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 Mercury General (MCY) revenue becomes net income?

For TTM through Q1 2026, Mercury General turned $6.14B of revenue into $840M of net income — a net margin of 13.7%. The waterfall shows where the rest goes: cost of revenue, operating expenses, non-operating items, and taxes.

What are Mercury General (MCY) gross, operating, and net margins?

For TTM through Q1 2026, Mercury General reported a gross margin of 43.9%, an operating margin of 17%, and a net margin of 13.7%. Each subtotal in the waterfall corresponds to one of these margins.

Why does Mercury General (MCY) 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.

Mercury General (MCY) Income Statement Waterfall

Revenue

$6.14B

Gross Margin

+43.9%

Operating Margin

+17.0%

Net Margin

+13.7%

Income statement waterfall for Mercury General (MCY) — TTM through Q1 2026

Net income: $840M

Margin breakdown for Mercury General (MCY) — TTM through Q1 2026

Line item	Amount	Running total
Revenue	$6.14B	$6.14B
Cost of Revenue	-$3.45B	$2.69B
Gross Profit	$2.69B	$2.69B
Operating Expenses	-$1.65B	$1.04B
Operating Income	$1.04B	$1.04B
Pre-tax Income	$1.04B	$1.04B
Income Tax	-$202M	$840M
Net Income	$840M	$840M

Revenue$6.14B
Cost of Revenue-$3.45B
Gross Profit$2.69B
Operating Expenses-$1.65B
Operating Income$1.04B
Pre-tax Income$1.04B
Income Tax-$202M
Net Income$840M

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