while revenue remained unchanged.
- Compared to the immediately preceding quarter, revenue was essentially unchanged, gross profit was similar, and gross margin was lower. Compared to the same quarter one year earlier, revenue and gross profit were higher, and gross margin was higher.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
79.0%
Gross profit
$2.1B
Revenue
$2.6B
Cost of revenue
$552.0M
Quarter-over-quarter change
-1.0 pts
Year-over-year change
+0.9 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 |
|---|---|---|---|---|
| Sep 30, 2023 | $2.3B | $1.8B | $496.0M | 78.3% |
| Dec 31, 2023 | $2.4B | $1.9B | $516.0M | 78.8% |
| Mar 31, 2024 | $2.6B | $2.1B | $520.0M | 80.0% |
| Jun 30, 2024 | $2.6B | $2.1B | $552.0M | 79.0% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Mar 31, 2024
-1.0 pts
Year-over-year change
Jun 30, 2023
+0.9 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The year-over-year improvement in gross margin was accompanied by higher revenue and a proportionally smaller increase in cost of revenue. The sequential decline in gross margin was associated with a rise in cost of revenue while revenue remained unchanged.
Compared to the immediately preceding quarter, revenue was essentially unchanged, gross profit was similar, and gross margin was lower. Compared to the same quarter one year earlier, revenue and gross profit were higher, and gross margin was higher.
Monitor the trend of cost of revenue relative to revenue, as a sequential increase in cost with stable revenue reduced gross margin.