Revenue vs Net Profit

Revenue and Net Profit measure fundamentally different aspects of a company's financial performance, representing opposite ends of the income statement. Revenue, often called the "top line," is the total amount of money generated from selling goods or services before any expenses are deducted, reflecting market demand and pricing effectiveness. Net Profit, known as the "bottom line," is what remains after subtracting all expenses—including cost of goods sold, operating expenses, interest, taxes, and depreciation—from revenue, representing the actual earnings a company retains after covering all costs of doing business.

A technology startup should emphasize Revenue when demonstrating market traction or growth trajectory to investors in early stages, as rapid revenue growth often signals product-market fit even before profitability is achieved. For instance, a SaaS company might highlight their 150% year-over-year revenue growth to show scaling potential and market validation. Conversely, the same company would focus on Net Profit when proving business model viability or sustainable operations to later-stage investors or when considering expansion funding. If the company has reached $10 million in annual revenue but still operates at a $2 million loss, investors would need to evaluate whether the continued losses represent strategic investments in growth or fundamental flaws in the business model. While Revenue showcases a company's ability to generate sales, Net Profit ultimately determines whether those sales translate into sustainable business success.