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.
Microsoft Corp., consolidated income statement
US$ in millions
Based on: 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), 10-K (reporting date: 2020-06-30).
The financial data exhibits clear growth in total revenue over the examined periods, increasing steadily from approximately $143 billion in 2020 to $282 billion in 2025. The revenue generated from services and other sources displays a markedly stronger upward trajectory compared to product revenue, which remains relatively stable and slightly declines in the later years.
- Revenue Composition
- Service and other revenues expanded significantly, from $75 billion in 2020 to $218 billion in 2025, reflecting a strategic or market shift favoring services over products. Product revenue, by contrast, peaked around 2022 at about $73 billion before decreasing to roughly $64 billion by 2025.
- Cost of Revenue and Gross Margin
- Costs associated with product revenue decreased over time, falling from $16 billion loss in 2020 to $13.5 billion in 2025, indicating improving cost efficiency or product mix changes. The cost for service-related revenue rose in absolute terms, aligned with growing service revenue, reaching $74 billion in 2025. Gross margin improved consistently, growing from $97 billion in 2020 to nearly $194 billion in 2025, underscoring effective management of cost relative to revenue growth.
- Operating Expenses
- Operating expenses also increased consistently, with research and development (R&D) spending rising from approximately $19 billion in 2020 to $32.5 billion in 2025, reflecting continued investment in innovation. Sales and marketing costs grew moderately from $19.6 billion to $25.7 billion, supporting revenue expansion. General and administrative costs showed some variability but remained relatively stable around $7 to $7.6 billion in recent years.
- Profitability Measures
- Operating income showed strong growth, increasing from about $53 billion in 2020 to $129 billion in 2025, reflecting both revenue growth and effective control of operating expenses. Interest income remained stable with minor fluctuations, while interest expense decreased over time, which may suggest favorable financing conditions or debt management. Net gains or losses related to investments, derivatives, and currency remeasurements were generally small and somewhat volatile, contributing minimally to overall income trends.
- Income Taxes and Net Income
- The provision for income taxes increased significantly from $8.8 billion to $21.8 billion between 2020 and 2025, consistent with rising pre-tax income. Net income followed an upward trend, rising from $44.3 billion in 2020 to approximately $102 billion in 2025, indicating improved profitability and efficient tax management relative to growing earnings.
In summary, the company demonstrates robust revenue growth driven primarily by its services segment. Cost management and increased operating expenses, especially in R&D and marketing, accompany revenue growth but do not inhibit the substantial improvement in operating income and net profit margins. The financial results indicate sustained expansion and strengthening profitability over the analyzed time frame.