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Dictionary / How companies make money

Revenue vs Profit

Revenue is all the money coming in from sales. Profit is the money left over after paying every cost. Revenue is the top line; profit is the bottom line.

A simple example

A food truck sells $50,000 of tacos in a year. That is its revenue. Food, gas, wages and the truck loan cost $42,000. The $8,000 left is its profit.

Is revenue the same as profit?

No, and the gap can be huge. A supermarket can have giant revenue but keep only a few cents per dollar. A software company can have smaller revenue but keep a much bigger share as profit. The share kept is called the profit margin.

Is revenue money in or out?

Revenue is only money in. Costs are money out. Profit is what you get when you put the two together.

Earnings vs revenue

"Earnings" usually means profit, not revenue. When the news says a company "beat earnings", it means profit came in higher than expected. Earnings per share is profit divided by the number of shares.

Which one matters more?

Both. Growing revenue shows demand. Growing profit shows the business can turn that demand into money for owners. The best companies grow both over time.

See it in real companies

Open a company to see what it sells and how it makes money.

Related terms

RevenueAll the money a company takes in from sales. ProfitWhat is left after all costs. Profit marginHow many cents of profit from each dollar of sales. EPSThe profit one share earned. EBITDAProfit before some costs, often used to compare companies. Free cash flowReal cash left after running and growing the business.

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