Most investors tend to fix their eyes on the income statement first when the company they're watching releases financial statements.

Generally, we group the stats on the income statement into three categories: operating revenue, operating expenses, and profit.

Operating revenue seems to be the most straightforward of the three, but plays an essential role in financial analysis, and it is imperative to pay close attention to it when investing in the US market.

More specifically, we may approach the operating revenue from four perspectives.

The first perspective is the size.

A company's operating revenue is the foundation of its growth.

Generally, sizable revenue tends to give the company some competitive advantages.

On the one hand, it can help create economies of scale. As the scale of income increases, operating costs, R&D expenses, sales management fees, etc., may decrease in proportion to income, driving up the profit margin.

On another hand, a company with higher-than-average income, even an industry leader, usually will gain higher brand influence and product pricing power.

Let's take Tesla's financial statements as an example.

From 2018 to 2022, its operating revenue quadrupled, while the ratios of its operating cost, R&D expenses, and SG&A all went down, driving its net profit ratio up from -5% to 15%.

The second perspective is revenue structure.

A company's revenue structure can be analyzed from different angles.

Let's first look at it from the company's primary operating segments.

A company may provide multiple products and services.

So you should look into each of their contributions to the revenue and analyze their competition and outlook, respectively.

We can also take a look at its customers.

Ask critical questions like:

How concentrated is the company's customer base?

How reliable are the customers?

And will the customer demand increase or decline?

Finally, we can also segregate a company's revenue geographically.

We need to identify the key geographic locations that generate income for the company and each of their contributions.

This breakdown of revenue by region matters because in different countries, or even different parts of a country, the demand for the company's products and services may vary.

Take Apple's 10-k for the fiscal year 2022 as an example.

From the operating segment perspective, their financial report includes revenue from sales of iPhone, Mac, iPad, wearables, and services.

Revenue breakdown by region is available, too.

Apple's markets include the US, Europe, Greater China, the rest of Asia Pacific, and other regions.

The third perspective of view is revenue growth.

For US stock investment, earnings growth is a core driver of long-term stock price performance.

Therefore, analyzing revenue growth becomes important for US stock investors.

When analyzing a company's financial results, we should first look at the company's revenue growth, as the higher the growth rate, generally the better the company is operating.

Meanwhile, the sustainability of growth also matters.

By observing the company's revenue growth over the past five years, we can tell whether it's growing faster or slower.

In addition, comparing the current growth rate with the industry average can help us see the picture.

A company growing faster than the market may become more competitive with a bigger market share.

Conversely, if its growth rate is lower than the industry average, the company might face great pressure from its competitors.

If we happen to be in earnings season, we may also compare the latest revenue growth rate with the market estimate. If the actual data beats the expectation, the stock might gain some momentum.

Conversely, if the estimate is missed, the stock price might meet pressure on its way in the short term.

The fourth perspective is the growth drivers.

Analyzing what fueled a company's revenue growth historically may help us determine if that growth can continue.

Generally, there are three major revenue drivers.

The first revenue driver is rising demand.

A fast-growing industry may stave off competition, leaving more time for companies to grow bigger.

The second driver of revenue is the bigger market share.

An incumbent market leader that fails to increase its penetration might find it difficult to sustain its revenue growth, and newcomers might even disrupt the whole industry.

The third revenue driver is the elevated prices of products or services.

But here, we need to pay attention to the logic behind a price rise.

If the company raises the price of its product as it becomes more prominent and influential, its revenue is more likely to see sustained growth.

But if the company is in a cyclical industry, which means the prices of its products or services go up

during a cyclical boom, the sustainability of its revenue growth may largely depend on how long that boom will last.

These three drivers are correlated with each other, and together, they determine the sustainability of the revenue growth.

Again, let's take Apple's 10-k as an example.

For the fiscal year 2022, Apple generated $394.3 billion in revenue.

The company managed to increase its market share with shrinking demand for smartphones, delivering a 7.79% YoY revenue growth.

Generally, Apple's revenue has been in an uptrend from fiscal year 2018 to 2022, but its growth slowed in the fiscal year 2022 compared with the year 2021.

So, will the global cell phone market get back on track?

Can Apple continue to increase its market share?

Is the company able to make its autonomous driving program a new growth point?

All these leave a question mark on Apple's revenue growth.

To wrap up, operating revenue is a key item on a company's income statement.

We may get insights by analyzing the revenue size, structure, growth rate, and growth drivers.