Operating margin is operating income as a percentage of revenue — profit from the core business, before interest and tax. It's a cleaner read on operating performance than net margin, since it isn't distorted by debt load or tax rate.
The formula
Operating IncomeRevenue
= Operating Margin
Why it matters
- —Strips out financing and tax decisions, so it's a fairer way to compare core operations across companies.
- —A rising operating margin alongside flat revenue usually signals improving efficiency or scale.
- —High operating leverage businesses (software, platforms) can expand this margin quickly as revenue grows.
How to read it
| < 10% | Lower operating leverage |
| 10%–25% | Solid for most industries |
| > 25% | High operating leverage — often scalable software or platforms |
Highest operating margins in our coverage
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