Revenue

Revenue is the total amount of money a company earns from its business activities — selling products, providing services, licensing technology, or any other primary source of income. It is the first line on the income statement, which is why it is often called the top line.

Revenue is the starting point for all profitability analysis. Every margin metric — gross margin, operating margin, net margin — is calculated as a percentage of revenue. Without growing revenue, it becomes increasingly difficult for a company to grow earnings over time.

Revenue vs Earnings

Revenue tells you how much money came in. Earnings (net income) tell you how much was left after all costs. A company can have strong revenue growth but weak or negative earnings if costs grow faster than revenue. Conversely, a company can have flat revenue but rising earnings if it improves efficiency.

Revenue growth rate is one of the most closely watched metrics for growth stocks. Analysts pay particular attention to year-over-year revenue growth and whether growth is accelerating or decelerating. Decelerating revenue growth in a high-P/E stock is often a trigger for significant price declines.

In the FPI Rating, revenue growth is a component of the growth factor, contributing to the overall quality assessment of the company.