What is net margin?
Net margin is the share of revenue a company kept as net income. Net income is the bottom line, after every cost, interest and income tax.[S1] It is shown as a percentage, so it reads as dollars kept per $100 of revenue. A net loss gives a negative net margin.[S2]
How is net margin worked out?
Net margin = net income ÷ revenue × 100. The SEC's guide works out operating margin the same way, with income from operations on top.[S1]
SEC rules list net income owed to outside owners of subsidiaries as its own line.[S2] Cityfort uses the net income that belongs to the company's own shareholders.
Microsoft's net income was $133.7B (FY2026) on revenue of $331.8B (FY2026). That gives a net margin of 40.3% (FY2026).
Where do you find it in a 10-K or 10-Q?
Both inputs sit on the income statement, sometimes called the statement of operations. In a 10-K, that is in Item 8.[S3] In a 10-Q, it is in Part I, Item 1.[S4]
Revenue is the top line. Net income comes near the bottom, after income tax and any discontinued operations.[S2]
Why can net margin change sharply in a single year?
Net income takes in one-off items. Meta's tax provision for the third quarter of 2025 included a one-time, non-cash income tax charge.[S6] Meta's stock page names it in its profit caption.
What does net margin leave out?
- Cash. A non-cash charge, like Meta's, lowers net income although no cash left the business.[S6]
- Where the profit came from. One figure mixes the main business with investment gains, non-operating costs and discontinued operations.[S2]
- Outside owners' share. Profit owed to outside owners of subsidiaries is left out of the figure Cityfort uses.[S2]
What a margin means compares net margin with gross and operating margin.