Name: Microsoft Corp. (NASDAQ:MSFT) | Income Statement
Creator: Stock Analysis on Net

Income Statement

The income statement presents information on the financial results of a company business activities over a period of time. The income statement communicates how much revenue the company generated during a period and what cost it incurred in connection with generating that revenue.

Download chart

Microsoft Corp., consolidated income statement

US$ in millions

12 months ended:	Jun 30, 2026	Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Product	64,696)	63,946)	64,773)	64,699)	72,732)	71,074)
Service and other	267,143)	217,778)	180,349)	147,216)	125,538)	97,014)
Revenue	331,839)	281,724)	245,122)	211,915)	198,270)	168,088)
Product	(12,098)	(13,501)	(15,272)	(17,804)	(19,064)	(18,219)
Service and other	(94,276)	(74,330)	(58,842)	(48,059)	(43,586)	(34,013)
Cost of revenue	(106,374)	(87,831)	(74,114)	(65,863)	(62,650)	(52,232)
Gross margin	225,465)	193,893)	171,008)	146,052)	135,620)	115,856)
Research and development	(35,562)	(32,488)	(29,510)	(27,195)	(24,512)	(20,716)
Sales and marketing	(26,710)	(25,654)	(24,456)	(22,759)	(21,825)	(20,117)
General and administrative	(7,956)	(7,223)	(7,609)	(7,575)	(5,900)	(5,107)
Operating income	155,237)	128,528)	109,433)	88,523)	83,383)	69,916)
Interest and dividends income	3,301)	2,647)	3,157)	2,994)	2,094)	2,131)
Interest expense	(3,051)	(2,385)	(2,935)	(1,968)	(2,063)	(2,346)
Net recognized gains (losses) on investments	4,385)	(349)	(118)	260)	461)	1,232)
Net gains (losses) on derivatives	1,867)	(260)	(187)	(456)	(52)	17)
Net gains (losses) on foreign currency remeasurements	(527)	171)	(244)	181)	(75)	54)
Other, net	4,722)	(4,725)	(1,319)	(223)	(32)	98)
Other income (expense), net	10,697)	(4,901)	(1,646)	788)	333)	1,186)
Income before income taxes	165,934)	123,627)	107,787)	89,311)	83,716)	71,102)
Provision for income taxes	(32,185)	(21,795)	(19,651)	(16,950)	(10,978)	(9,831)
Net income	133,749)	101,832)	88,136)	72,361)	72,738)	61,271)

Based on: 10-K (reporting date: 2026-06-30), 10-K (reporting date: 2025-06-30), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30).

Financial performance across the analyzed period demonstrates a consistent and aggressive growth trajectory, characterized by a fundamental shift in revenue composition and expanding profitability. Total revenue increased from US$ 168,088 million in 2021 to US$ 331,839 million in 2026, reflecting a robust upward trend in top-line growth.

Revenue Mix and Diversification: A significant transition is observed in the revenue streams. Product revenue remained relatively stagnant, fluctuating between US$ 63,946 million and US$ 72,732 million over the period. Conversely, Service and other revenue experienced rapid expansion, growing from US$ 97,014 million in 2021 to US$ 267,143 million in 2026. This indicates a strategic pivot toward service-oriented income, which now constitutes the vast majority of total revenue.
Gross Profitability and Cost Management: Gross margin expanded steadily from US$ 115,856 million in 2021 to US$ 225,465 million in 2026. While the cost of revenue increased in absolute terms, the growth rate of the gross margin outpaced the growth rate of these costs, suggesting improved economies of scale and a more favorable product-to-service mix.
Operating Expense Trends: Operating expenses show a controlled increase relative to revenue. Research and development expenditures rose from US$ 20,716 million to US$ 35,562 million, signaling sustained investment in innovation. Sales and marketing costs grew more moderately, while general and administrative expenses remained relatively stable, indicating efficient operational scaling.
Operating Income and Leverage: Operating income demonstrated strong growth, rising from US$ 69,916 million in 2021 to US$ 155,237 million in 2026. The acceleration of operating income relative to revenue growth highlights significant operating leverage, as the company converted a larger percentage of incremental revenue into operating profit.
Net Income and Non-Operating Items: Net income grew from US$ 61,271 million in 2021 to US$ 133,749 million in 2026. The path to net income was influenced by volatility in "Other income (expense), net," which shifted from a gain of US$ 1,186 million in 2021 to a significant loss of US$ 4,901 million in 2025, before rebounding to a gain of US$ 10,697 million in 2026. Despite these fluctuations and an increasing provision for income taxes, the bottom-line trend remains decisively positive.

AI Ask an analyst for more

My previous chats

Add tokens

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.

How can I help you?