Margins
Gross Margin
Gross profit as a percentage of revenue.
Definition
Gross margin shows what fraction of every dollar of revenue is left after paying the direct costs of production. A 70% gross margin means $0.70 of every revenue dollar funds R&D, sales, overhead, and profit.
Formula
(Gross Profit ÷ Revenue) × 100
Why it matters
Gross margin is the single best indicator of pricing power and competitive moat. Software companies typically run 70–85%; commodity businesses often run 10–25%. Persistent gross-margin compression is a serious warning sign.
How Standard Equity uses it
Shown in the main table, and the SE Grade's moat pillar checks how stable it has been. Banks and broker-dealers show Net Interest Margin (NIM) in its place; insurers have no cost of revenue and show the combined ratio (or benefit ratio) instead.
The metric
| Category | Margins |
|---|---|
| Unit | % |