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, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|---|
| Productivity and Business Processes | 57.75% | 55.85% | 53.18% | 46.85% | 45.17% | 40.36% |
| Intelligent Cloud | 41.96% | 43.23% | 38.95% | 43.48% | 43.49% | 37.89% |
| More Personal Computing | 25.92% | 23.52% | 22.40% | 35.16% | 35.94% | 32.98% |
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 profit margin trends across the segments reveal distinct patterns over the six-year period examined.
- Productivity and Business Processes
- The segment exhibits a consistent upward trajectory in profit margin. Starting at 40.36% in 2020, there is a steady increase each year, culminating at a margin of 57.75% in 2025. This progression indicates strengthening profitability and possibly enhanced operational efficiency or pricing power within this segment.
- Intelligent Cloud
- The Intelligent Cloud segment displays a more fluctuating trend compared to Productivity and Business Processes. The profit margin rose from 37.89% in 2020 to a peak of 43.49% in 2021 and remained almost stable through 2022. However, it experienced a notable decline in 2023 to 38.95% before partially recovering to 43.23% in 2024 and slightly decreasing again to 41.96% in 2025. These variations suggest the segment faced some operational or market challenges impacting profitability, with signs of some recovery in recent years.
- More Personal Computing
- This segment's profit margin shows a declining trend overall. It began at 32.98% in 2020 and reached a short-term peak of 35.94% in 2021, then gradually declined to 35.16% in 2022. A significant drop occurred in 2023, dropping to 22.4%, after which there was a mild recovery to 23.52% in 2024 and 25.92% in 2025. This pattern indicates increased pressure on profit margins, potentially from competitive factors, rising costs, or shifts in product mix, with only a modest improvement in the most recent years.
Overall, while Productivity and Business Processes demonstrate robust and growing profitability, Intelligent Cloud shows mixed performance with some volatility, and More Personal Computing exhibits notable margin compression with limited recovery.
Segment Profit Margin: Productivity and Business Processes
Microsoft Corp.; Productivity and Business Processes; segment profit margin calculation
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | 69,773) | 59,661) | 50,074) | 29,687) | 24,351) | 18,724) |
| Revenue | 120,810) | 106,820) | 94,151) | 63,364) | 53,915) | 46,398) |
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | 57.75% | 55.85% | 53.18% | 46.85% | 45.17% | 40.36% |
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).
1 2025 Calculation
Segment profit margin = 100 × Operating income ÷ Revenue
= 100 × 69,773 ÷ 120,810 = 57.75%
- Operating Income
- The operating income demonstrates a consistent and significant upward trend over the examined period. Starting from 18,724 million USD in mid-2020, it increases steadily each year, reaching 69,773 million USD by mid-2025. This marks an approximate 273% increase over five years, indicative of improving profitability and effective cost management within the segment.
- Revenue
- Revenue also shows a robust growth trajectory, rising from 46,398 million USD in 2020 to 120,810 million USD in 2025. This reflects strong demand and expanding business activities, with revenue nearly tripling in the period. The growth rate appears to accelerate particularly in the mid to latter years, suggesting successful market penetration or product performance.
- Segment Profit Margin
- The segment profit margin exhibits a steady improvement, increasing from 40.36% in 2020 to 57.75% in 2025. This indicates enhanced operational efficiency and profitability relative to revenue. The gradual rise in margin percentage highlights successful cost control and possible shifts towards higher-margin products or services. The most notable margin improvements occur after 2022, corresponding with significant increases in both operating income and revenue.
- Summary
- The data reflects a strongly positive performance trend for the segment, characterized by substantial growth in revenues and operating income, alongside improving profit margins. This combination suggests effective business strategies, growing market share, and enhanced operational efficiencies, resulting in a progressively more profitable business segment over the five-year period.
Segment Profit Margin: Intelligent Cloud
Microsoft Corp.; Intelligent Cloud; segment profit margin calculation
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | 44,589) | 37,813) | 28,411) | 32,721) | 26,126) | 18,324) |
| Revenue | 106,265) | 87,464) | 72,944) | 75,251) | 60,080) | 48,366) |
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | 41.96% | 43.23% | 38.95% | 43.48% | 43.49% | 37.89% |
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).
1 2025 Calculation
Segment profit margin = 100 × Operating income ÷ Revenue
= 100 × 44,589 ÷ 106,265 = 41.96%
- Revenue Trends
- Revenue demonstrated a consistent upward trajectory over the examined period. Starting at $48,366 million in mid-2020, revenue rose to $60,080 million in 2021, followed by a substantial increase to $75,251 million in 2022. Although there was a slight decline to $72,944 million in 2023, the revenue rebounded strongly in 2024 and 2025, reaching $87,464 million and $106,265 million respectively. Overall, the data reflects robust growth with minor fluctuation in 2023.
- Operating Income Analysis
- Operating income exhibited an increasing trend similar to revenue but with more variability. Initially recorded at $18,324 million in 2020, it increased sharply to $26,126 million in 2021 and further to $32,721 million in 2022. However, operating income dropped to $28,411 million in 2023, despite the strong revenue performance the same year. Subsequently, operating income increased considerably to $37,813 million in 2024 and to $44,589 million in 2025, indicating improved operational efficiency and profitability after the dip.
- Segment Profit Margin Dynamics
- The segment profit margin fluctuated during the reviewed years. The margin started at 37.89% in 2020 and increased significantly to 43.49% in 2021, maintaining a similar level in 2022 at 43.48%. In 2023, the margin declined to 38.95%, mirroring the decrease seen in operating income despite relatively stable revenue. The margin recovered in 2024 to 43.23% and slightly decreased to 41.96% in 2025. This pattern suggests some cyclicality in profitability relative to revenue, possibly reflecting changing cost structures or market conditions.
- Overall Insights
- The data reveals strong growth in revenue and operating income over the five-year span, with a temporary setback in 2023. The profit margin trend indicates that profitability was generally stable at elevated levels except for the dip in 2023, aligning with operating income's behavior. The subsequent recovery in both operating income and margin in the last two years suggests effective management actions or favorable market conditions had a positive impact on profitability and operational performance within the Intelligent Cloud segment.
Segment Profit Margin: More Personal Computing
Microsoft Corp.; More Personal Computing; segment profit margin calculation
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | 14,166) | 11,959) | 10,038) | 20,975) | 19,439) | 15,911) |
| Revenue | 54,649) | 50,838) | 44,820) | 59,655) | 54,093) | 48,251) |
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | 25.92% | 23.52% | 22.40% | 35.16% | 35.94% | 32.98% |
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).
1 2025 Calculation
Segment profit margin = 100 × Operating income ÷ Revenue
= 100 × 14,166 ÷ 54,649 = 25.92%
The segment under review exhibits fluctuations in both operating income and revenue over the analyzed periods, with corresponding changes in the segment profit margin.
- Operating Income (US$ in millions)
- Operating income showed an upward trend from 15,911 million in mid-2020 to a peak of 20,975 million in mid-2022. Subsequently, there was a significant decline to 10,038 million in mid-2023, followed by a gradual recovery in the next two years to reach 14,166 million by mid-2025. This indicates a period of volatility, with a notable dip in operating profitability around 2023 before partial restoration.
- Revenue (US$ in millions)
- Revenue followed a generally similar pattern with initial growth from 48,251 million in mid-2020 to a peak of 59,655 million in mid-2022. Afterwards, revenue decreased sharply to 44,820 million in mid-2023, then increased again modestly through 2024 and 2025, reaching 54,649 million. This trend suggests external or internal factors impacting sales performance around the 2023 period, with partial recovery thereafter.
- Segment Profit Margin (%)
- The profit margin exhibited improvement from 32.98% in 2020 to 35.94% in 2021, remaining relatively stable at 35.16% in 2022. However, margin contracted substantially to 22.4% in 2023, indicating reduced efficiency or increased costs relative to revenue. The margin improved slightly in subsequent years to 23.52% in 2024 and 25.92% in 2025, but remained well below previous peak levels.
Overall, the data reveals a cycle of growth in revenue and profitability up to 2022, followed by a sharp downturn in 2023 across all key financial metrics for the segment. The partial recovery in the two ensuing years suggests steps were taken to stabilize and improve financial performance, though results had yet to return to prior highs as of mid-2025.
Revenue
Microsoft Corp., revenue by reportable segment
US$ in millions
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|---|
| Productivity and Business Processes | 120,810) | 106,820) | 94,151) | 63,364) | 53,915) | 46,398) |
| Intelligent Cloud | 106,265) | 87,464) | 72,944) | 75,251) | 60,080) | 48,366) |
| More Personal Computing | 54,649) | 50,838) | 44,820) | 59,655) | 54,093) | 48,251) |
| Total | 281,724) | 245,122) | 211,915) | 198,270) | 168,088) | 143,015) |
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).
- Productivity and Business Processes Revenue
-
The segment exhibited consistent growth throughout the observed periods, progressing from US$46,398 million in 2020 to US$120,810 million in 2025. A notable acceleration in growth is observed starting in 2022, with revenue increasing sharply from US$63,364 million in 2022 to US$94,151 million in 2023, and continuing upward to US$120,810 million by 2025.
- Intelligent Cloud Revenue
-
This segment showed a generally upward trend in revenue, increasing from US$48,366 million in 2020 to US$106,265 million in 2025. After a substantial rise between 2020 and 2022, reaching US$75,251 million, the revenue experienced a slight decrease in 2023 to US$72,944 million before resuming growth in the subsequent years. The increase from 2023 to 2025 remains strong and consistent.
- More Personal Computing Revenue
-
The revenue for this segment demonstrated moderate growth between 2020 and 2022, rising from US$48,251 million to US$59,655 million. However, a significant decline occurred in 2023 when revenue dropped to US$44,820 million, followed by a recovery in 2024 and 2025, reaching US$54,649 million. The rebound suggests a possible recovery from a temporary setback.
- Total Revenue
-
Total revenue shows a clear upward trajectory over the time span, growing from US$143,015 million in 2020 to US$281,724 million in 2025. The increase is steady, with the most pronounced jumps observed between 2022 and 2023 as well as continuing growth through 2024 and 2025. The combined performance of the three segments contributes to this robust total growth, despite fluctuations in individual segments.
Operating income
Microsoft Corp., operating income by reportable segment
US$ in millions
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|---|
| Productivity and Business Processes | 69,773) | 59,661) | 50,074) | 29,687) | 24,351) | 18,724) |
| Intelligent Cloud | 44,589) | 37,813) | 28,411) | 32,721) | 26,126) | 18,324) |
| More Personal Computing | 14,166) | 11,959) | 10,038) | 20,975) | 19,439) | 15,911) |
| Total | 128,528) | 109,433) | 88,523) | 83,383) | 69,916) | 52,959) |
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).
- Productivity and Business Processes Segment
- The operating income in this segment has exhibited a consistent upward trajectory over the reported periods. Beginning at $18,724 million in June 2020, it increased steadily each year, reaching $69,773 million by June 2025. Notably, there was a substantial jump between June 2022 and June 2023, where the income rose from $29,687 million to $50,074 million. This sharp increase suggests significant growth or operational improvements within this segment during that interval.
- Intelligent Cloud Segment
- This segment showed growth from $18,324 million in June 2020 to $32,721 million in June 2022. However, the data indicates a decline to $28,411 million in June 2023, representing a temporary setback. Following this dip, operating income rebounded to $44,589 million by June 2025, reflecting recovery and resumed growth. The pattern points to some volatility but overall positive growth over the six-year span.
- More Personal Computing Segment
- The operating income for this segment increased moderately from $15,911 million in June 2020 to $20,975 million in June 2022, followed by a notable decrease to $10,038 million in June 2023. After this decline, the segment’s income rose gradually to $14,166 million by June 2025. This segment demonstrates a peak followed by a pronounced drop and a subsequent partial recovery, indicating possible challenges or restructuring effects in that mid-period.
- Total Operating Income
- Total operating income across all segments has shown an overall upward trend, starting at $52,959 million in June 2020 and increasing to $128,528 million in June 2025. Despite fluctuations within individual segments, the total demonstrates robust growth. The increase was especially marked between June 2022 and June 2025, driven largely by the rapid growth in the Productivity and Business Processes segment and the rebound in the Intelligent Cloud segment.