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Procera Networks Inc (NAS:PKT)
Gross Margin
59.06% (As of Mar. 2015)

Gross Margin is calculated as gross profit divided by its revenue. Procera Networks Inc's gross profit for the three months ended in Mar. 2015 was \$12.11 Mil. Procera Networks Inc's revenue for the three months ended in Mar. 2015 was \$20.50 Mil. Therefore, Procera Networks Inc's Gross Margin for the quarter that ended in Mar. 2015 was 59.06%.

Procera Networks Inc had a gross margin of 59.06% for the quarter that ended in Mar. 2015 => Durable competitive advantage

The 5-Year average Growth Rate of Gross Margin for Procera Networks Inc was 0.00% per year.

Definition

Gross Margin is the percentage of Gross Profit out of sales or Revenue.

Procera Networks Inc's Gross Margin for the fiscal year that ended in Dec. 2014 is calculated as

 Gross Margin (A: Dec. 2014 ) = Gross Profit (A: Dec. 2014 ) / Revenue (A: Dec. 2014 ) = 44.2 / 75.413 = (Revenue - Cost of Goods Sold) / Revenue = (75.413 - 31.207) / 75.413 = 58.62 %

Procera Networks Inc's Gross Margin for the quarter that ended in Mar. 2015 is calculated as

 Gross Margin (Q: Mar. 2015 ) = Gross Profit (Q: Mar. 2015 ) / Revenue (Q: Mar. 2015 ) = 12.1 / 20.503 = (Revenue - Cost of Goods Sold) / Revenue = (20.503 - 8.393) / 20.503 = 59.06 %

* 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

Procera Networks Inc had a gross margin of 59.06% for the quarter that ended in Mar. 2015 => Durable competitive advantage

Be Aware

If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin and Operating Margin closely helps avoid value trap situations.

Related Terms

Historical Data

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

Procera Networks Inc Annual Data

 Dec05 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Gross Margin -20.78 67.08 64.00 36.57 40.66 56.64 59.28 67.35 54.66 58.62

Procera Networks Inc Quarterly Data

 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Gross Margin 64.74 52.00 60.12 48.55 57.96 57.66 56.98 63.42 57.39 59.06
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