Operating Margin

Revenue minus the cost of goods sold (COGS), expressed as a percentage of revenue. Gross margin indicates how efficiently a company produces its goods or delivers its services and determines how much revenue is available to cover operating expenses and generate profit.

EBITDA expressed as a percentage of revenue, indicating how much operating profit a company generates from each pound of revenue before non-cash charges and financing costs. EBITDA margin is a key benchmark for operational efficiency across industries.

Revenue minus variable costs, expressed as a total or per-unit figure. Contribution margin reveals how much each unit sold contributes to covering fixed costs and generating profit, and is a key input in unit economics analysis.

The degree to which a company's operating income changes relative to a change in revenue, determined by the proportion of fixed costs to variable costs. Companies with high intangible asset bases often exhibit strong operating leverage because intangible costs (such as software development and R&D) are largely fixed, enabling profits to scale rapidly with revenue.

The ongoing costs of running a business, including salaries, rent, utilities, marketing, and professional services. Unlike capital expenditure, OpEx is expensed immediately on the income statement.

The measure of the value of goods and services produced, calculated as revenue minus the cost of purchased inputs (services, energy, and materials). GVA captures the value a company creates through its own activities and is a core productivity metric in the Opagio framework.

Earnings Before Interest, Taxes, Depreciation, and Amortisation. A widely used measure of a company's core operating performance that strips out financing decisions, tax jurisdictions, and non-cash charges, making it useful for comparing profitability across companies.

The profit margin that a hypothetical developer would expect to earn for undertaking the creation of an asset, reflecting compensation for development risk, time, and expertise. In intangible asset valuation under the cost approach, developer's profit is added to direct and indirect costs to arrive at the total cost that a market participant would incur.

What is Gross Margin and Contribution Margin?

Gross Margin = (Revenue − Cost of Goods Sold) / Revenue. Contribution Margin = (Revenue − Variable Costs) / Revenue. Both measure profitability at different levels of cost allocation.

How do intangible assets affect company valuation?

Intangible assets typically represent 70-90% of enterprise value in modern companies, directly influencing revenue multiples, EBITDA margins, and acquisition premiums.

What is the link between intangible assets and EBITDA?

Companies with strong intangible assets typically generate higher EBITDA margins because intangibles scale without proportional cost increases — driving higher revenue per employee and lower marginal costs.