Arcvue
Finance—two margins, measured at two different points
One says how the contract was bid. The other says whether the company works.
Gross margin is what survives the direct cost of doing the work. Net margin is what survives everything. In GovCon the distance between them is the indirect rate structure, which is why watching only one of them misleads. Arcvue reports both, with the indirect structure between them itemized, so neither one is ever read on its own.
The same revenue, measured twice.
Basis a worked year at illustrative figures. Synthetic sample. Thirty percent gross and five percent net is one business, not two, and the difference between them is the operating structure.
They fail in opposite directions.
- Gross margin alone flatters a company with heavy overhead. The contracts look well bid while the business loses money.
- Net margin alone hides which contracts are the problem. The company reads as thin without saying whether it is the bidding or the structure.
- Subcontractor pass-through distorts both. Large pass-throughs inflate revenue without adding margin, so percentages fall while dollars do not—which is why some firms read margin against net revenue instead.
- Cost-plus work compresses gross margin by design. A low percentage on cost-reimbursable revenue is the contract type, not a failure.
Both margins, at contract level and at company level.
Financial statements carry the P&L with both lines, and contract-level margin shows which work earns its keep—so a thin net margin can be traced to the contracts causing it rather than guessed at.