Common-Size Income Statement
Quarterly Data
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- Statement of Comprehensive Income
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- Enterprise Value (EV)
- Enterprise Value to EBITDA (EV/EBITDA)
- Dividend Discount Model (DDM)
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- Price to Book Value (P/BV) since 2005
- Analysis of Revenues
- Analysis of Debt
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Microsoft Corp., common-size consolidated income statement (quarterly data)
Based on: 10-Q (reporting date: 2025-12-31), 10-Q (reporting date: 2025-09-30), 10-K (reporting date: 2025-06-30), 10-Q (reporting date: 2025-03-31), 10-Q (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-K (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-Q (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-K (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-K (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30).
The common-size income statement reveals a significant shift in revenue composition and profitability trends over the observed period. Initially, product revenue constituted a larger portion of total revenue, but this gradually decreased while service and other revenue increased, indicating a strategic move towards a service-based business model. Gross margin exhibited relative stability, with fluctuations primarily occurring between 66.51% and 71.16% throughout the period. Operating income demonstrated a generally positive trend, particularly in the later years, though with some quarterly variations.
- Revenue Composition
- Product revenue as a percentage of total revenue decreased consistently from 47.70% in September 2019 to 20.42% in June 2024, before experiencing a slight increase to 23.29% in March 2025. Conversely, service and other revenue increased from 52.30% in September 2019 to a high of 79.58% in June 2024, before decreasing to 79.76% in December 2025. This suggests a successful transition towards a more service-oriented revenue stream.
- Profitability Analysis
- Gross margin remained relatively stable, fluctuating within a range of approximately 66% to 71% throughout the period. A notable increase in gross margin occurred between June 2023 and September 2023, reaching 72.51%. Operating income showed a general upward trend, particularly from 2021 onwards, peaking at 48.28% in September 2023, before decreasing to 47.32% in December 2025. This indicates improved operational efficiency and cost management over time.
- Expense Management
- Cost of revenue as a percentage of revenue generally decreased from 33.49% in December 2019 to 28.84% in September 2023, before increasing to 31.96% in December 2025. Research and development expenses remained consistently high, fluctuating between 10.46% and 13.95% of revenue. Sales and marketing expenses showed a decreasing trend from 14.24% in June 2020 to 7.36% in September 2025. General and administrative expenses also exhibited a decreasing trend, though less pronounced, from 4.35% to 2.38%.
- Net Income and Taxes
- Net income as a percentage of revenue followed the trend of operating income, increasing from 31.56% in December 2019 to 45.25% in September 2023, before decreasing to 47.32% in December 2025. The provision for income taxes fluctuated significantly, ranging from -8.83% to 12.27% of revenue, with a substantial increase in December 2025. This suggests potential changes in tax regulations or accounting practices.
The observed trends suggest a company successfully adapting its business model, improving operational efficiency, and maintaining a strong financial position. The increasing proportion of service revenue and decreasing marketing expenses are particularly noteworthy. However, the fluctuations in the provision for income taxes warrant further investigation.