ServiceNow, Inc. stock research
FY2025 Q4
ServiceNow (NOW) Gross Margin — Quarter Ended Dec 31, 2025
Revenue and gross profit both increased relative to the prior quarter and the same quarter last year. However, the gross margin weakened compared to both periods, as cost of revenue grew at a faster pace than revenue.
Gross margin takeaway
Quarter ended Dec 31, 2025 · FY2025 Q4
Revenue and gross profit both increased relative to the prior quarter and the same quarter last year. However, the gross margin weakened compared to both periods, as cost of revenue grew at a faster pace than revenue.
- The strongest observable driver of the margin change is the faster growth in cost of revenue relative to revenue growth. This relationship directly compressed the gross margin.
- Compared to the immediately preceding quarter, gross margin declined slightly. Compared to the same quarter one year earlier, gross margin was lower by a more noticeable degree.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
76.6%
Gross profit
$2.7B
Revenue
$3.6B
Cost of revenue
$834.0M
Quarter-over-quarter change
-0.7 pts
Year-over-year change
-2.0 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, 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% |
| Dec 31, 2025 | $3.6B | $2.7B | $834.0M | 76.6% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Sep 30, 2025
-0.7 pts
Year-over-year change
Dec 31, 2024
-2.0 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The strongest observable driver of the margin change is the faster growth in cost of revenue relative to revenue growth. This relationship directly compressed the gross margin.
Compared to the immediately preceding quarter, gross margin declined slightly. Compared to the same quarter one year earlier, gross margin was lower by a more noticeable degree.
Monitor the trajectory of cost of revenue growth relative to revenue growth, as it has been an increasing drag on gross margin.