Revenue vs. profit
Revenue is what a company charged. Profit is what it kept. The distance between them is where the entire business lives.
Revenue — also called the top line or sales — is the total amount a company billed its customers over a period. Profit is what remains after paying for everything required to produce those sales.
Between the two sit several stages, and each one answers a different question.
The stages, in order
- Revenue. What customers paid. Says nothing about whether it was worth producing.
- Gross profit (revenue minus cost of goods sold). What is left after the direct cost of making the product. As a percentage, this is gross margin, and it tells you about pricing power.
- Operating income. Gross profit minus the cost of running the business — research, sales, salaries, administration. This is the profitability of the actual operation.
- Net income. After interest on debt, taxes, and anything else. This is the bottom line, and it is the one that becomes earnings per share.
NVIDIA's fiscal Q1 2027 (quarter ended April 26, 2026): revenue $81.6bn, GAAP gross margin 74.9%, GAAP operating expenses $7.6bn, GAAP diluted EPS $2.39.
A 74.9% gross margin means roughly 75 cents of every revenue dollar survives the direct cost of production. That is unusually high, and it is the single most informative number in the release.
Why revenue growth alone can mislead
A company can grow revenue indefinitely by selling at a loss. Several famous businesses have done exactly that. Revenue growth is only meaningful alongside what happens to margin as the business scales.
When revenue grows, does margin hold, expand or contract? Growing revenue with expanding margins means the business is getting better at what it does. Growing revenue with contracting margins usually means it is buying growth — with discounts, with marketing spend, or with a worse class of customer.
GAAP and non-GAAP
You will see two versions of profit. GAAP figures follow standardised accounting rules. Non-GAAP or "adjusted" figures are the company's own preferred presentation, typically excluding certain costs — most often share-based compensation.
Non-GAAP profit is almost always higher than GAAP profit, because the adjustments generally remove expenses. When you see the opposite — GAAP above non-GAAP — something is being added under GAAP, usually gains from outside the operating business. That is worth investigating rather than celebrating.