What is revenue?
Revenue (also “turnover” or the “top line”) is the total income a company earns from selling its goods or services in a period, before any costs are deducted. It is the starting point of the income statement: revenue minus costs and expenses works down to profit, the “bottom line.”
Recognized, not received
Under accrual accounting (IFRS 15 / ASC 606), revenue is recognized when the performance obligation is satisfied, not when cash arrives. A SaaS company invoicing an annual plan of $12,000 upfront books $1,000 of revenue per month and carries the rest as deferred revenue. That gap between billings, cash and revenue is where diligence finds most surprises.
Why the definition matters in deals
Valuations quoted as revenue multiples, earn-outs tied to “net revenue,” and covenant baskets keyed to turnover all depend on which definition the contract adopts: gross vs. net of refunds and discounts, whether marketplace GMV counts (it does not: only the take rate is revenue), and how agency vs. principal treatment applies. In Türkiye, revenue also drives regulatory thresholds: merger-control filing turnover tests and administrative fines calculated as a percentage of gross revenue.
Revenue vs. profit: the difference?
Revenue is what you earn from sales; profit is what remains after costs. A company can grow revenue rapidly while losing money: most venture-backed startups do exactly that by design.
Is ARR the same as revenue?
ARR is an annualized snapshot of recurring subscription run-rate: a metric, not an accounting figure. Recognized revenue in the financials can differ materially from ARR.
Related: MRR, gross margin.
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