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 Vertex Pharmaceuticals (VRTX) revenue becomes net income?

For TTM through Q1 2026, Vertex Pharmaceuticals turned $12.3B of revenue into $4.34B of net income — a net margin of 35.4%. The waterfall shows where the rest goes: cost of revenue, operating expenses, non-operating items, and taxes.

What are Vertex Pharmaceuticals (VRTX) gross, operating, and net margins?

For TTM through Q1 2026, Vertex Pharmaceuticals reported a gross margin of 86.3%, an operating margin of 39%, and a net margin of 35.4%. Each subtotal in the waterfall corresponds to one of these margins.

Why does Vertex Pharmaceuticals (VRTX) 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.

Vertex Pharmaceuticals (VRTX) Income Statement Waterfall

Revenue

$12.3B

Gross Margin

+86.3%

Operating Margin

+39.0%

Net Margin

+35.4%

Income statement waterfall for Vertex Pharmaceuticals (VRTX) — TTM through Q1 2026

Net income: $4.34B

Margin breakdown for Vertex Pharmaceuticals (VRTX) — TTM through Q1 2026

Line item	Amount	Running total
Revenue	$12.3B	$12.3B
Cost of Revenue	-$1.68B	$10.6B
Gross Profit	$10.6B	$10.6B
Operating Expenses	-$5.8B	$4.78B
Operating Income	$4.78B	$4.78B
Other Income / Expense	$390M	$5.17B
Pre-tax Income	$5.17B	$5.17B
Income Tax	-$827M	$4.34B
Net Income	$4.34B	$4.34B

Revenue$12.3B
Cost of Revenue-$1.68B
Gross Profit$10.6B
Operating Expenses-$5.8B
Operating Income$4.78B
Other Income / Expense$390M
Pre-tax Income$5.17B
Income Tax-$827M
Net Income$4.34B

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