Gross Profit

I. Formal Definition

Revenue minus cost of revenue in absolute terms, the dollar counterpart to gross margin and the principal source of funds for operating expense, investment, and profit. Gross profit is the federation-recognised primary measure of product-level economics in absolute dollar terms and is the basis for all downstream profitability measures. The federation requires gross profit to be reported on a GAAP basis with consistent cost of revenue definition, with reconciliation to revenue and to gross margin under UFMS-001:3.2. Material drivers of period-over-period change are footnoted.

II. Etymology

A standard term of corporate accounting; the construction stabilised in the standardised income statement format adopted in the early twentieth century.

III. Federation Usage

Federation members publish GAAP gross profit quarterly with reconciliation to revenue and gross margin. Material drivers of change are footnoted under MEV-Annex:4.1. Gross profit is a quarterly input to capital efficiency and the IFO4 Score.

IV. Related Terms

• gross-margin
• contribution-margin
• operating-margin
• ebitda

V. Authoritative Citations

• UFMS-001:3.2UFMS Article III - Gross Profit
• MEV-Annex:4.1MEV Annex IV - Gross Profit Reporting

VI. Citation in BibTeX

@misc{ifo4_glossary_gross_profit,
  title        = {{Gross Profit}},
  author       = {{IFO4 Federation Editorial Board}},
  howpublished = {{IFO4 Federation Glossary, slug \texttt{gross-profit}}},
  year         = {2026},
  url          = {https://ifo4.org/glossary/gross-profit},
  note         = {Category: Unit Economics; key: GrossProfit}
}

VII. Challenge This Definition

Federation members and accredited practitioners may challenge any entry under TGS-002:1.7. Filed challenges are routed to the editorial board, triaged into the revision register, and resolved in writing on the public docket. The slug remains stable through any revision.