Operating Margin (EBIT Margin): Operating income as a percentage of revenue.
Formula
Operating Margin = Operating Income / Revenue × 100Benchmarks
- Below -50%: Heavy investment phase
- -50% to 0%: Growth mode
- 0-20%: Path to profitability
- Above 20%: Profitable and efficient
Related Metrics
Connected in the GASP relationship graph.
Upstream: what drives this
- Gross Margin drives Operating Margin (Core)
Downstream: what this drives
- Operating Margin component of Rule of 40 (Core)
- Operating Margin drives Free Cash Flow (Finance)
- Operating Margin measures Subscription (Entity)