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 Pinnacle West Capital (PNW) revenue becomes net income?

For TTM through Q1 2026, Pinnacle West Capital turned $5.46B of revenue into $654M of net income — a net margin of 12%. The waterfall shows where the rest goes: cost of revenue, operating expenses, non-operating items, and taxes.

What are Pinnacle West Capital (PNW) gross, operating, and net margins?

For TTM through Q1 2026, Pinnacle West Capital reported a gross margin of 40.7%, an operating margin of 27.5%, and a net margin of 12%. Each subtotal in the waterfall corresponds to one of these margins.

Why does Pinnacle West Capital (PNW) 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.

Pinnacle West Capital (PNW) Income Statement Waterfall

Revenue

$5.46B

Gross Margin

+40.7%

Operating Margin

+27.5%

Net Margin

+12.0%

Income statement waterfall for Pinnacle West Capital (PNW) — TTM through Q1 2026

Net income: $654M

Margin breakdown for Pinnacle West Capital (PNW) — TTM through Q1 2026

Line item	Amount	Running total
Revenue	$5.46B	$5.46B
Cost of Revenue	-$3.24B	$2.22B
Gross Profit	$2.22B	$2.22B
Operating Expenses	-$719M	$1.5B
Operating Income	$1.5B	$1.5B
Other Income / Expense	-$722M	$781M
Pre-tax Income	$781M	$781M
Income Tax	-$114M	$667M
Other Items	-$13M	$654M
Net Income	$654M	$654M

Revenue$5.46B
Cost of Revenue-$3.24B
Gross Profit$2.22B
Operating Expenses-$719M
Operating Income$1.5B
Other Income / Expense-$722M
Pre-tax Income$781M
Income Tax-$114M
Other Items-$13M
Net Income$654M

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