Operating Margin
Agency glossary · Updated July 2026
Definition
Operating margin is the share of net revenue left as profit from core operations, after delivery costs and overhead but before interest and taxes. It shows how profitable the agency’s actual business is, independent of financing and tax effects.
Operating profit / net revenue x 100Why it matters
Operating margin isolates how well the agency runs as a business, which is useful when comparing periods or agencies with different tax and debt situations.
For most small agencies, operating margin and net margin are close, because interest and tax are small. As an agency takes on debt or grows, the two diverge.
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