ServiceNow, Inc. stock research
FY2025 Q3
ServiceNow (NOW) Gross Margin — Quarter Ended Sep 30, 2025
Revenue and gross profit both increased compared to the prior quarter and the same quarter last year. Gross margin weakened slightly from the prior quarter and was lower than the same quarter a year ago.
Gross margin takeaway
Quarter ended Sep 30, 2025 · FY2025 Q3
Revenue and gross profit both increased compared to the prior quarter and the same quarter last year. Gross margin weakened slightly from the prior quarter and was lower than the same quarter a year ago.
- The relationship between revenue and cost of revenue shows that cost grew faster than revenue, which pressured gross margin. The strongest observable driver is the relative growth of cost of revenue compared to revenue.
- Compared to the prior quarter, gross margin was slightly lower despite higher revenue and gross profit. Versus the same quarter last year, gross margin weakened as cost of revenue increased at a faster pace than revenue.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
77.3%
Gross profit
$2.6B
Revenue
$3.4B
Cost of revenue
$774.0M
Quarter-over-quarter change
-0.2 pts
Year-over-year change
-1.8 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 |
|---|---|---|---|---|
| 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% |
| Sep 30, 2025 | $3.4B | $2.6B | $774.0M | 77.3% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Jun 30, 2025
-0.2 pts
Year-over-year change
Sep 30, 2024
-1.8 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The relationship between revenue and cost of revenue shows that cost grew faster than revenue, which pressured gross margin. The strongest observable driver is the relative growth of cost of revenue compared to revenue.
Compared to the prior quarter, gross margin was slightly lower despite higher revenue and gross profit. Versus the same quarter last year, gross margin weakened as cost of revenue increased at a faster pace than revenue.
Monitor the trend in cost of revenue growth relative to revenue growth in upcoming quarters.