What is profit margin?

Updated November 15, 2026 · examples use today’s data

Profit margin is profit as a percentage of revenue. There are three main versions: gross margin (after the direct cost of the products), operating margin (after running the business) and net margin (after interest and taxes).

A real example

Over its last twelve reported months Apple made $132.2 billion of net income on $478.8 billion of revenue, a net margin of 27.6%. Its gross margin over the last year was about 49%. Nvidia's net margin over the last year was about 56%, exceptional for a hardware company.

Compare within an industry

A 3% net margin is normal for a supermarket and alarming for a software company. Compare margins with direct competitors and with the company's own history.

The trend matters

Rising margins usually mean pricing power or scale; falling margins can be the first sign of competition.

Frequently asked questions

Which margin matters most?

Operating margin shows the core business best; net margin is what ends up with shareholders.

Why can net margin jump in one year?

One-off items such as a gain on a sale or a tax benefit. Check whether operating margin moved too.

Tools for this

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Keep learning

What is the P/E ratio and how do you use it?What is earnings per share (EPS)?What does TTM (trailing twelve months) mean?What is an ETF and how is it different from a stock?What is a dividend and what is dividend yield?What is compound interest and why does it matter so much?

Educational content, not investment advice. Figures in the examples come from company filings and market prices and update automatically.