What is Revenue?

Revenue is every dollar your business takes in from sales, before a single expense is subtracted. Sell 100 hats at $20 and your revenue is $2,000 — regardless of what the hats cost you, what the ads cost, or whether you have any money left at the end.

It's called the 'top line' because it sits at the top of the income statement, with every cost stacked underneath it. That position is the entire reason revenue gets quoted so often: it is the largest and most flattering number a business owns.

Which is exactly why it deserves suspicion. Revenue tells you a business is happening; it tells you nothing about whether it works. A company with $10 million in revenue and $11 million in costs is dying loudly. 'We did a million in revenue' is a great tweet and a terrible business plan on its own — the number that matters is what's left after expenses.