I don't think that's true. If you have revenue from thousands of purchases, and lots of revenue, you have an avenue to reduce costs as your pipeline matures. It's not the only number you should care about, but it's hardly a who-cares item.
I respectfully disagree. Without context, revenue by itself is less than 'who cares', it can be something of a damaging number in the sense that it can lead financially illiterate people astray.
Lots of financially literate people exaggerate the significance of revenue numbers. It's a close cousin to EBITDA, often just a way to avoid admitting you aren't making money.
I don't see how you can solve the 'financially illiterate people [will be led] astray' with some other metric. Profit is similarly useless without context (e.g. Is this reoccurring, or one-time?). Giving all the metrics you might care to can still lead financially illiterate people astray.
Agree. I work for a big healthcare company that likes to throw around the revenue numbers (pretty much all public companies do). Of course it's huge, cause healthcare is expensive (US). Our profit margin is like 2% cause COGS and labor is just as expensive and our top line revenue is basically just a made up number that we like to bill people, with no hopes of actually getting paid that amount, it's before the insurance companies "contractual adjustment", which is essentially a huge discount that we know invalidates top line.
The question is so what if your profit margin is 2%. Are you big and expanding or are you contracting and belt tightening? Do your shareholders demand higher earnings? How much power do they have? Amazon famously zeroed out profits for a decade in pursuit of growth.
I get it. There's no one metric to rule them all. It's a narrative. But that's kind of my point, the obsession with revenue doesn't always make sense. For example, my company talks about growing revenue for many recent years. That's the biggest takeaway if you we're doing laymen research. However, we talk about it because it's a good story instead of mentioning that our margins are eroding. Actually, our business is shrinking but due to growing revenues nobody knows it. For us, revenue naturally grows at the same clip of healthcare cost. When that's 20% and we're growing by revenues by 15%, well most outsiders would not know we're shrinking.
Ok I understand. Typically any public statements made by a company are carefully orchestrated PR because interests of management and key employees who are compensated in stock and options is tied to stock performing well (if public) or valuation remaining good (if private) and retaining the confidence of the board which represents shareholders and can fire them. In very large organizations, internal messaging about overall company financials are also carefully orchestrated (eg. Teleprompters are frequently used in internal "town-halls") because with so many people, internal communications are also quasi public, still messaging tends to be more blunt. However at a operational level, if you are seeing delusional communication, it's probably time to pack up your bags
Revenues are necessary but not sufficient for profits.
Personally as a sole operator i'd prefer 10k revenue and 5k a month in profits over 100k in revenue and 2k in profits. However the last is more preferable for expansion.
To expand if you have 2M in gross revenue and only 2k in net profits this surely means that there is demand for whatever you are selling and some sort of optimization/innovation would bring you greater profits.
If you have billions in revenues then profits matter even less as long as the company keeps getting external financing from the markets and there is perceived need/potential for company products. Look up on how AMD, MU etc has been operating for 30+ years.
Revenues show sales, profits show sales + costs + spending. Wayfair, for example, has large revenues, and is profitable for its businesses, but not after it's spending. The spending though is because they've found a weakness in their business model, and they're building assets fix the problem. In the long term, they'll be able to grow faster, it will be harder for competitors to enter, and they'll be able to get higher margins. Revenue tells a story that profit can't.
Depends on scale and runway. If you have 200k/month in revenue you can easily make (or lose) a boat load of money with a few small adjustments to your margins.