ServiceNow, Inc. stock research
FY2025 Q2
ServiceNow (NOW) Gross Margin — Quarter Ended Jun 30, 2025
Revenue and gross profit increased compared to both the prior quarter and the same quarter a year earlier, while cost of revenue also rose. Gross margin weakened slightly from both periods, indicating cost growth outpaced revenue growth.
Gross margin takeaway
Quarter ended Jun 30, 2025 · FY2025 Q2
Revenue and gross profit increased compared to both the prior quarter and the same quarter a year earlier, while cost of revenue also rose. Gross margin weakened slightly from both periods, indicating cost growth outpaced revenue growth.
- The company's subscription-based model, with high renewal rates as noted in the filing, supports a stable gross margin structure despite periodic fluctuations.
- On a sequential basis, all three line items—revenue, gross profit, and cost of revenue—were higher, but gross margin declined. The same pattern held year-over-year: revenue, gross profit, and cost of revenue were all higher, while gross margin was slightly lower.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
77.5%
Gross profit
$2.5B
Revenue
$3.2B
Cost of revenue
$724.0M
Quarter-over-quarter change
-1.4 pts
Year-over-year change
-1.5 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, 2024 | $2.8B | $2.2B | $584.0M | 79.1% |
| Dec 31, 2024 | $3.0B | $2.3B | $631.0M | 78.7% |
| Mar 31, 2025 | $3.1B | $2.4B | $651.0M | 78.9% |
| Jun 30, 2025 | $3.2B | $2.5B | $724.0M | 77.5% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Mar 31, 2025
-1.4 pts
Year-over-year change
Jun 30, 2024
-1.5 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The company's subscription-based model, with high renewal rates as noted in the filing, supports a stable gross margin structure despite periodic fluctuations.
On a sequential basis, all three line items—revenue, gross profit, and cost of revenue—were higher, but gross margin declined. The same pattern held year-over-year: revenue, gross profit, and cost of revenue were all higher, while gross margin was slightly lower.
Monitor the trajectory of cost of revenue relative to revenue, as the recent margin compression suggests costs are growing faster.