Growing revenue while the margin erodes
139 companies above $1bn in revenue have grown their top line in each of the last three years while their gross margin fell over the same period.
Revenue growth is the headline number and the one management is asked about. Gross margin is the quieter figure underneath it, and when the two move in opposite directions for three consecutive years something structural is happening rather than something cyclical.
There are respectable explanations. A company shifting its mix towards a lower-margin but larger product line is trading margin for scale deliberately. An acquisition of a lower-margin business does the same thing in one step. Input-cost inflation that the company chose not to pass on in full will do it too.
The unwelcome explanation is discounting: growth bought by cutting price. That works until it stops, and it is difficult to reverse, because the price is now what customers expect to pay.
The distinction is usually visible in operating margin. If gross margin is falling but operating margin holds, the company is offsetting the pressure elsewhere. If both are falling, the growth is being bought.
What this is usually called
This pattern is usually described as margin compression, margin erosion or unprofitable growth, depending on how unkind the writer intends to be. Revenue is also called the top line, net sales or turnover. The distinction that matters is between mix shift, where the company is selling more of something structurally cheaper, and price pressure, where it is selling the same thing for less.
The question, as a query
The table is generated by running this against the filings held today. The syntax is the screener's, so the query is a starting point rather than a result.
INCREASED(revenue,3,3) AND DECLINED(gross_margin,3) AND revenue > 1b| Company | Revenue | Net income | Gross margin | Free cash flow |
|---|---|---|---|---|
| UNH InsurerUNITEDHEALTH GROUP INC | $447.57B | $12.06B | 88.7% | $16.08B |
| MCKMCKESSON CORP | $403.43B | $4.76B | 3.6% | $5.72B |
| MSFTMICROSOFT CORP | $331.84B | $133.75B | 67.9% | $66.99B |
| CI InsurerCigna Group | $274.90B | $5.96B | 21.8% | Unavailable |
| ELV InsurerElevance Health, Inc. | $199.12B | $5.66B | 89.4% | $3.17B |
| CNC InsurerCENTENE CORP | $194.78B | -$6.67B | 7.3% | $4.32B |
| FFORD MOTOR CO | $187.27B | Unavailable | 6.8% | Unavailable |
| JNJJOHNSON & JOHNSON | $94.19B | $26.80B | 67.9% | $19.70B |
| ACIAlbertsons Companies, Inc. | $83.17B | $217.40M | 27.2% | Unavailable |
| LMTLOCKHEED MARTIN CORP | $75.05B | $5.02B | 10.2% | Unavailable |
| ACNAccenture plc | $69.67B | $7.68B | 31.9% | $10.87B |
| MOH InsurerMOLINA HEALTHCARE, INC. | $45.43B | $472.00M | 13.1% | -$636.00M |
| DGDOLLAR GENERAL CORP | $42.72B | $1.51B | 30.7% | Unavailable |
| CBRECBRE GROUP, INC. | $40.55B | $1.16B | 18.7% | Unavailable |
| SMCISuper Micro Computer, Inc. | $39.06B | $2.23B | 10.8% | -$6.97B |
| MDLZMondelez International, Inc. | $38.54B | $2.45B | 28.4% | $3.24B |
| LADLITHIA MOTORS INC | $37.63B | $819.60M | 15.2% | $5.80M |
| AMGNAMGEN INC | $36.75B | $7.71B | 67.2% | $8.10B |
| MDTMedtronic plc | $36.36B | $4.80B | 65.0% | $5.43B |
| MELIMERCADOLIBRE INC | $28.89B | $2.00B | 44.5% | Unavailable |
| FCXFREEPORT-MCMORAN INC | $25.92B | Unavailable | 28.2% | Unavailable |
| GOLDGold.com, Inc. | $25.51B | $82.34M | 1.8% | $1.21B |
| GPIGROUP 1 AUTOMOTIVE INC | $22.57B | $325.20M | 16.0% | $424.50M |
| DLTRDOLLAR TREE, INC. | $19.41B | $1.28B | 36.3% | Unavailable |
| OMCOMNICOM GROUP INC. | $17.27B | -$54.50M | 8.5% | $2.79B |
| DKSDICK'S SPORTING GOODS, INC. | $17.22B | $849.24M | 32.9% | $400.17M |
| FLUTFlutter Entertainment plc | $16.38B | Unavailable | 45.2% | $1.08B |
| URIUNITED RENTALS, INC. | $16.10B | $2.49B | 38.2% | Unavailable |
| LHLABCORP HOLDINGS INC. | $13.95B | $876.50M | 28.8% | $1.21B |
| NOWServiceNow, Inc. | $13.28B | $1.75B | 77.5% | $4.58B |
| ULTAUlta Beauty, Inc. | $12.39B | $1.15B | 39.1% | $1.07B |
| JJACOBS SOLUTIONS INC. | $12.03B | $289.34M | 24.8% | $607.47M |
| VRTXVERTEX PHARMACEUTICALS INC / MA | $12.00B | $3.95B | 86.2% | $3.19B |
| HSYHERSHEY CO | $11.69B | $883.26M | 33.5% | $1.82B |
| SHOPSHOPIFY INC. | $11.56B | $1.23B | 48.1% | $2.01B |
| PANWPalo Alto Networks Inc | $11.48B | $307.00M | 70.4% | Unavailable |
| BAXBAXTER INTERNATIONAL INC | $11.24B | -$957.00M | 30.1% | Unavailable |
| EBAYEBAY INC | $11.10B | $2.03B | 71.5% | $1.43B |
| ISRGINTUITIVE SURGICAL INC | $10.06B | $2.86B | 66.0% | Unavailable |
| CNXCConcentrix Corp | $9.83B | -$1.28B | 35.0% | $572.47M |
Showing the 40 largest by revenue of 139. Open the full list in the screener.
What this does not show
Gross margin depends on where a company draws the line between cost of revenue and operating expense, which some companies change. A reclassification can appear here as erosion.
The measures behind this
Revenue Gross margin Operating margin
Related findings
Citing this
SequelSEC, “Growing revenue while the margin erodes”, 26 September 2026. https://sequelsec.com/findings/revenue-up-margin-down
Figures are recomputed on every view from SEC filings, so a number quoted from this page should carry the date it was read.