Revenue

Total income from sales of goods and services before any expenses.

Revenue, often called the top line, is the total amount of money a company brings in from selling its goods or services before any expenses, taxes, or deductions are taken out. It sits at the very top of the income statement and serves as the starting point from which all costs are subtracted to eventually calculate net income. For most businesses, revenue is recognized when a product is delivered or a service is performed, rather than when the cash is actually received. Investors track this figure closely because it represents the fundamental demand for a company's offerings. Without consistent revenue, a business cannot sustain profitability over the long term. While rising revenue generally signals a healthy, growing business, investors must look at it in context. High revenue growth can sometimes mask deep operational inefficiencies or unsustainable spending on customer acquisition. Conversely, a company might show rising net income by cutting costs, but if its revenue is shrinking, its long-term growth potential is limited.

Company A sells 10,000 software subscriptions during the year at a price of $150 per subscription. Its total revenue for the year is calculated as 10,000 units multiplied by $150, which equals $1,500,000.