From Revenue to Gross Profit
Top-line revenue minus cost of goods
Revenue$391BTop-line
$391B
Cost of Goods$210B−53.8%
$210B
Gross Profit$181B46.2% margin
$181B
From Gross Profit to Net Income
How gross profit shrinks after operating expenses, taxes, and interest
Gross Profit$181B46.2%
$181B
Operating Exp.$58B−14.7%
$58B
Operating Inc.$123B31.5% margin
$123B
Tax & Interest$29B−7.5%
$29B
Net Income$94B24.0% margin
$94B
What this implies
Cost of Goods is the largest expense at $210B (53.8% of revenue). Services at 73.9% gross margin is pulling the blended rate up — the real story is software economics layered onto a hardware install base.