How to read a P&L, top to bottom

A P&L (profit and loss statement, or income statement) is a staircase. It starts with what the company earned in the period and steps down, subtracting costs in a fixed order. Each landing has a name, and each answers its own question.

The top step is revenue: what the company earned from what it delivered in the period, counted when it was delivered. For Klasna's autumn quarter, September to November 2026, that is 6,832,760 UAH: its commission on 1:1 lessons, lessons that expired unused, Klasna Club and Klasna for Teams.

Revenue is not:

• all the money customers paid: families paid far more for 1:1 lessons, much of it in advance and most of it belonging to tutors;
• the change in the bank: a Teams invoice can be earned and still unpaid; a winter lesson can be paid and not yet earned.

Keep the word "earned" in mind: the P&L counts a lesson when it happens, not when the money for it arrives.

The second step is cost of revenue: what it costs to deliver what was sold. At Klasna it is payment fees (390,616 UAH), video and AI (794,220), Club hosts and AI (195,225) and tutor payouts for Teams lessons (344,000), 1,724,061 in total.

Revenue minus cost of revenue is gross profit: 6,832,760 − 1,724,061 = 5,108,699 UAH.

Divide it by revenue and you get the gross margin: 5,108,699 ÷ 6,832,760 = 74.77%. Of every hryvnia of revenue, about 75 kopiykas survive delivery.

Gross margin is the first health check. If it is thin, growth cannot fix the bottom line: every extra sale brings little to pay for the team, marketing and office.

Why are Teams tutors in cost of revenue, but not the tutors of 1:1 lessons? Because the 1:1 tutors' share was never counted as Klasna's revenue in the first place, while Teams is sold as Klasna's own service.

Leo calls marketing an investment in growth, and in a business sense it may work like one. On the P&L, though, it is an operating expense of the period it was spent in, next to salaries, coordinators and the office.

Why not spread it like the laptops? The laptops are a long-lived asset: they keep serving Klasna for two years, so their 432,000 UAH price is spread over 24 months as depreciation. A campaign leaves no such asset. The families it brought may stay for a year or leave after one package, and nobody can count on either.

So Klasna's 880,000 UAH of autumn marketing sits fully in the autumn quarter, between gross profit and EBITDA.

Two practical points follow:

• A big campaign makes the quarter's profit look worse even when it works. Judge it by what it brings over time, but report it where it was spent.
• Cutting marketing improves this quarter's profit at once, which says nothing about whether the cut is wise.

Every cost on a P&L sits on one step. The question that sorts them: is this what it takes to deliver what we sold, or what it takes to run the company?

Cost of revenue (above gross profit) is delivery:

• payment provider fees on what customers pay;
• video minutes and AI used in lessons;
• Club hosts and AI;
• tutor payouts for Teams lessons, because Teams is Klasna's own service.

Operating expenses (between gross profit and EBITDA) run the company whatever was delivered: support coordinators (418,000 UAH), team salaries (1,800,000), marketing (880,000), office and tools (252,000), 3,350,000 in total.

Depreciation has its own line below EBITDA.

This is close to, but not the same as, the variable/fixed split from break-even. That split asks how a cost reacts to volume; this one asks what the cost is for. Coordinators, for instance, step up with learners, yet on the P&L they are an operating expense of running support.

Some purchases serve for years: laptops, studio equipment, a server. Charging the whole price to the month it was paid would make that month look terrible and the following ones look too good. So the P&L spreads the price over the useful life. That spread is depreciation.

With even spreading:

depreciation per period = price ÷ number of periods of useful life

Klasna's laptops: 432,000 UAH over 24 months = 18,000 a month, 54,000 a quarter.

A studio kit bought in December for 120,000 UAH and used for 3 years: 120,000 ÷ 36 months = 3,333.33 a month, so 10,000 a quarter (or 120,000 ÷ 12 quarters).

Two things to keep straight:

• The cash leaves in one go, when the purchase is paid. Depreciation is not a payment; it is how the P&L allocates a payment already made.
• Match the units: months with months, quarters with quarters. Dividing a three-year life by 3 gives a yearly figure, not a quarterly one.

EBITDA leaves depreciation out; operating profit keeps it in. Each can be turned into a margin by dividing by revenue:

• EBITDA margin: 1,758,699 ÷ 6,832,760 = 25.74%;
• operating margin: 1,704,699 ÷ 6,832,760 = 24.95%.

The gap between them is the quarter's 54,000 UAH of depreciation.

EBITDA is popular because it is handy for comparing companies with different equipment: one that owns many laptops and one that rents them look more alike before depreciation. That is also its weakness. Klasna's laptops are a real cost: they will wear out and Klasna will buy new ones again, so leaving depreciation out flatters the business.

A fair report shows both numbers side by side and never calls EBITDA "profit" without the word. For a company with heavy equipment, the gap can be large; for Klasna today it is small, which is itself useful to know.

A P&L is read from the top down, and each subtotal is the line above minus one group of costs:

EBITDA stands for earnings before interest, taxes, depreciation and amortization. Operating profit is what is left after depreciation too. Interest and tax would come below it; Klasna has no loans, so the staircase stops here.

Reading top to bottom shows why the bottom line is what it is. Jumping straight to 1,704,699 tells you the result but not whether it came from a strong gross margin, lean operating costs or both. A board member will read every step, and so should you.

The P&L measures what was earned and what it cost to earn it. The bank measures money moving. Over years they agree; in any one quarter they don't.

Klasna's autumn shows three gaps:

• Teams was invoiced 640,000 UAH at the end of November and has not paid. It is in revenue, not in the bank.
• Families prepaid lessons Klasna will deliver in winter. The money is in the bank, but not in autumn revenue.
• The laptops left the bank in August for 432,000 UAH. The autumn P&L carries only 54,000 of depreciation for them.

So an operating profit of 1,704,699 UAH answers "are we profitable?", not "can we pay salaries on Friday?". Telling the team "we have 1.7 million more in the bank" would be wrong.

Read the size of each line, too, not only the total: 629,310 UAH of autumn revenue, about 9% of it, came from lessons that expired unused. Profit built on that line needs its own look.