Common-Size Income Statement
Quarterly Data
Microsoft Corp., common-size consolidated income statement (quarterly data)
Based on: 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 financial data indicates several key trends related to the revenue composition, cost structure, and profitability measures over the analyzed quarters.
- Revenue Composition
- There is a noticeable decline in the proportion of revenue derived from the product segment, decreasing steadily from 47.7% in late 2019 to around 20.5% by late 2025. Conversely, the service and other segment exhibits a complementary increase, rising from approximately 52.3% to near 79.5% over the same period. This shift suggests a strategic transition towards a greater focus on services.
- Cost of Revenue and Gross Margin
-
The cost of revenue as a percentage of total revenue fluctuates between roughly 29% and 33%, showing some variability but without a distinct upward or downward trend. Meanwhile, gross margin remains relatively stable, fluctuating around the mid to high 60% range, peaking near 71% at times. This stability in gross margin despite the shift in revenue composition likely reflects controlled cost management in response to changing business segments.
- Research and Development (R&D)
- R&D expenses maintain a fairly consistent share of revenue, generally hovering between 10.5% and 14%. There is a slight downward tendency in recent periods toward the lower end of this range. This stability signifies continued investment in innovation and product development relative to revenue.
- Sales and Marketing
- The sales and marketing expense ratio shows moderate variability, mostly within a 7% to 14% range, with a downward trend in the later periods approaching 7.36%. This decline might indicate improved efficiency or a strategic reduction in sales and marketing spending relative to revenue.
- General and Administrative Expenses
- General and administrative costs represent a smaller proportion of revenue, generally fluctuating between about 2.3% and 4.4%. No significant trend is evident, although some quarters show slight increases or decreases without sustained movement in any particular direction.
- Operating Income
- Operating income as a percentage of revenue remains robust and generally strong, mostly ranging between approximately 35% and 49%, with occasional peaks toward the upper 40s. This indicates effective operational leverage and profitability despite shifts in revenue mix and costs.
- Other Income (Expense), Net
- Other income and expense demonstrate volatility with minor gains and losses, though there is increased negative impact in the later periods, notably with values reaching as low as -4.71%. This may exert some downward pressure on overall profitability in those quarters.
- Income Before Income Taxes
- This metric closely tracks operating income but is somewhat affected by fluctuations in other income/expense. It remains strong overall, mostly ranging between 35% and 48% of revenue.
- Provision for Income Taxes
- The effective tax rate relative to revenue is variable, between roughly 0% and -8.8%, with some irregular low points (notably near 0% and less negative values in some quarters). This variability suggests fluctuations in tax expenses or benefits that impact net profitability across periods.
- Net Income
- Net income as a percentage of revenue follows the trend of income before taxes, fluctuating between about 29% and 45%, with no clear sustained upward or downward movement but showing resilience despite cost and revenue composition changes.