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 Electronic Arts (EA) revenue becomes net income?

For TTM through Q1 2026, Electronic Arts turned $7.53B of revenue into $887M of net income — a net margin of 11.8%. The waterfall shows where the rest goes: cost of revenue, operating expenses, non-operating items, and taxes.

What are Electronic Arts (EA) gross, operating, and net margins?

For TTM through Q1 2026, Electronic Arts reported a gross margin of 79%, an operating margin of 15.4%, and a net margin of 11.8%. Each subtotal in the waterfall corresponds to one of these margins.

Why does Electronic Arts (EA) 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.

Electronic Arts (EA) Income Statement Waterfall

Revenue

$7.53B

Gross Margin

+79.0%

Operating Margin

+15.4%

Net Margin

+11.8%

Income statement waterfall for Electronic Arts (EA) — TTM through Q1 2026

Net income: $887M

Margin breakdown for Electronic Arts (EA) — TTM through Q1 2026

Line item	Amount	Running total
Revenue	$7.53B	$7.53B
Cost of Revenue	-$1.58B	$5.95B
Gross Profit	$5.95B	$5.95B
Operating Expenses	-$4.79B	$1.16B
Operating Income	$1.16B	$1.16B
Other Income / Expense	$18M	$1.18B
Pre-tax Income	$1.18B	$1.18B
Income Tax	-$293M	$887M
Net Income	$887M	$887M

Revenue$7.53B
Cost of Revenue-$1.58B
Gross Profit$5.95B
Operating Expenses-$4.79B
Operating Income$1.16B
Other Income / Expense$18M
Pre-tax Income$1.18B
Income Tax-$293M
Net Income$887M

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