Microsoft Corporation - Financial Analysis
Microsoft demonstrates exceptional financial performance across revenue growth, profitability, and balance sheet strength.
Revenue and Growth Trends
| Period | Total Revenue (billions) | YoY Growth |
|---|---|---|
| TTM | $261.8 | 6.8% |
| 6/30/2024 | $245.1 | 15.7% |
| 6/30/2023 | $211.9 | 6.9% |
| 6/30/2022 | $198.3 | 18.0% |
| 6/30/2021 | $168.1 | - |
Microsoft has demonstrated consistent revenue growth over the past four fiscal years, with a particularly strong 15.7% increase in FY 2024. The trailing twelve months (TTM) revenue of $261.8 billion indicates continued growth momentum.
Profit Margins
| Period | Gross Margin | Operating Margin | Net Margin |
|---|---|---|---|
| TTM | 69.4% | 45.0% | 35.4% |
| 6/30/2024 | 69.8% | 44.6% | 36.0% |
| 6/30/2023 | 68.9% | 41.8% | 34.1% |
| 6/30/2022 | 68.4% | 42.1% | 36.7% |
| 6/30/2021 | 68.9% | 41.6% | 36.5% |
Microsoft has maintained robust gross margins around 69%, while operating margins have improved from 41.6% in FY 2021 to 44.6% in FY 2024. These industry-leading margins reflect the company's efficient operations and scalable business model.
Earnings Per Share
| Period | Basic EPS | Diluted EPS |
|---|---|---|
| TTM | $12.48 | $12.41 |
| 6/30/2024 | $11.86 | $11.80 |
| 6/30/2023 | $9.72 | $9.68 |
| 6/30/2022 | $9.70 | $9.65 |
| 6/30/2021 | $8.12 | $8.05 |
Diluted EPS has increased from $8.05 in FY 2021 to $11.80 in FY 2024, a 46.6% increase over three years. The TTM diluted EPS of $12.41 suggests continued earnings growth, outpacing revenue growth and indicating improved operational efficiency and effective share repurchase programs.
Balance Sheet Strength
Asset Growth
| Period | Total Assets (billions) | YoY Growth |
|---|---|---|
| 6/30/2024 | $512.2 | 24.3% |
| 6/30/2023 | $412.0 | 12.9% |
| 6/30/2022 | $364.8 | 9.3% |
| 6/30/2021 | $333.8 | - |
Key Balance Sheet Metrics
| Metric | Value | Interpretation |
|---|---|---|
| Total Cash | $71.55B | Substantial cash reserves |
| Total Debt | $67.13B | Manageable debt level |
| Net Debt | $33.32B | Strong net cash position |
| Total Equity | $268.48B | 52.4% of assets |
| Current Ratio | 1.35 | Adequate liquidity |
Microsoft maintains a strong balance sheet with substantial cash reserves and a conservative debt-to-equity ratio. The company's equity position has steadily improved from 42.5% of assets in FY 2021 to 52.4% in FY 2024.
Cash Flow Analysis
| Period | Operating CF (billions) | Free Cash Flow (billions) |
|---|---|---|
| TTM | $125.6 | $70.0 |
| 6/30/2024 | $118.5 | $74.1 |
| 6/30/2023 | $87.6 | $59.5 |
| 6/30/2022 | $89.0 | $65.1 |
| 6/30/2021 | $76.7 | $56.1 |
Capital Allocation
| Period | Capital Expenditure (billions) | Stock Repurchases (billions) |
|---|---|---|
| TTM | -$55.6 | -$17.5 |
| 6/30/2024 | -$44.5 | -$17.3 |
| 6/30/2023 | -$28.1 | -$22.2 |
| 6/30/2022 | -$23.9 | -$32.7 |
| 6/30/2021 | -$20.6 | -$27.4 |
Microsoft generates robust operating cash flow and free cash flow, with significant growth in FY 2024. The company's free cash flow margin of approximately 30% of revenue highlights its exceptional cash generation efficiency. Capital expenditures have more than doubled from $20.6 billion in FY 2021 to $44.5 billion in FY 2024, reflecting significant investments in infrastructure, particularly for cloud services and AI capabilities.
Financial Strength Summary
Microsoft demonstrates exceptional financial strength characterized by:
- Consistent Revenue Growth: Steady revenue growth across multiple years with 15.7% growth in FY 2024.
- Expanding Profit Margins: Improving operating margins from 41.6% to 44.6% over four years.
- Strong Balance Sheet: Increasing equity position to 52.4% of total assets and manageable debt levels.
- Robust Cash Generation: Operating cash flow of $118.5 billion in FY 2024 with free cash flow of $74.1 billion.
- Prudent Capital Allocation: Balanced approach to investments, debt management, and shareholder returns.
- Earnings Growth: 46.6% increase in diluted EPS over three years, reaching $11.80 in FY 2024.
These financial metrics collectively indicate Microsoft's continued market leadership, operational excellence, and ability to generate significant shareholder value through its diverse business segments including cloud services, software, and hardware. The company's financial position provides substantial flexibility to pursue strategic initiatives, weather economic uncertainties, and continue delivering value to shareholders through dividends and share repurchases.