Glossary
What is net margin?
Definition
Net margin is net income attributable to the parent company's shareholders, as a percentage of revenue. Also called net profit margin, it shows the share of revenue left as profit after all costs, including finance costs and tax. For example, PepsiCo's net margin for FY2025 (ended 27 Dec 2025) was 8.8%, our calculation from its Form 10-K.
Formula
Net margin = Net income ÷ Revenue
Net margin sets the bottom line of the income statement against its top line: net income divided by revenue, shown as a percentage. Revenue is the top line and net income the bottom line, left after all expenses and income tax.[1] Both lines cover the same period. The margin is negative when net income is a loss.
For a group with subsidiaries it does not fully own, the net income we use is the part that belongs to the parent's shareholders. The rest belongs to non-controlling interests, the outside owners of those subsidiaries. Unlike gross margin and operating margin, net margin also reflects interest, other income and tax.
Worked example: PepsiCo
This example calculates net margin from PepsiCo's income statement for its latest fiscal year, from its Form 10-K. The statement prints revenue as net revenue. Net income is the line it prints as net income attributable to PepsiCo. That line equals the consolidated net income printed above it, less the part attributable to non-controlling interests that PepsiCo prints just before it.
To get the margin, divide that attributable net income, not the consolidated figure, by revenue. Both inputs are lines PepsiCo prints, so neither carries the D marker (derived by StockFactsheet).
| USD m | FY2025ended |
|---|---|
| Revenue | 93,925 |
| Net income | 8,240 |
| Net margin % | 8.8% |
Source: PepsiCo Form 10-K for FY2025, SEC EDGAR
Totals may not add up because of rounding.
All periods: PepsiCo income statement
How StockFactsheet calculates it
StockFactsheet calculates net margin from net income attributable to the parent and revenue, as reported, with no adjustment for one-off items. Impairments, tax changes and gains or losses on disposals therefore stay in the margin. A trailing 12 months (TTM) net margin divides TTM net income by TTM revenue, a ratio of sums.
Our bank tables have no net margin row; the ratio we calculate from a bank's income statement is the cost-to-income ratio. The full rule is in our methodology for net margin.
Common mistakes
- Using consolidated net income in a net margin: it includes the profit that belongs to non-controlling interests, so the result can differ from ours, which uses the parent's share.
- Reading net margin as a measure of cash: net income counts revenue when earned and costs when incurred, not when cash moves, unlike free cash flow.
- Comparing net margins of companies with different debt or tax positions as if they reflected operations alone: interest and tax sit between operating income and net income.
Sources and data
The references explain the term; the worked example's figures are as reported in the filings after them. Derived figures are our calculations (see Methodology).
(opens in new tab)- [1] Reference Beginners' Guide to Financial Statements
- [2] Filing Form 10-K, fiscal year ended 27 Dec 2025
- [3] Our dataset StockFactsheet fundamentals dataset, extracted from SEC EDGAR XBRL on ; derived values (Q4, TTM, free cash flow, net debt, margins, growth rates and ratios) are explained in Methodology.
Cite this page
StockFactsheet (2026). "What is net margin?" Signed off by OffScriptBySami. Updated ; data as of . https://stockfactsheet.com/learn/net-margin/
For information only. StockFactsheet does not recommend buying, selling or holding any security. Figures can contain errors; always check the original filings. Full disclaimer
Update history
- Published First published version.