# Gross Profit

Revenue minus the direct cost of producing what was sold.

## Definition

Gross profit is what's left after subtracting cost of goods sold (COGS) from revenue. For a software company COGS is mostly hosting; for a manufacturer it's raw materials and direct labour.

## Formula

Revenue − Cost of Goods Sold

## Why it matters

Gross profit represents the dollars available to pay for everything else — research, marketing, overhead, and ultimately profit. A business whose gross profit is shrinking has no buffer for any of those costs.

## How Standard Equity uses it

Not shown as a dollar figure. Its margin (gross profit ÷ revenue) is in the main table, and the SE Grade's moat pillar checks how stable that margin has been.

## The metric

| Category | Income Statement |
| -------- | ---------------- |
| Unit     | $M               |

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