Stock Analysis on Net
Stock Analysis on Net

Microsoft Corp. (NASDAQ:MSFT)

Common-Size Income Statement 
Quarterly Data

Microsoft Corp., common-size consolidated income statement (quarterly data)

Microsoft Excel
3 months ended: Dec 31, 2025 Sep 30, 2025 Jun 30, 2025 Mar 31, 2025 Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019
Product 20.24 20.50 22.42 21.86 23.29 23.29 20.42 27.61 30.54 27.49 29.99 29.49 31.31 31.41 34.62 35.18 40.17 36.70 41.03 40.46 45.18 42.53 47.71 45.32 49.46 47.70
Service and other 79.76 79.50 77.58 78.14 76.71 76.71 79.58 72.39 69.46 72.51 70.01 70.51 68.69 68.59 65.38 64.82 59.83 63.30 58.97 59.54 54.82 57.47 52.29 54.68 50.54 52.30
Revenue 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Product -4.31 -3.76 -4.34 -4.33 -5.54 -5.02 -2.22 -7.01 -9.62 -6.25 -6.89 -7.46 -10.79 -8.58 -8.40 -9.29 -12.24 -8.37 -9.29 -10.26 -14.06 -9.68 -11.49 -9.64 -13.46 -10.00
Service and other -27.65 -27.19 -27.08 -26.95 -25.77 -25.62 -28.19 -22.90 -22.02 -22.60 -23.00 -23.06 -22.37 -22.25 -23.28 -22.35 -20.55 -21.74 -21.03 -21.02 -18.89 -19.93 -20.95 -21.70 -20.03 -21.48
Cost of revenue -31.96% -30.95% -31.42% -31.28% -31.31% -30.65% -30.41% -29.92% -31.64% -28.84% -29.89% -30.51% -33.15% -30.83% -31.68% -31.63% -32.79% -30.11% -30.32% -31.28% -32.95% -29.61% -32.44% -31.34% -33.49% -31.48%
Gross margin 68.04% 69.05% 68.58% 68.72% 68.69% 69.35% 69.59% 70.08% 68.36% 71.16% 70.11% 69.49% 66.85% 69.17% 68.32% 68.37% 67.21% 69.89% 69.68% 68.72% 67.05% 70.39% 67.56% 68.66% 66.51% 68.52%
Research and development -10.46 -10.49 -11.55 -11.70 -11.37 -11.50 -12.45 -12.37 -11.52 -11.78 -11.99 -13.21 -12.98 -13.22 -13.21 -12.78 -11.13 -12.36 -12.32 -12.48 -11.37 -13.26 -13.71 -13.95 -12.47 -13.81
Sales and marketing -8.10 -7.36 -9.53 -8.87 -9.25 -8.72 -10.53 -10.03 -10.07 -9.18 -11.04 -10.88 -10.77 -10.23 -12.15 -11.34 -10.40 -10.03 -12.69 -12.19 -11.48 -11.39 -14.24 -14.02 -13.37 -13.12
General and administrative -2.38 -2.33 -2.60 -2.48 -2.62 -2.55 -3.47 -3.09 -3.19 -2.61 -3.91 -3.11 -4.43 -2.79 -3.37 -3.00 -2.68 -2.84 -3.30 -3.18 -2.64 -3.01 -4.35 -3.63 -3.04 -3.21
Operating income 47.09% 48.87% 44.90% 45.67% 45.46% 46.58% 43.14% 44.59% 43.59% 47.59% 43.17% 42.29% 38.67% 42.93% 39.59% 41.26% 43.01% 44.66% 41.37% 40.88% 41.55% 42.73% 35.25% 37.05% 37.64% 38.38%
Other income (expense), net 12.27 -4.71 -2.23 -0.89 -3.29 -0.43 -1.04 -1.38 -0.82 0.69 0.84 0.61 -0.11 0.11 -0.09 -0.35 0.52 0.63 0.67 0.45 1.02 0.67 0.04 -0.38 0.53 0.00
Income before income taxes 59.36% 44.16% 42.67% 44.78% 42.17% 46.15% 42.10% 43.21% 42.77% 48.28% 44.01% 42.89% 38.56% 43.04% 39.50% 40.90% 43.53% 45.29% 42.05% 41.33% 42.57% 43.40% 35.29% 36.67% 38.16% 38.38%
Provision for income taxes -12.04 -8.44 -7.04 -7.93 -7.55 -8.54 -8.06 -7.74 -7.51 -8.83 -8.27 -8.28 -7.42 -8.01 -7.22 -7.01 -7.25 -0.04 -6.39 -4.27 -6.67 -6.00 -5.84 -5.97 -6.60 -6.07
Net income 47.32% 35.72% 35.63% 36.86% 34.62% 37.61% 34.04% 35.47% 35.26% 39.44% 35.74% 34.62% 31.14% 35.03% 32.28% 33.89% 36.28% 45.25% 35.66% 37.06% 35.90% 37.39% 29.45% 30.70% 31.56% 32.30%

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.

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