Glossary · 26 terms

The words behind the numbers.

Every term used in our breakdowns, explained in plain words, with real examples from the companies we’ve covered.

Results

Revenue: Everything a company invoices its customers in a period, before any costs are taken off.
Segment: A part of a company that reports its own revenue and profit, such as a product line or region.
Fiscal year: The 12-month period a company uses for its accounts, which doesn't always match the calendar year.
Guidance: A company's own forecast for its coming results, such as expected growth or margin.

Operating profit (EBIT): Profit from the core business: revenue minus operating costs, before interest and taxes.
Operating margin: Operating profit as a share of revenue: how many cents of each euro of sales remain as operating profit.
Gross margin: Revenue minus the direct cost of making what was sold, as a share of revenue.
EBITDA: Operating profit before depreciation and amortisation, often used as a rough proxy for operating cash generation.
Net profit: What is left of revenue after every cost, including interest and taxes.

Free cash flow: Cash the business generates after paying for its operations and investments in equipment.
Net cash / net debt: Cash minus financial debt. Positive means net cash; negative means net debt.

Constant currency: Growth calculated as if exchange rates hadn't changed, to separate real business growth from currency effects.
Organic growth: Growth from the existing business, excluding acquisitions, disposals and currency effects.

Order backlog: Orders a company has already received but not yet delivered or billed.
Recurring revenue: Revenue that repeats regularly, such as subscriptions, service contracts or maintenance fees.
Installed base: All the products a company has sold that are still in use, and that can generate service and upgrade revenue.
Licensing & royalties: Earning money by letting others use a brand, patent or recording in exchange for a fee per use or sale.
Research & development (R&D): Spending on inventing and improving products, from new drugs to new chip machines.
Economic moat: What protects a business from competitors, like a moat around a castle.
Vertical integration: Owning several steps of the supply chain, from making the product to selling it to the end customer.

Net loss: When costs, interest, write-downs and taxes add up to more than revenue: the bottom line is negative.
Impairment (write-down): Reducing the value of an asset on the balance sheet because it is worth less than recorded.
Restructuring: A deep reorganisation of a company's operations or finances, often to survive or regain profitability.
Insolvency & bankruptcy: When a company can no longer pay its debts as they fall due, and a court-supervised process begins.
Chapter 11: A US court procedure that lets a company keep operating while it reorganises its debts under court protection.
AT1 bonds: Bank bonds designed to absorb losses: they can be converted into shares or written down to zero in a crisis.