ONEOK, Inc. (OKE) Income Statement

The 52.8% YoY revenue growth in 2026Q2, following a 61.2% increase in 2025Q2, indicates a step-change in scale from the Magellan acquisition rather than organic momentum. Excluding the acquisition, underlying volume growth in NGL and natural gas segments appears more moderate, as evidenced by the deceleration in sequential revenue growth from 2026Q1 to 2026Q2 (9.6B to 12.0B, a 25% QoQ jump). This suggests the market should focus on integration execution and volume retention rather than top-line growth rates, which are likely to normalize as acquisition effects annualize.

The dramatic drop in gross margin from 26.7% in 2026Q1 to 14.2% in 2026Q2, despite a 25% revenue increase, suggests a significant change in revenue mix toward lower-margin marketing or refined product activities. This is consistent with the Magellan integration, which brings higher-volume, lower-margin refined products. While operating margin remained relatively stable at 13.2% in 2026Q2, the gross margin compression indicates that the company is now generating more revenue per dollar of gross profit, which may pressure overall profitability if not offset by operating efficiencies. Investors should monitor whether this margin level becomes the new norm or if it recovers as integration synergies materialize.

In 2026Q2, operating income increased only 6.7% sequentially despite a 25% revenue jump, implying that the incremental revenue is not flowing through to operating income at historical rates. This is likely due to the lower-margin nature of Magellan's refined products business and one-time integration expenses. However, the 2025Q4 data showed operating margin of 29.7% on revenue of $9.1B, suggesting that when the revenue mix is more favorable, operating leverage is strong. The key question is whether the company can achieve similar operating margins on the larger revenue base as integration costs subside and synergies are realized.

The sharp increase in COGS, which outpaced revenue growth in 2026Q2, indicates that a significant portion of the company's costs are directly tied to the purchase of NGLs and refined products for resale. This is typical of midstream companies with marketing operations, but it means that gross profit is more sensitive to commodity price spreads. The SG&A line was $634M in 2026Q1, but zero in other quarters, which may indicate that SG&A is not consistently reported or is included in other lines. This inconsistency warrants caution when analyzing cost trends, as the true overhead efficiency is unclear.