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 Philip Morris International (PM) revenue becomes net income?

For TTM through Q2 2026, Philip Morris International turned $42.5B of revenue into $10.9B of net income — a net margin of 25.6%. The waterfall shows where the rest goes: cost of revenue, operating expenses, non-operating items, and taxes.

What are Philip Morris International (PM) gross, operating, and net margins?

For TTM through Q2 2026, Philip Morris International reported a gross margin of 67.5%, an operating margin of 37.7%, and a net margin of 25.6%. Each subtotal in the waterfall corresponds to one of these margins.

Why does Philip Morris International (PM) 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.

Philip Morris International (PM) Income Statement Waterfall

Revenue

$42.5B

Gross Margin

+67.5%

Operating Margin

+37.7%

Net Margin

+25.6%

Income statement waterfall for Philip Morris International (PM) — TTM through Q2 2026

Net income: $10.9B

Margin breakdown for Philip Morris International (PM) — TTM through Q2 2026

Line item	Amount	Running total
Revenue	$42.5B	$42.5B
Cost of Revenue	-$13.8B	$28.7B
Gross Profit	$28.7B	$28.7B
Operating Expenses	-$12.7B	$16.1B
Operating Income	$16.1B	$16.1B
Other Income / Expense	-$1.22B	$14.8B
Pre-tax Income	$14.8B	$14.8B
Income Tax	-$3.06B	$11.8B
Other Items	-$908M	$10.9B
Net Income	$10.9B	$10.9B

Revenue$42.5B
Cost of Revenue-$13.8B
Gross Profit$28.7B
Operating Expenses-$12.7B
Operating Income$16.1B
Other Income / Expense-$1.22B
Pre-tax Income$14.8B
Income Tax-$3.06B
Other Items-$908M
Net Income$10.9B

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