01—Abstract
Summary
Summary of the 10-K filed July 30, 2020. Cited figures are marked; the original filing is the authoritative source.
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%a 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 billionb. 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.
02—Key points
Key Highlights
- Total revenue grew by 14% to $143.0 billion in fiscal year 2020.
- Intelligent Cloud segment revenue increased by 24% to $48.4 billion, with Azure revenue up 56%.
- Productivity and Business Processes segment revenue rose 13% to $46.4 billion, fueled by Office Commercial and LinkedIn growth.
- More Personal Computing segment revenue saw a 6% increase to $48.3 billion, driven by Windows and Surface.
- Commercial cloud revenue surged 36% to $51.7 billion.
- The company returned $8.9 billion to shareholders in Q4 FY2020 through share repurchases and dividends.
- Microsoft continued to invest in R&D, with expenses increasing 14% to $19.3 billion.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Microsoft Corp kept $0.31.
- Revenue$143.01B100.0%
- Cost of revenue−$46.08B32.2%
- Gross profit$96.94B67.8%
- Operating costs−$43.98B30.8%
- Operating income$52.96B37.0%
- Interest, other & tax−$8.68B6.1%
- Net income$44.28B31.0%
Where FY2020 revenue went
$143.01B- Cost of revenue: $46.08B, 32% of revenue
- Net income: $44.28B, 31% of revenue
- Other operating costs: $24.71B, 17% of revenue
- R&D: $19.27B, 13% of revenue
- Interest, other & tax: $8.68B, 6.1% of revenue
Kept 31% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed July 30, 2020Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $143.01B$125.84B | +13.6% |
| Cost of Revenue | $46.08B$42.91B | +7.4% |
| Gross Profit | $96.94B$82.93B | +16.9% |
| R&D Expenses | $19.27B$16.88B | +14.2% |
| Operating Income | $52.96B$42.96B | +23.3% |
| Interest Expense | $2.59B$2.69B | −3.5% |
| Net Income | $44.28B$39.24B | +12.8% |
| EPS (Basic) | $5.82$5.11 | +13.9% |
| EPS (Diluted) | $5.76$5.06 | +13.8% |
| Shares Outstanding (Basic) | 7.61B7.67B | −0.8% |
| Shares Outstanding (Diluted) | 7.68B7.75B | −0.9% |
05—Questions
Frequently Asked Questions
What was Microsoft's overall financial performance in FY2020?
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.
How did Microsoft's cloud business perform?
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.
What was the impact of COVID-19 on Microsoft's business?
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.
How is Microsoft returning value to shareholders?
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.
06—Continue