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 Shopify (SHOP) revenue becomes net income?

For TTM through Q1 2026, Shopify turned $12.4B of revenue into $1.33B of net income — a net margin of 10.8%. The waterfall shows where the rest goes: cost of revenue, operating expenses, non-operating items, and taxes.

What are Shopify (SHOP) gross, operating, and net margins?

For TTM through Q1 2026, Shopify reported a gross margin of 48%, an operating margin of 13.3%, and a net margin of 10.8%. Each subtotal in the waterfall corresponds to one of these margins.

Why does Shopify (SHOP) 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.

Shopify (SHOP) Income Statement Waterfall

Revenue

$12.4B

Gross Margin

+48.0%

Operating Margin

+13.3%

Net Margin

+10.8%

Income statement waterfall for Shopify (SHOP) — TTM through Q1 2026

Net income: $1.33B

Margin breakdown for Shopify (SHOP) — TTM through Q1 2026

Line item	Amount	Running total
Revenue	$12.4B	$12.4B
Cost of Revenue	-$6.43B	$5.93B
Gross Profit	$5.93B	$5.93B
Operating Expenses	-$4.29B	$1.65B
Operating Income	$1.65B	$1.65B
Other Income / Expense	-$2M	$1.65B
Pre-tax Income	$1.65B	$1.65B
Income Tax	-$313M	$1.33B
Net Income	$1.33B	$1.33B

Revenue$12.4B
Cost of Revenue-$6.43B
Gross Profit$5.93B
Operating Expenses-$4.29B
Operating Income$1.65B
Other Income / Expense-$2M
Pre-tax Income$1.65B
Income Tax-$313M
Net Income$1.33B

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