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 Align Technology (ALGN) revenue becomes net income?

For TTM through Q1 2026, Align Technology turned $4.1B of revenue into $430M of net income — a net margin of 10.5%. The waterfall shows where the rest goes: cost of revenue, operating expenses, non-operating items, and taxes.

What are Align Technology (ALGN) gross, operating, and net margins?

For TTM through Q1 2026, Align Technology reported a gross margin of 67.7%, an operating margin of 14.4%, and a net margin of 10.5%. Each subtotal in the waterfall corresponds to one of these margins.

Why does Align Technology (ALGN) 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.

Align Technology (ALGN) Income Statement Waterfall

Revenue

$4.1B

Gross Margin

+67.7%

Operating Margin

+14.4%

Net Margin

+10.5%

Income statement waterfall for Align Technology (ALGN) — TTM through Q1 2026

Net income: $430M

Margin breakdown for Align Technology (ALGN) — TTM through Q1 2026

Line item	Amount	Running total
Revenue	$4.1B	$4.1B
Cost of Revenue	-$1.32B	$2.77B
Gross Profit	$2.77B	$2.77B
Operating Expenses	-$2.18B	$592M
Operating Income	$592M	$592M
Other Income / Expense	$2.14M	$594M
Pre-tax Income	$594M	$594M
Income Tax	-$164M	$430M
Net Income	$430M	$430M

Revenue$4.1B
Cost of Revenue-$1.32B
Gross Profit$2.77B
Operating Expenses-$2.18B
Operating Income$592M
Other Income / Expense$2.14M
Pre-tax Income$594M
Income Tax-$164M
Net Income$430M

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