Sales Revenue (Sales & Services)

Category

Income Statement

Units

Currency

US-GAAP elements

RevenueFromContractWithCustomerExcludingAssessedTaxRevenueFromContractWithCustomerIncludingAssessedTax

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)

Sales and services revenue, often simply called sales revenue, is the income a company earns from selling its products and performing services for customers during a period, after deducting discounts, returns, and allowances. It covers the core commercial activity of the business and excludes interest, investment, rental, and other incidental income.

For most industrial, retail, and technology companies it equals total revenue. It differs for companies that also earn meaningful revenue from lending, leasing, or other activities outside contracts with customers.

Revenue from customer contracts is recognized under ASC 606. A company identifies its promises to a customer and records revenue when control of each good or service passes to the customer, either at a point in time or over the contract's duration. In XBRL the figure is most often tagged RevenueFromContractWithCustomerExcludingAssessedTax, which excludes sales, value-added, and excise taxes collected on behalf of governments. Companies that include such taxes in revenue use RevenueFromContractWithCustomerIncludingAssessedTax instead.

Regulation S-X Rule 5-03.1 breaks revenue into classes and asks for separate disclosure of net sales of tangible products, which it defines as gross sales less discounts, returns, and allowances, and of revenues from services, along with operating revenues of utilities, rental income, and other revenues. A class that is not more than ten percent of the total may be combined with another. If excise taxes included in revenue reach one percent or more of the total, the amount must be shown on the face of the statement.

The split between products and services is useful in its own right. Service and subscription revenue is often more recurring and carries different margins than product sales, so a shift in the mix can change a company's growth profile and profitability. Revenue can also be recorded gross or net: a company acting as an agent, arranging for another party to supply the goods, records only its fee, which makes its revenue look much smaller than a principal's with similar activity.