What is an income statement waterfall?

An income statement waterfall is a bar chart that walks from total revenue down to net income, with each step showing how much a cost or tax line removes (or adds). Subtotals — gross profit, operating income, pre-tax income — are anchored to zero so the cascade reconciles exactly to the bottom line.

How much of Apple (AAPL) revenue becomes net income?

For TTM through Q1 2026, Apple turned $451B of revenue into $123B of net income — a net margin of 27.2%. The waterfall shows where the rest goes: cost of revenue, operating expenses, non-operating items, and taxes.

What are Apple (AAPL) gross, operating, and net margins?

For TTM through Q1 2026, Apple reported a gross margin of 47.9%, an operating margin of 32.6%, and a net margin of 27.2%. Each subtotal in the waterfall corresponds to one of these margins.

Why does Apple (AAPL) have such a high (or low) gross margin?

Gross margin (gross profit ÷ revenue) reflects how much of each revenue dollar remains after direct production costs. Capital-light software and platform businesses often show gross margins above 60–80% because their cost of revenue is mainly hosting and support. Hardware, retail, and commodity businesses show lower gross margins because raw materials and manufacturing costs are significant. The waterfall makes this visible at a glance — the size of the "Cost of Revenue" bar relative to Revenue is the gross margin complement.

What is the difference between gross, operating, and net margin?

Gross margin = (Revenue − Cost of Revenue) ÷ Revenue. It measures production efficiency. Operating margin = Operating Income ÷ Revenue. It adds operating expenses (R&D, S&M, G&A) and measures the profitability of core operations. Net margin = Net Income ÷ Revenue. It also includes interest, other income/expense, and taxes, and represents the shareholder take after everything.

Apple (AAPL) Income Statement Waterfall

Revenue

$451B

Gross Margin

+47.9%

Operating Margin

+32.6%

Net Margin

+27.2%

Income statement waterfall for Apple (AAPL) — TTM through Q1 2026

Net income: $123B

Margin breakdown for Apple (AAPL) — TTM through Q1 2026

Line item	Amount	Running total
Revenue	$451B	$451B
Cost of Revenue	-$235B	$216B
Gross Profit	$216B	$216B
Operating Expenses	-$68.7B	$147B
Operating Income	$147B	$147B
Other Income / Expense	$304M	$148B
Pre-tax Income	$148B	$148B
Income Tax	-$25.1B	$123B
Net Income	$123B	$123B

Revenue$451B
Cost of Revenue-$235B
Gross Profit$216B
Operating Expenses-$68.7B
Operating Income$147B
Other Income / Expense$304M
Pre-tax Income$148B
Income Tax-$25.1B
Net Income$123B

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