10-KPeriod: FY2020

MICROSOFT CORP Annual Report, Year Ended Jun 30, 2020

Filed July 30, 2020For Securities:MSFT

Summary

Microsoft's 10-K filing for the fiscal year ended June 30, 2020, highlights robust revenue growth across all segments, driven by strong performance in cloud services, particularly Azure, which saw a 56% increase. The company's mission to empower every person and organization is being realized through its strategic focus on the intelligent cloud and intelligent edge, with significant investments in AI and mixed reality. Despite facing intense competition and the ongoing impacts of the COVID-19 pandemic, Microsoft demonstrated resilience, with total revenue reaching $143 billion. The company returned significant capital to shareholders through share repurchases and dividends, underscoring its commitment to shareholder value while continuing to invest heavily in research and development to drive future innovation.

Financial Highlights

54 data points
Beta

Revenue

$143.01B

67.8% Gross Margin

Net Income

$44.28B

31.0% Net Margin

EPS (Diluted)

$5.76

Total Assets

$301.31B

Cash & Equivalents

$13.58B

Free Cash Flow

$45.23B

Financial Statements
Beta
Revenue$143.01B
Cost of Revenue$46.08B
Gross Profit$96.94B
R&D Expenses$19.27B
Operating Income$52.96B
Interest Expense$2.59B
Net Income$44.28B
EPS (Basic)$5.82
EPS (Diluted)$5.76
Shares Outstanding (Basic)7.61B
Shares Outstanding (Diluted)7.68B

Key Highlights

  • 1Total revenue grew by 14% to $143.0 billion in fiscal year 2020.
  • 2Intelligent Cloud segment revenue increased by 24% to $48.4 billion, with Azure revenue up 56%.
  • 3Productivity and Business Processes segment revenue rose 13% to $46.4 billion, fueled by Office Commercial and LinkedIn growth.
  • 4More Personal Computing segment revenue saw a 6% increase to $48.3 billion, driven by Windows and Surface.
  • 5Commercial cloud revenue surged 36% to $51.7 billion.
  • 6The company returned $8.9 billion to shareholders in Q4 FY2020 through share repurchases and dividends.
  • 7Microsoft continued to invest in R&D, with expenses increasing 14% to $19.3 billion.

Frequently Asked Questions

Microsoft reported strong financial performance in fiscal year 2020, with total revenue reaching $143.0 billion, a 14% increase from the previous year. This growth was driven by all three operating segments: Intelligent Cloud, Productivity and Business Processes, and More Personal Computing. Operating income also saw a significant increase of 23% to $53.0 billion.

Microsoft's cloud business demonstrated significant strength. Commercial cloud revenue increased by 36% to $51.7 billion. Specifically, the Intelligent Cloud segment, heavily influenced by Azure, grew revenue by 24% to $48.4 billion, with Azure itself experiencing a substantial 56% revenue increase. This indicates strong customer adoption and demand for Microsoft's cloud offerings.

The COVID-19 pandemic had a mixed impact. While cloud usage and demand increased in the Productivity and Business Processes and Intelligent Cloud segments, leading to growth, there was a slowdown in transactional licensing for small and medium businesses. LinkedIn was negatively affected by the weak job market and reduced advertising spend. In the More Personal Computing segment, Windows OEM, Surface, and Gaming benefited from remote work and learning trends, but Search advertising was impacted by reduced ad spend. Microsoft noted substantial uncertainty regarding the pandemic's continued effects.

Microsoft actively returns value to shareholders through share repurchases and dividends. In the fourth quarter of fiscal year 2020, the company returned $8.9 billion to shareholders through these methods. For the full fiscal year 2020, share repurchases totaled $19.7 billion, and dividends paid amounted to $15.5 billion.