Does small-cap Software company UserTesting have a sustainably profitable business model? By studying its gross margins and comparing them to its operating margins, we can gain insight into quality of its business. With gross margins at 74.8%, you might be telling yourself the UserTesting is profitable — but there is more to the story.
|Date Reported||Revenue ($)||Cost of Revenue ($)||Gross Margins (%)||YoY Growth (%)|
UserTesting's cost of revenue is growing at an average 61.2% per year, while its total revenues are lagging with a 38.8% growth rate.
|Date Reported||Total Revenue ($)||Operating Expenses ($)||Operating Margins (%)||YoY Growth (%)|
The table above tells us that, on average, UserTesting has not been profitable over the last four years, which should be a warning sign to prospective investors. Indeed, the company's operating margins are sinking at rate of -16.9%