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 Zoetis (ZTS) revenue becomes net income?

For TTM through Q1 2026, Zoetis turned $9.51B of revenue into $2.64B of net income — a net margin of 27.8%. The waterfall shows where the rest goes: cost of revenue, operating expenses, non-operating items, and taxes.

What are Zoetis (ZTS) gross, operating, and net margins?

For TTM through Q1 2026, Zoetis reported a gross margin of 70.8%, an operating margin of 37.6%, and a net margin of 27.8%. Each subtotal in the waterfall corresponds to one of these margins.

Why does Zoetis (ZTS) 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.

Zoetis (ZTS) Income Statement Waterfall

Revenue

$9.51B

Gross Margin

+70.8%

Operating Margin

+37.6%

Net Margin

+27.8%

Income statement waterfall for Zoetis (ZTS) — TTM through Q1 2026

Net income: $2.64B

Margin breakdown for Zoetis (ZTS) — TTM through Q1 2026

Line item	Amount	Running total
Revenue	$9.51B	$9.51B
Cost of Revenue	-$2.78B	$6.73B
Gross Profit	$6.73B	$6.73B
Operating Expenses	-$3.16B	$3.57B
Operating Income	$3.57B	$3.57B
Other Income / Expense	-$265M	$3.31B
Pre-tax Income	$3.31B	$3.31B
Income Tax	-$665M	$2.64B
Net Income	$2.64B	$2.64B

Revenue$9.51B
Cost of Revenue-$2.78B
Gross Profit$6.73B
Operating Expenses-$3.16B
Operating Income$3.57B
Other Income / Expense-$265M
Pre-tax Income$3.31B
Income Tax-$665M
Net Income$2.64B

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