What Is Revenue? Why the Same Sale Can Be $100 or $15

Revenue is the money a company earns from selling goods and services over a period, counted before any costs come off. It is the first line of the income statement, which is why it is called the top line.

In a simple example, a company can take $100 from a customer and report $100 of revenue. Another can take the same $100 and report $15. Both are correct under the same rule. What separates them is whether the company sold the thing itself or arranged the sale for somebody else.

Revenue is income that arises from what a company does for a living. The international standard, International Financial Reporting Standard 15 (IFRS 15), defines it as income from a company's ordinary activities. The US standard, issued together with it, is the one the accounts of Apple, Amazon and Microsoft are prepared under.

That wording does real work. A gain on selling an office building raises income. It is not revenue, because selling buildings is not Apple's trade.

The same line carries several names. Apple and Amazon print net sales. Microsoft prints revenue. UK company law calls it turnover, measured after value added tax (VAT) and trade discounts. All of them describe money earned from selling goods and services.

Two things are not revenue when they arrive. Sales taxes and similar amounts are collected for other parties, so all three companies leave them out. Orders promised but not yet delivered are not revenue until they are delivered, however firm they look.

Its position is fixed by rule. US filing rules make it the first line of the income statement, with the cost of making those sales immediately beneath. Our walk through a full income statement follows the whole statement down.

A sale counts when the promise behind it is kept. There is a deal with a customer. That deal holds one or more distinct promises.

The price is then worked out, including discounts and expected returns. Where a deal holds several promises, the price is split between them. Each slice counts when its own promise is kept.

Some promises are kept at a moment, others across a stretch of time. Most of an iPhone's price counts when it ships. A Prime membership counts across the length of the membership, because the customer gets the benefit as Amazon stands ready to deliver it.

This is why revenue is not cash. The cash flow statement shows the cash side. Money taken for work not yet done sits on the balance sheet as an obligation to the customer, called deferred revenue, or unearned revenue.

At Microsoft, $185.7 billion of the $331.8 billion of revenue reported for the year to 30 June 2026 had first been counted as deferred revenue, which is 56.0%.

When another business is involved in supplying the customer, a company has to decide what it actually sold. If it controlled the goods before the customer got them, it is the principal. It counts the full price.

If it merely arranged the sale, it is the agent. It counts the fee it keeps.

Both treatments sit inside real filings. Apple counts the gross amount it bills for third-party products where it obtains control first. For third-party apps sold through the App Store it counts only the commission it retains.

The hypothetical sale below shows what the choice does to the figures. Gross profit is revenue less what the thing sold cost.

Hypothetical figures. Source: YX Insights

Both columns describe one transaction. The gross profit is identical at $15. The revenue differs by a factor of 6.7. So does every margin worked out from it.

The agent's fee is all gross profit, a margin of 100%, against 15% for the seller. The fee in the table is a round number picked for the arithmetic. No filing gives any company's commission rate.

Amazon records its own online store sales gross. For goods other businesses sell on its site, the sale is not Amazon's own. Its revenue there is the commissions plus the related fulfilment and shipping fees.

Online stores, at $70.4 billion, is mostly the full price of goods and digital media Amazon sold itself. Third-party seller services, at $46.8 billion, are fees on goods other businesses sold. AWS is Amazon Web Services, the cloud business, at $42.2 billion.

That fee group was $46.8 billion of the quarter's $200.6 billion of net sales, or 23.3%. For the whole of 2025 it was $172.2 billion of $716.9 billion, or 24.0%.

The filings give those fees but not the price the shoppers paid for the sellers' goods, so the full value of that trade is not shown.

Apple's fiscal 2025, the 52 weeks to 27 September 2025, shows the distance. Net sales of $416.2 billion became a gross margin of $195.2 billion once the cost of sales came off. Cost of sales is what it cost Apple to make and deliver what it sold. Gross margin is Apple's own name for gross profit.

Operating income of $133.1 billion is what was left after running costs such as research and administration. Net income of $112.0 billion is what was left after every remaining cost and tax, which is 26.9% of the top line.

Revenue sits above every cost, so it can rise in a year the company loses money. Amazon's net sales rose 9.4% in 2022, from $469.8 billion to $514.0 billion. Its total costs, cost of sales included, rose faster at 12.8%, so operating income fell 50.8%, from $24.9 billion to $12.2 billion.

Below that line, other income and expense came to a net $16.8 billion cost, which included a $12.7 billion valuation loss on an investment. The year ended in a net loss of $2.7 billion.

Companies split revenue into segments, which are the parts of the business they report separately. The three here split it differently.

Apple's segments are places: Americas, Europe, Greater China, Japan and Rest of Asia Pacific. Microsoft's are three business lines. Amazon's mix the two, with North America, International and AWS.

The fiscal calendars, meaning each company's own financial year, do not line up either. The same three months to the end of June 2026 were Apple's fiscal third quarter, Microsoft's fiscal fourth and Amazon's second.

Amazon reported $200.6 billion of net sales in its quarter and Apple $109.4 billion in its, which ended 27 June. Microsoft's $90.0 billion is its $331.8 billion of full-year revenue less the $241.8 billion of its first nine months, derived from its annual and quarterly filings.

So revenue is the top line: the price of what a company sold itself, or only the fee where it arranged the sale. What it kept sits on later lines. What the cash did sits in another statement.

This explainer is part of the YX Insights Academy. Each one takes a single idea and checks it against real data.

The same approach runs through everything else we publish:

Good places to start on the website:

It is the money a company earns from selling its goods and services in a period, before any costs are taken off. It is the first line of the income statement. It counts sales the company has delivered, whether or not the customer has paid yet.

Mostly. Apple and Amazon print net sales. Microsoft prints revenue. UK company law says turnover, measured after value added tax and trade discounts. All describe money earned from selling goods and services, though the definitions are worded differently, so they need not come to exactly the same figure.

No. Revenue is the top line, above every cost. Apple's net sales for the 52 weeks to 27 September 2025 were $416.2 billion while its net income was $112.0 billion, which is 26.9% of the top line. A company can grow revenue in a year it loses money, as Amazon did in 2022.

Gross means the full price the customer paid. Net, in this sense, means the fee a company keeps when it only arranged the sale. The full price is counted when the company controlled the goods before the customer got them. The word net has other uses in filings, including sales measured after returns and taxes.

DISCLAIMER: This article is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.