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 TransDigm Group (TDG) revenue becomes net income?

For TTM through Q1 2026, TransDigm Group turned $9.5B of revenue into $2.02B of net income — a net margin of 21.3%. The waterfall shows where the rest goes: cost of revenue, operating expenses, non-operating items, and taxes.

What are TransDigm Group (TDG) gross, operating, and net margins?

For TTM through Q1 2026, TransDigm Group reported a gross margin of 59%, an operating margin of 46.5%, and a net margin of 21.3%. Each subtotal in the waterfall corresponds to one of these margins.

Why does TransDigm Group (TDG) 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.

TransDigm Group (TDG) Income Statement Waterfall

Revenue

$9.5B

Gross Margin

+59.0%

Operating Margin

+46.5%

Net Margin

+21.3%

Income statement waterfall for TransDigm Group (TDG) — TTM through Q1 2026

Net income: $2.02B

Margin breakdown for TransDigm Group (TDG) — TTM through Q1 2026

Line item	Amount	Running total
Revenue	$9.5B	$9.5B
Cost of Revenue	-$3.89B	$5.61B
Gross Profit	$5.61B	$5.61B
Operating Expenses	-$1.19B	$4.42B
Operating Income	$4.42B	$4.42B
Other Income / Expense	-$1.76B	$2.66B
Pre-tax Income	$2.66B	$2.66B
Income Tax	-$577M	$2.08B
Other Items	-$60M	$2.02B
Net Income	$2.02B	$2.02B

Revenue$9.5B
Cost of Revenue-$3.89B
Gross Profit$5.61B
Operating Expenses-$1.19B
Operating Income$4.42B
Other Income / Expense-$1.76B
Pre-tax Income$2.66B
Income Tax-$577M
Other Items-$60M
Net Income$2.02B

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