NOW Profit Margins
Gross, Operating & Net Margin Analysis for Servicenow Inc
Margin Quality
Good
Current Profit Margins
Gross Margin
77.5%
$10.29B gross profit
Operating Margin
13.7%
$1.82B operating income
Net Profit Margin
13.2%
$1.75B net income
5-Year Margin Trends
What Margins Indicate About NOW
Business Quality
High gross margins above 50% suggest Servicenow Inc has strong pricing power and competitive advantages that allow premium pricing.
Operational Efficiency
Expanding operating margins show Servicenow Inc is improving operational leverage and cost management.
Profitability
Net margins in the 5-15% range are solid and typical for many profitable businesses.
Investment Implications
Expanding margins across the board suggest improving business fundamentals, which often supports stock price appreciation.
Understanding Profit Margins
Gross Margin
(Revenue - Cost of Goods Sold) / Revenue. Measures pricing power and production efficiency before operating expenses.
Operating Margin
Operating Income / Revenue. Shows profitability from core operations after all operating expenses but before interest and taxes.
Net Profit Margin
Net Income / Revenue. The bottom line - shows how much profit the company keeps from each dollar of revenue after all expenses.
Analyze NOW Profitability
Get complete financial analysis with profitability trends, ROE, ROIC, and more
Frequently Asked Questions
What is NOW's profit margin?
NOW (Servicenow Inc) has a net profit margin of 13.2%, meaning the company keeps $0.13164633227895767 in profit for every dollar of revenue. This represents an improvement from the previous year's net margin of 13.0%.
What is NOW's gross margin?
NOW's gross margin is 77.5%. Gross margin measures the percentage of revenue remaining after subtracting the cost of goods sold. A high gross margin like this indicates strong pricing power and efficient production.
What is NOW's operating margin?
NOW has an operating margin of 13.7%. Operating margin shows profitability after operating expenses but before interest and taxes. The 13.7% year-over-year improvement suggests better operational efficiency.
Are NOW's profit margins good?
NOW's margins are considered good. When evaluating margins, it's important to compare against Software peers, as different sectors have structurally different margin profiles.
How do profit margins affect NOW stock?
Profit margins are a key indicator of NOW's business quality and competitive position. The current margins should be evaluated alongside growth rates and return on capital to assess overall business quality. Expanding margins often lead to stock price appreciation, while contracting margins can signal competitive pressures.
What drives NOW's profit margins?
NOW's profit margins are influenced by several factors: pricing power vs competitors, operational efficiency, scale advantages, input costs (materials, labor), Software-specific dynamics, and management execution. The significant expansion in gross margin suggests changes in these underlying drivers.
Disclaimer: Margin analysis is based on reported financial statements and should be compared to industry peers for context. Different sectors have structurally different margin profiles. This information is for educational purposes only and should not be considered financial advice.