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Revenue

What is revenue?

Revenue is total sales recognised over a period, before any costs are subtracted. It is the top line of the income statement and the base every margin is calculated from.

Written by
Suggested Investments Research Team
Content type
Reference definition
Published
2026-09-13
Last reviewed
2026-09-13

Growth quality matters more than the growth number

Revenue that comes from a genuine increase in customers or usage is different from revenue added through an acquisition, a one-time contract, or a price increase that customers may not tolerate again. The same growth percentage can mean very different things.

Revenue is not cash

Under accrual accounting, revenue can be recognised before the cash is actually collected. A company can report growing revenue while its cash collection lags, which is one reason revenue and free cash flow are read together rather than in isolation.

A worked example

A company reporting $10bn revenue this year against $9bn last year grew 11%. Whether that is encouraging depends on where the growth came from and whether margins moved with it.

The mistake people make

Treating revenue growth alone as evidence of a healthier business without checking what happened to margins and cash generation over the same period.

How we use it

Revenue trends, tracked across multiple periods rather than a single quarter, are one input to Fundamental Momentum, which is 20% of the Suggested Investment Score.

Related terms

Reading a company's financial statements

Sources and methodology

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Educational information only. Nothing here is a recommendation to buy or sell any investment, and no research measurement removes the risk of loss.