Gross revenue (also gross sales) is the monetary amount that an entity earns from sales of products/ services (i.e., its operations or core business) in a period of time. It represents all income from sales in a reporting period, that is presented on the income statement, before accounting for any expenses (or losses) incurred in the process of revenue generation.

Net revenue (also net sales), on the other hand, constitutes the net results from operations- that is, after accounting for all relevant expenses, including fixed expenses/ overhead (and losses), during the same period of revenue  generation. Such expenses include cost of sales, and discounts/ allowances incurred by an entity for generation of gross revenue.

Net revenue = gross revenue – expenses and losses

The main differences between the two measures of income are:

• Gross revenue does not account for all relevant expenses, while net revenue does.
• Gross revenue provides a wider picture about an entity’s operational results, while net revenue is an absolute amount, reflecting the effect of netting, without a broader context. However, net revenue provides a much more comprehensive view about an entity’s efficiency and performance that can be easily benchmarked and compared with those of other entities. Gross revenue only provides a partial picture about the exact state of affairs and performance. In other words, net revenue indicates whether an entity is profitable or not, whereas gross revenue is a meaningless figure until it is put into context.
• Gross revenue is a positive figure, or at worst it could be zero. While net revenue could be positive or negative, or zero, depending on the proportion of revenues relative to expenses.