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 Target (TGT) revenue becomes net income?

For TTM through Q2 2026, Target turned $106B of revenue into $3.45B of net income — a net margin of 3.2%. The waterfall shows where the rest goes: cost of revenue, operating expenses, non-operating items, and taxes.

What are Target (TGT) gross, operating, and net margins?

For TTM through Q2 2026, Target reported a gross margin of 28.1%, an operating margin of 4.5%, and a net margin of 3.2%. Each subtotal in the waterfall corresponds to one of these margins.

Why does Target (TGT) 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.

Target (TGT) Income Statement Waterfall

Revenue

$106B

Gross Margin

+28.1%

Operating Margin

+4.5%

Net Margin

+3.2%

Income statement waterfall for Target (TGT) — TTM through Q2 2026

Net income: $3.45B

Margin breakdown for Target (TGT) — TTM through Q2 2026

Line item	Amount	Running total
Revenue	$106B	$106B
Cost of Revenue	-$76.4B	$29.9B
Gross Profit	$29.9B	$29.9B
Operating Expenses	-$25.2B	$4.78B
Operating Income	$4.78B	$4.78B
Other Income / Expense	-$362M	$4.42B
Pre-tax Income	$4.42B	$4.42B
Income Tax	-$968M	$3.45B
Net Income	$3.45B	$3.45B

Revenue$106B
Cost of Revenue-$76.4B
Gross Profit$29.9B
Operating Expenses-$25.2B
Operating Income$4.78B
Other Income / Expense-$362M
Pre-tax Income$4.42B
Income Tax-$968M
Net Income$3.45B

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