Revenue

Revenue (also called sales or top line) is the total amount of money a company brought in from selling its products or services during a period, before any expenses are subtracted. It is the first line on the income statement.

Revenue alone does not tell you whether a company is profitable — a company can have billions in revenue and still lose money if its costs are higher. But revenue growth is one of the most watched metrics because it measures whether the business is expanding.

Declining revenue is generally a red flag. Even companies with good profit margins will struggle if the top line is shrinking, since there are only so many costs you can cut. Consistent revenue growth, on the other hand, gives a company options — it can invest in growth, improve margins, or return money to shareholders.

Comparing revenue between companies in different industries is not very useful. A retail chain with $10 billion in revenue may be less profitable than a software company with $500 million.