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 Arista Networks (ANET) revenue becomes net income?

For TTM through Q1 2026, Arista Networks turned $9.71B of revenue into $3.72B of net income — a net margin of 38.3%. The waterfall shows where the rest goes: cost of revenue, operating expenses, non-operating items, and taxes.

What are Arista Networks (ANET) gross, operating, and net margins?

For TTM through Q1 2026, Arista Networks reported a gross margin of 63.5%, an operating margin of 42.8%, and a net margin of 38.3%. Each subtotal in the waterfall corresponds to one of these margins.

Why does Arista Networks (ANET) 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.

Arista Networks (ANET) Income Statement Waterfall

Revenue

$9.71B

Gross Margin

+63.5%

Operating Margin

+42.8%

Net Margin

+38.3%

Income statement waterfall for Arista Networks (ANET) — TTM through Q1 2026

Net income: $3.72B

Margin breakdown for Arista Networks (ANET) — TTM through Q1 2026

Line item	Amount	Running total
Revenue	$9.71B	$9.71B
Cost of Revenue	-$3.54B	$6.17B
Gross Profit	$6.17B	$6.17B
Operating Expenses	-$2.01B	$4.16B
Operating Income	$4.16B	$4.16B
Other Income / Expense	$411M	$4.57B
Pre-tax Income	$4.57B	$4.57B
Income Tax	-$846M	$3.72B
Net Income	$3.72B	$3.72B

Revenue$9.71B
Cost of Revenue-$3.54B
Gross Profit$6.17B
Operating Expenses-$2.01B
Operating Income$4.16B
Other Income / Expense$411M
Pre-tax Income$4.57B
Income Tax-$846M
Net Income$3.72B

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