Targa Resources Corp. stock research
FY2024 Q1
Targa Resources (TRGP) Gross Margin — Quarter Ended Mar 31, 2024
The company generated higher revenue this quarter compared to both the prior quarter and the same quarter last year. Gross profit improved year over year but remained stable sequentially, while cost of revenue increased relative to both periods, resulting in a gross margin that weakened from the prior quarter but strengthened from the year-ago level.
Gross margin takeaway
Quarter ended Mar 31, 2024 · FY2024 Q1
The company generated higher revenue this quarter compared to both the prior quarter and the same quarter last year. Gross profit improved year over year but remained stable sequentially, while cost of revenue increased relative to both periods, resulting in a gross margin that weakened from the prior quarter but strengthened from the year-ago level.
- The strongest observable margin driver is the relationship between revenue and cost of revenue: revenue growth outpaced the increase in cost of revenue when compared with the year-ago quarter, leading to an improved gross margin year over year. Sequentially, however, cost of revenue rose more proportionally than revenue, causing a slight weakening in gross margin.
- Gross margin weakened sequentially, from the prior quarter level to the current quarter level, but improved significantly year over year from the same quarter last year. Revenue increased, gross profit was stable sequentially and higher year over year, while cost of revenue rose in both comparisons.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
29.5%
Gross profit
$1.3B
Revenue
$4.6B
Cost of revenue
$3.2B
Quarter-over-quarter change
-2.2 pts
Year-over-year change
+8.9 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Jun 30, 2023 | $2.7B | $650.7M | $2.1B | 23.9% |
| Sep 30, 2023 | $3.9B | $1.2B | $2.7B | 31.0% |
| Dec 31, 2023 | $4.2B | $1.3B | $2.9B | 31.6% |
| Mar 31, 2024 | $4.6B | $1.3B | $3.2B | 29.5% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Dec 31, 2023
-2.2 pts
Year-over-year change
Mar 31, 2023
+8.9 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The strongest observable margin driver is the relationship between revenue and cost of revenue: revenue growth outpaced the increase in cost of revenue when compared with the year-ago quarter, leading to an improved gross margin year over year. Sequentially, however, cost of revenue rose more proportionally than revenue, causing a slight weakening in gross margin.
Gross margin weakened sequentially, from the prior quarter level to the current quarter level, but improved significantly year over year from the same quarter last year. Revenue increased, gross profit was stable sequentially and higher year over year, while cost of revenue rose in both comparisons.
Monitor whether cost of revenue continues to grow at a pace closer to or exceeding revenue growth, as this would pressure gross margin further.