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 Phillips 66 (PSX) revenue becomes net income?

For TTM through Q1 2026, Phillips 66 turned $136B of revenue into $4.12B of net income — a net margin of 3%. The waterfall shows where the rest goes: cost of revenue, operating expenses, non-operating items, and taxes.

What are Phillips 66 (PSX) gross, operating, and net margins?

For TTM through Q1 2026, Phillips 66 reported a gross margin of 7%, an operating margin of 4.7%, and a net margin of 3%. Each subtotal in the waterfall corresponds to one of these margins.

Why does Phillips 66 (PSX) 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.

Phillips 66 (PSX) Income Statement Waterfall

Revenue

$136B

Gross Margin

+7.0%

Operating Margin

+4.7%

Net Margin

+3.0%

Income statement waterfall for Phillips 66 (PSX) — TTM through Q1 2026

Net income: $4.12B

Margin breakdown for Phillips 66 (PSX) — TTM through Q1 2026

Line item	Amount	Running total
Revenue	$136B	$136B
Cost of Revenue	-$126B	$9.56B
Gross Profit	$9.56B	$9.56B
Operating Expenses	-$3.23B	$6.34B
Operating Income	$6.34B	$6.34B
Other Income / Expense	-$1.31B	$5.03B
Pre-tax Income	$5.03B	$5.03B
Income Tax	-$811M	$4.22B
Other Items	-$98M	$4.12B
Net Income	$4.12B	$4.12B

Revenue$136B
Cost of Revenue-$126B
Gross Profit$9.56B
Operating Expenses-$3.23B
Operating Income$6.34B
Other Income / Expense-$1.31B
Pre-tax Income$5.03B
Income Tax-$811M
Other Items-$98M
Net Income$4.12B

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