# Gross margin

> Gross profit as a share of revenue, for the same period.

Updated Oct 17, 2026.

Gross margin is gross profit as a percentage of revenue. It shows how much of each dollar of sales is left after the direct cost of producing what was sold.

## Formula

```
gross margin = gross profit / revenue
```

Both figures are for the same period, as reported. A trailing twelve-month margin divides [TTM](/glossary/ttm) gross profit by TTM revenue. It is not an average of four quarterly margins.

## Reading it

Gross margin varies widely by industry. Software companies often have high gross margins and retailers low ones, so compare a company with itself over time, or with close peers, rather than with the market as a whole. A small change matters: on revenue of $1,000 million (an illustrative figure), one percentage point of gross margin is $10 million of gross profit.

## When it says "not reported"

- [Gross profit](/glossary/gross-profit) is not reported for the period.
- Revenue is not reported, or is zero.

In the forecast leagues, gross margin is one of the three metrics. For a company that reports no gross profit, the leagues use [operating margin](/glossary/operating-margin) instead.

## Related terms

- [Gross profit](/glossary/gross-profit.md)
- [Revenue](/glossary/revenue.md)
- [Operating margin](/glossary/operating-margin.md)
- [Net margin](/glossary/net-margin.md)
- [TTM](/glossary/ttm.md)

All terms: [/glossary.md](/glossary.md)