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Not mentioned: $140mn in Sales and Marketing to generate $110mn in Gross Profit.
by RC_ITR 5y ago
Not mentioned: $140mn in Sales and Marketing to generate $110mn in Gross Profit.
- hammock 5y agoIs that unusual?
- ac29 5y agoMaybe not unusual for a young, growing company, but its obviously not sustainable for each dollar in profit to cost more than a dollar in sales/marketing effort. Thats a negative ROI.
- wonnage 5y agoYou're confusing profit and revenue
- gamblor956 5y agoGross profit = the profit from a specific business activity, in this case, sales, when looking solely at sales revenue less the specific costs of generating that revenue (aka COGS). Net profit = the profit from the overall business, taking into account all sources of income and all expenses. Sales and marketing are usually not treated as part of COGS, because they are not a necessary expense (in this context, COGS would include things like materials and production costs).
- RC_ITR 5y agoMany investors think in gross profit terms rather than revenue terms, because gross profit is the actual “cash in” from a given sale. That had become less common because software has famously high gross margins that aren’t necessarily linearly tied to revenue, but allbirds are shoes.
- deleted 5y ago[deleted]
- RC_ITR 5y agoWhen you’re growing that gross profit by 10% and you’re not locking customers into long term revenue agreements? No comment on usual or not. Definitely not “good”.
- jgalt212 5y agoAre they paying people $14 to then in turn purchase an $11 shoe? Why can't I just keep the $14?
- joshuamorton 5y agoThey're paying 14 to get people to purchase a 25 dollar shoe. Profit is after Cost of revenue.
- RC_ITR 5y agoMore accurately, they’re paying people $14 to buy a $20 shoe that cost $9 to make. And they’re not just “keeping the money” because they’re hoping to be valued on a revenue multiple.