Analysis of Reportable Segments
Microsoft Corp. operates in 3 segments: Productivity and Business Processes; Intelligent Cloud; and More Personal Computing.
Segment Profit Margin
Microsoft Corp., profit margin by reportable segment
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | |
|---|---|---|---|---|---|---|
| Productivity and Business Processes | 52.16% | 49.35% | 46.85% | 45.17% | 40.36% | 39.40% |
| Intelligent Cloud | 47.06% | 43.10% | 43.48% | 43.49% | 37.89% | 35.71% |
| More Personal Computing | 31.13% | 30.05% | 35.16% | 35.94% | 32.98% | 28.05% |
Based on: 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), 10-K (reporting date: 2019-06-30).
- Productivity and Business Processes Segment
- The profit margin for this segment has demonstrated a consistent upward trend over the observed periods. Starting at 39.4% in mid-2019, it increased steadily year over year, reaching 52.16% by mid-2024. This indicates improving profitability and efficiency within this segment, with a cumulative increase of nearly 13 percentage points over five years.
- Intelligent Cloud Segment
- The profit margin in the Intelligent Cloud segment also exhibited growth overall, rising from 35.71% in mid-2019 to 47.06% in mid-2024. While the trend is generally positive, the margin remained relatively stable between mid-2021 and mid-2023, fluctuating slightly but staying in the range of approximately 43%. This suggests a period of steadiness in profitability before a notable increase in the latest reported period.
- More Personal Computing Segment
- The profit margin for the More Personal Computing segment shows more variability compared to the other two segments. It grew from 28.05% in mid-2019 to a peak of 35.94% in mid-2021, indicating improving profitability during this timeframe. However, after this peak, the margin declined to 30.05% in mid-2023, before experiencing a modest recovery to 31.13% in mid-2024. This pattern suggests challenges affecting profitability after 2021, with some signs of stabilization in the most recent period.
- Overall Comparative Insights
- Among the three segments, Productivity and Business Processes showed the most robust and steady margin growth, reflecting sustained operational improvements or favorable market dynamics. Intelligent Cloud also improved notably but with a period of stabilization mid-series. Conversely, More Personal Computing displayed more fluctuation, suggesting variability in market conditions or cost pressures impacting profitability. The disparity in margin trends highlights differing business conditions and performance dynamics across the company’s operating segments.
Segment Profit Margin: Productivity and Business Processes
Microsoft Corp.; Productivity and Business Processes; segment profit margin calculation
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | 40,540) | 34,189) | 29,687) | 24,351) | 18,724) | 16,219) |
| Revenue | 77,728) | 69,274) | 63,364) | 53,915) | 46,398) | 41,160) |
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | 52.16% | 49.35% | 46.85% | 45.17% | 40.36% | 39.40% |
Based on: 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), 10-K (reporting date: 2019-06-30).
1 2024 Calculation
Segment profit margin = 100 × Operating income ÷ Revenue
= 100 × 40,540 ÷ 77,728 = 52.16%
The annual data for the "Productivity and Business Processes" segment reveals a consistent upward trend across all key financial measures over the six-year period from June 30, 2019, to June 30, 2024.
- Operating Income
- The operating income demonstrates a steady increase year over year, rising from $16,219 million in 2019 to $40,540 million in 2024. This represents a significant growth, more than doubling over the observed period, which indicates enhanced profitability and effective cost management within the segment.
- Revenue
- Revenue also shows a continuous growth pattern, advancing from $41,160 million in 2019 to $77,728 million in 2024. The increasing revenues suggest robust demand and successful market penetration for the products or services offered by the segment.
- Segment Profit Margin
- The profit margin has improved consistently, moving from 39.4% in 2019 to 52.16% in 2024. This upward trajectory in margin percentage reflects improving operational efficiency, cost control, and possibly higher-value offerings or pricing power in the segment.
In summary, the data indicates strong financial health and operational performance improvements in the segment. The combined growth in revenue, operating income, and profit margin underscores a positive trajectory likely driven by effective business strategies and favorable market conditions over the analyzed periods.
Segment Profit Margin: Intelligent Cloud
Microsoft Corp.; Intelligent Cloud; segment profit margin calculation
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | 49,584) | 37,884) | 32,721) | 26,126) | 18,324) | 13,920) |
| Revenue | 105,362) | 87,907) | 75,251) | 60,080) | 48,366) | 38,985) |
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | 47.06% | 43.10% | 43.48% | 43.49% | 37.89% | 35.71% |
Based on: 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), 10-K (reporting date: 2019-06-30).
1 2024 Calculation
Segment profit margin = 100 × Operating income ÷ Revenue
= 100 × 49,584 ÷ 105,362 = 47.06%
The analysis of the annual data for the "Intelligent Cloud" segment reveals a consistent upward trend across all key financial metrics over the six-year period.
- Operating Income
- Operating income has shown robust growth, increasing steadily from $13,920 million in 2019 to $49,584 million in 2024. This reflects a notable improvement, more than tripling over the period and indicating enhanced profitability and operational efficiency within the segment.
- Revenue
- Revenue also demonstrates a strong upward trajectory, rising from $38,985 million in 2019 to $105,362 million in 2024. The consistent annual increases suggest expanding market demand and successful sales growth initiatives. The rate of revenue growth supports the segment's increasing scale and customer adoption.
- Segment Profit Margin
- The segment profit margin improved from 35.71% in 2019 to 47.06% in 2024. This margin enhancement indicates not only higher revenue but also improved cost management or value extraction within the segment. After a gradual increase through 2021, the margin plateaued slightly around 43% before jumping significantly in 2024, which may reflect operational leverage or strategic efficiencies implemented recently.
Overall, the "Intelligent Cloud" segment exhibits strong financial health with substantial and sustained growth in revenue and operating income, accompanied by improving profitability margins. The data points to a segment that is scaling effectively while enhancing its profitability, reflecting successful execution of cloud-related business strategies over the examined period.
Segment Profit Margin: More Personal Computing
Microsoft Corp.; More Personal Computing; segment profit margin calculation
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | 19,309) | 16,450) | 20,975) | 19,439) | 15,911) | 12,820) |
| Revenue | 62,032) | 54,734) | 59,655) | 54,093) | 48,251) | 45,698) |
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | 31.13% | 30.05% | 35.16% | 35.94% | 32.98% | 28.05% |
Based on: 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), 10-K (reporting date: 2019-06-30).
1 2024 Calculation
Segment profit margin = 100 × Operating income ÷ Revenue
= 100 × 19,309 ÷ 62,032 = 31.13%
The financial performance of the More Personal Computing segment shows several notable trends over the analyzed periods.
- Revenue
- The revenue demonstrated a generally increasing trend from June 30, 2019, to June 30, 2024. Beginning at $45,698 million in 2019, it saw moderate growth in 2020, rising to $48,251 million. The upward trajectory continued more steeply in 2021 and 2022, reaching $54,093 million and $59,655 million respectively. However, in 2023, revenue declined to $54,734 million before increasing again to $62,032 million by mid-2024. This shows overall growth with some volatility, particularly in 2023 where a temporary dip occurred.
- Operating Income
- Operating income followed a positive trend from 2019 through 2022, increasing from $12,820 million to $20,975 million. In 2023, operating income declined notably to $16,450 million, paralleling the revenue drop. By 2024, operating income recovered to $19,309 million, indicating a rebound. Despite the fluctuations, the segment maintained substantial profitability throughout the period.
- Segment Profit Margin
- The profit margin displayed an initial increase from 28.05% in 2019 to a peak of 35.94% in 2021, indicating improved efficiency or pricing power. It slightly decreased to 35.16% in 2022 before dropping more significantly to 30.05% in 2023, coinciding with the revenue and operating income declines. The margin improved slightly to 31.13% in 2024 but did not return to the earlier peak levels. This pattern suggests cost pressures or changing market conditions affecting profitability after 2021.
In summary, the More Personal Computing segment experienced overall growth in revenue and operating income with a strong profitability profile until 2021. Subsequent periods show some volatility with a dip in 2023, reflected in all key metrics, followed by partial recovery in 2024. The segment's profit margin trends indicate that while profitability was historically strong, challenges emerged post-2021 that impacted margins.
Revenue
Microsoft Corp., revenue by reportable segment
US$ in millions
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | |
|---|---|---|---|---|---|---|
| Productivity and Business Processes | 77,728) | 69,274) | 63,364) | 53,915) | 46,398) | 41,160) |
| Intelligent Cloud | 105,362) | 87,907) | 75,251) | 60,080) | 48,366) | 38,985) |
| More Personal Computing | 62,032) | 54,734) | 59,655) | 54,093) | 48,251) | 45,698) |
| Total | 245,122) | 211,915) | 198,270) | 168,088) | 143,015) | 125,843) |
Based on: 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), 10-K (reporting date: 2019-06-30).
- Productivity and Business Processes
- The segment revenue shows a consistent upward trend over the six-year period. Starting at 41,160 million US dollars in June 2019, it increased steadily each year, reaching 77,728 million US dollars by June 2024. This represents an approximate overall growth of 89%. The growth rate appears to accelerate particularly from 2020 onwards, indicating sustained demand and possible expansion within this segment.
- Intelligent Cloud
- This segment demonstrates the most pronounced growth among all categories. Beginning at 38,985 million US dollars in June 2019, revenue climbed each year to reach 105,362 million US dollars by June 2024. This is nearly a tripling of revenue within five years. The annual increments increase noticeably after 2020, suggesting expanding cloud adoption and possibly increased market share or new service offerings driving significant revenue gains.
- More Personal Computing
- The revenue for this segment exhibits a more variable pattern. From 45,698 million US dollars in June 2019, revenue increased modestly to 59,655 million in June 2022. However, a decline is observed in June 2023, dropping to 54,734 million, followed by a recovery to 62,032 million in June 2024. This volatility may indicate fluctuations in consumer demand or competitive pressures affecting this segment.
- Total Revenue
- Total reportable segment revenue shows a consistent and robust upward trajectory, rising from 125,843 million US dollars in June 2019 to 245,122 million US dollars in June 2024. This represents an overall increase of approximately 95%, driven primarily by strong contributions from the Intelligent Cloud and Productivity and Business Processes segments. The steady growth in aggregate revenue underscores successful expansion across multiple business areas despite segment-specific variability.
Operating income
Microsoft Corp., operating income by reportable segment
US$ in millions
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | |
|---|---|---|---|---|---|---|
| Productivity and Business Processes | 40,540) | 34,189) | 29,687) | 24,351) | 18,724) | 16,219) |
| Intelligent Cloud | 49,584) | 37,884) | 32,721) | 26,126) | 18,324) | 13,920) |
| More Personal Computing | 19,309) | 16,450) | 20,975) | 19,439) | 15,911) | 12,820) |
| Total | 109,433) | 88,523) | 83,383) | 69,916) | 52,959) | 42,959) |
Based on: 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), 10-K (reporting date: 2019-06-30).
The financial data reveals distinct trends across the three segments from June 30, 2019, through June 30, 2024. Overall, total operating income has experienced strong growth throughout this period.
- Productivity and Business Processes
- This segment demonstrates consistent upward momentum, rising from $16,219 million in 2019 to $40,540 million in 2024. The growth appears steady and accelerating, with particular increases noted from 2020 to 2024, indicating a robust expansion in this business area.
- Intelligent Cloud
- The Intelligent Cloud segment shows the most substantial growth among all segments. Starting at $13,920 million in 2019, it surged to $49,584 million by 2024. The data suggests continuous and sharp increases each year, with a notable acceleration between 2023 and 2024. This reflects a strong emphasis and increasing profitability in cloud services.
- More Personal Computing
- This segment initially shows growth from 2019 to 2022, increasing from $12,820 million to $20,975 million. However, income declines sharply in 2023 to $16,450 million before recovering somewhat in 2024 to $19,309 million. This volatility contrasts with the steady growth of the other segments and may indicate market challenges or shifts impacting this unit more than others.
- Total Operating Income
- The overall total operating income expands from $42,959 million in 2019 to $109,433 million in 2024. This trend mirrors the combined growth of the individual segments, driven primarily by the strong performance of the Productivity and Business Processes and Intelligent Cloud segments. The fluctuations in the More Personal Computing segment have a limited impact on the total given its relative size.
In summary, the segment data points to robust expansion fueled by cloud services and productivity solutions, while personal computing experiences some instability in recent years. The total operating income's rapid increase underscores the company's strengthening market position across most business areas.