Gross Profit
Revenue minus the cost of goods sold; the profit a company makes before operating expenses, interest, and taxes.
What is Gross Profit?
Gross profit is the first profitability measure on the income statement, calculated as revenue minus cost of goods sold (COGS). It represents the profit a company generates from its core business activities before accounting for operating expenses such as sales, marketing, R&D, and administrative costs. Gross profit is the foundation for gross margin, which expresses gross profit as a percentage of revenue. A high and expanding gross margin typically signals strong pricing power, brand value, or scalable business economics. Gross profit must be sufficient to cover all operating expenses and still produce operating income — companies with thin gross margins have little room for error.
Example
Nvidia reported gross profit of approximately $67 billion on revenue of $79 billion in FY2025, implying a gross margin of roughly 75% — exceptional for a semiconductor company and reflecting its dominant pricing power in AI accelerators where demand far outstrips supply.