Revenue

Category

Income Statement

Units

Currency

US-GAAP elements

RevenuesRevenueFromContractWithCustomerExcludingAssessedTax

Reference

Regulation S-X Rule 5-03.1 (Net sales and gross revenues); ASC 606

Source

Reported in SEC EDGAR filings (US-GAAP XBRL taxonomy)

Revenue is the total amount a company earns from its business activities during a period, chiefly from selling goods and providing services, net of discounts, returns, and allowances. It is the top line of the income statement, before any costs are subtracted.

Revenue goes by several names. US companies often say sales or net sales, and turnover is the common term in the UK and parts of Europe. Total revenue can also include interest, rental, and other income when those are part of how a company earns money.

Companies tag total revenue in XBRL as Revenues, which the SEC defines broadly enough to cover goods, services, insurance premiums, and, where they form part of revenue, interest and investment income. Revenue from contracts with customers, recognized under ASC 606, is tagged RevenueFromContractWithCustomerExcludingAssessedTax. For most non-financial companies the two are equal. Regulation S-X Rule 5-03.1 asks companies to state separately net product sales, operating revenues of utilities, rental income, service revenue, and other revenue, although a class not more than ten percent of the total may be combined with another.

Under ASC 606, revenue is recognized when control of a promised good or service passes to the customer, in the amount the company expects to be entitled to. Cash timing does not matter: an annual subscription paid upfront is recognized over the year, with the unearned portion held as deferred revenue. Whether a company acts as principal or agent also matters. An agent records only its commission or fee, so marketplaces and travel sites can report revenue far smaller than the value of transactions they handle.

Revenue is the starting point for nearly every margin ratio and for valuation multiples such as price to sales and EV to sales. GeminIQ measures revenue growth on a trailing twelve-month basis, comparing the sum of the four latest quarters with the same four quarters one, three, or five years earlier to avoid seasonal distortion. Revenue is harder to manipulate than earnings, but it is still worth checking its quality: rapid growth in receivables or deferred revenue swings can indicate that recognized revenue and collected cash are diverging.