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 Microchip Technology (MCHP) revenue becomes net income?

For TTM through Q1 2026, Microchip Technology turned $4.71B of revenue into $202M of net income — a net margin of 4.3%. The waterfall shows where the rest goes: cost of revenue, operating expenses, non-operating items, and taxes.

What are Microchip Technology (MCHP) gross, operating, and net margins?

For TTM through Q1 2026, Microchip Technology reported a gross margin of 57.7%, an operating margin of 10.4%, and a net margin of 4.3%. Each subtotal in the waterfall corresponds to one of these margins.

Why does Microchip Technology (MCHP) 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.

Microchip Technology (MCHP) Income Statement Waterfall

Revenue

$4.71B

Gross Margin

+57.7%

Operating Margin

+10.4%

Net Margin

+4.3%

Income statement waterfall for Microchip Technology (MCHP) — TTM through Q1 2026

Net income: $202M

Margin breakdown for Microchip Technology (MCHP) — TTM through Q1 2026

Line item	Amount	Running total
Revenue	$4.71B	$4.71B
Cost of Revenue	-$1.99B	$2.72B
Gross Profit	$2.72B	$2.72B
Operating Expenses	-$2.23B	$490M
Operating Income	$490M	$490M
Other Income / Expense	-$217M	$274M
Pre-tax Income	$274M	$274M
Income Tax	-$43.5M	$230M
Other Items	-$27.8M	$202M
Net Income	$202M	$202M

Revenue$4.71B
Cost of Revenue-$1.99B
Gross Profit$2.72B
Operating Expenses-$2.23B
Operating Income$490M
Other Income / Expense-$217M
Pre-tax Income$274M
Income Tax-$43.5M
Other Items-$27.8M
Net Income$202M

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