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 RLI (RLI) revenue becomes net income?

For TTM through Q2 2026, RLI turned $1.44B of revenue into $439M of net income — a net margin of 30.4%. The waterfall shows where the rest goes: cost of revenue, operating expenses, non-operating items, and taxes.

What are RLI (RLI) gross, operating, and net margins?

For TTM through Q2 2026, RLI reported a gross margin of 38.2%, an operating margin of 29.6%, and a net margin of 30.4%. Each subtotal in the waterfall corresponds to one of these margins.

Why does RLI (RLI) 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.

RLI (RLI) Income Statement Waterfall

Revenue

$1.44B

Gross Margin

+38.2%

Operating Margin

+29.6%

Net Margin

+30.4%

Income statement waterfall for RLI (RLI) — TTM through Q2 2026

Net income: $439M

Margin breakdown for RLI (RLI) — TTM through Q2 2026

Line item	Amount	Running total
Revenue	$1.44B	$1.44B
Cost of Revenue	-$847M	$552M
Gross Profit	$552M	$552M
Operating Expenses	-$125M	$427M
Operating Income	$427M	$427M
Other Income / Expense	$122M	$549M
Pre-tax Income	$549M	$549M
Income Tax	-$110M	$439M
Net Income	$439M	$439M

Revenue$1.44B
Cost of Revenue-$847M
Gross Profit$552M
Operating Expenses-$125M
Operating Income$427M
Other Income / Expense$122M
Pre-tax Income$549M
Income Tax-$110M
Net Income$439M

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