Two words appear everywhere in company reports and financial news. They sound similar. They are not.
Revenue is everything a company earns — every sale, every subscription, every service fee. It is the total money flowing in before any costs are subtracted. Sometimes called turnover or the top line.
Profit is what is left after all the costs are paid. Salaries, rent, materials, taxes, debt repayments — all of it subtracted. Sometimes called net income or the bottom line.
A company can have enormous revenue and still lose money. A streaming service with 100 million subscribers might earn billions in subscription fees — but if it spends even more on content, servers, and staff, it makes a loss.
Why does this matter?
Because investors are ultimately interested in profit — or the credible promise of future profit. A fast-growing company might lose money for years while capturing market share, betting that scale will eventually make it profitable. Some of history's most valuable companies operated at a loss for a long time before turning the corner.
But a company burning through cash without a clear path to profit is carrying real risk — even if its revenue looks impressive.
When you see a company's numbers, always ask both questions:
How much does it earn? And how much does it keep?