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Nuance Communications Inc (NAS:NUAN)
Gross Profit
$1,077 Mil (TTM As of Mar. 2014)

Nuance Communications Inc's gross profit for the three months ended in Mar. 2014 was $265 Mil. Nuance Communications Inc's gross profit for the trailing twelve months (TTM) ended in Mar. 2014 was $1,077 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Nuance Communications Inc's gross profit for the three months ended in Mar. 2014 was $265 Mil. Nuance Communications Inc's revenue for the three months ended in Mar. 2014 was $476 Mil. Therefore, Nuance Communications Inc's Gross Margin for the quarter that ended in Mar. 2014 was 55.77%.

Nuance Communications Inc had a gross margin of 55.77% for the quarter that ended in Mar. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Nuance Communications Inc was 84.60%. The lowest was -5.13%. And the median was 63.41%.

Warning Sign:

Nuance Communications Inc gross margin has been in long term decline. The average rate of decline per year is -1.1%.


Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

Nuance Communications Inc's Gross Profit for the fiscal year that ended in Sep. 2013 is calculated as

Gross Profit (A: Sep. 2013 )=Revenue - Cost of Goods Sold
=1855.279 - 766.55
=1,089

Nuance Communications Inc's Gross Profit for the quarter that ended in Mar. 2014 is calculated as

Gross Profit (Q: Mar. 2014 )=Revenue - Cost of Goods Sold
=475.653 - 210.364
=265

Nuance Communications Inc Gross Profit for the trailing twelve months (TTM) ended in Mar. 2014 was 275.711 (Jun. 2013 ) + 273.508 (Sep. 2013 ) + 262.16 (Dec. 2013 ) + 265.289 (Mar. 2014 ) = $1,077 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

Nuance Communications Inc's Gross Margin for the quarter that ended in Mar. 2014 is calculated as

Gross Margin (Q: Mar. 2014 )=Gross Profit (Q: Mar. 2014 ) / Revenue (Q: Mar. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=265 / 475.653
=55.77 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Nuance Communications Inc had a gross margin of 55.77% for the quarter that ended in Mar. 2014 => Durable competitive advantage


Related Terms

Cost of Goods Sold, Gross Margin, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Nuance Communications Inc Annual Data

Dec03Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
Gross_Profit 991632674045535917108191,0471,089

Nuance Communications Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Gross_Profit 226250274297280260276274262265
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