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 Western Digital (WDC) revenue becomes net income?

For TTM through Q2 2026, Western Digital turned $11.8B of revenue into $6.49B of net income — a net margin of 55.1%. The waterfall shows where the rest goes: cost of revenue, operating expenses, non-operating items, and taxes.

What are Western Digital (WDC) gross, operating, and net margins?

For TTM through Q2 2026, Western Digital reported a gross margin of 45.4%, an operating margin of 30.8%, and a net margin of 55.1%. Each subtotal in the waterfall corresponds to one of these margins.

Why does Western Digital (WDC) 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.

Western Digital (WDC) Income Statement Waterfall

Revenue

$11.8B

Gross Margin

+45.4%

Operating Margin

+30.8%

Net Margin

+55.1%

Income statement waterfall for Western Digital (WDC) — TTM through Q2 2026

Net income: $6.49B

Margin breakdown for Western Digital (WDC) — TTM through Q2 2026

Line item	Amount	Running total
Revenue	$11.8B	$11.8B
Cost of Revenue	-$6.43B	$5.35B
Gross Profit	$5.35B	$5.35B
Operating Expenses	-$1.73B	$3.63B
Operating Income	$3.63B	$3.63B
Other Income / Expense	$3.38B	$7.01B
Pre-tax Income	$7.01B	$7.01B
Income Tax	-$524M	$6.48B
Net Income	$6.49B	$6.49B

Revenue$11.8B
Cost of Revenue-$6.43B
Gross Profit$5.35B
Operating Expenses-$1.73B
Operating Income$3.63B
Other Income / Expense$3.38B
Pre-tax Income$7.01B
Income Tax-$524M
Net Income$6.49B

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