Learn · Explainer
Gross, operating and net margin
Three margins, three different layers of cost, with worked examples from Apple, Nvidia, Walmart and Intel 10-K filings.
The short answer
A profit margin is a profit figure divided by revenue. Gross margin counts only the direct cost of what was sold, operating margin also takes out the costs of running the business, and net margin takes out everything, including interest and taxes. In fiscal 2025, Apple's gross margin was 46.9%, its operating margin 32.0% and its net margin 26.9%.
Three margins, three layers of cost
Gross margin = gross profit ÷ revenue
Operating margin = operating income ÷ revenue
Net margin = net income ÷ revenue
- Gross profit is revenue minus the cost of sales: parts, manufacturing, the goods a retailer buys to resell.
- Operating income is gross profit minus operating expenses: research and development, sales and marketing, and general and administrative costs.
- Net income is operating income plus or minus interest, investment gains and losses and other items, minus income taxes.
Each margin is smaller than the one before it, because each step takes out more costs.
A worked example: Apple
Apple's 10-K for fiscal 2025 reports net sales of $416.2B, gross margin (Apple's name for gross profit) of $195.2B and operating income of $133.1B, ending at net income of $112.0B.
Apple · FY2025
So $195.2B ÷ $416.2B = 46.9% gross margin, $133.1B ÷ $416.2B = 32.0% operating margin, and $112.0B ÷ $416.2B = 26.9% net margin.
Source: Apple 10-K for fiscal 2025, filed Oct 31, 2025
What each margin shows
Gross margin says how much each sale earns before the costs of running the company. Software and chip designers keep most of each dollar at this step: Nvidia's gross margin in fiscal 2026 was 71.1% and Microsoft's was 67.9%.
Operating margin adds the cost of research, marketing and overhead. Walmart's operating income of $29.8B on revenue of $713.2B in fiscal 2026 is an operating margin of 4.2%: a thin slice on a huge amount of merchandise.
A company can earn a solid gross margin and still lose money from operations. Intel's gross margin in fiscal 2025 was 34.8%, but research, development and other operating costs were larger than its gross profit, so operating income was −$2.2B, an operating margin of −4.2%.
Nvidia · FY2026
Intel · FY2025
Source: Nvidia 10-K for fiscal 2026, filed Feb 25, 2026 · Microsoft 10-K for fiscal 2026, filed Jul 29, 2026 · Walmart 10-K for fiscal 2026, filed Mar 13, 2026 · Intel 10-K for fiscal 2025, filed Jan 23, 2026
Margins at banks
Banks don't report gross profit or operating income. Their revenue is already net of the interest they pay, so a bank's net margin isn't comparable with an industrial company's. Revenue vs. net income covers how bank revenue is counted.
Operating margin for 76 companies
Latest fiscal year from each company's 10-K, sorted by operating margin. Operating margin is operating income divided by revenue. Banks and brokers are left out because they don't report operating income, and a few other companies don't tag it in their filings. A higher or lower margin mostly reflects the industry.
Try it yourself
The profit margin calculator works out all three margins from any income statement. Revenue vs. net income has net margins for all 100 companies Ticker Sage covers.
Common questions
What is the difference between gross margin and net margin?
Gross margin only takes out the direct cost of what was sold. Net margin takes out every cost, including operating expenses, interest and taxes. Apple's fiscal 2025 gross margin was 46.9% and its net margin was 26.9%. Source: Apple 10-K for fiscal 2025.
What is a good operating margin?
It depends on the industry. Among the 76 companies in the table above, operating margins run from −4.2% at Intel to 74.6% at Micron. Comparing a company with its own past or its closest peers says more than one number.
Is operating income the same as EBIT?
They're close but not always equal. EBIT (earnings before interest and taxes) usually adds back interest and taxes to net income, so it can include investment gains or other income that sits below operating income. Operating income is the line the company reports on its income statement.
What is EBITDA margin?
EBITDA is earnings before interest, taxes, depreciation and amortization. It isn't a line in the financial statements, so companies and data providers calculate it in different ways. Ticker Sage sticks to the margins built from reported lines.
Can a margin be negative?
Yes. When costs are larger than revenue at that step, the profit figure is a loss and the margin is negative. Intel's operating margin in fiscal 2025 was −4.2%. Source: Intel 10-K for fiscal 2025.
Disclosures
- Editor holdings
- The editor holds shares of Tesla (TSLA) in a long-term retirement account. The editor holds no position in any other company named on this page. As of Oct 25, 2026.
- Compensation
- Nobody paid for this page. No affiliate links on this page.
- Sources
- Each company's own SEC filings, linked next to each number.
- Last updated
- Oct 26, 2026
General education, the same for every reader. Not a recommendation to buy, sell or hold any security, and it doesn't consider your situation.
More in Learn and Tools · Methodology & Disclosures explains where every number comes from.