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Microsoft Corporation · Financials
Is this a real, growing, cash-generative business, or a story propped up by accounting?
Business engineSteady: revenue compounds ~13.7%/yr (FY22→FY26), net margin 40.3%; free cash flow runs at 50% of net income. Check the accrual gap. Worth your attention in FY26: Capex step-up ($115.9B). Visible in the receipts below.
The four lines that matter · FY22–FY26
Revenue ($B)▲17.8%
331.8
FY22→FY26CAGR +13.7%/yr
Net income ($B)▲31.3%
133.7
FY22→FY26CAGR +16.4%/yr
Free cash flow ($B)▼6.5%
67.0
capex stepped upCAGR +0.7%/yr
Diluted EPS▲31.6%
17.95
FY22→FY26CAGR +16.8%/yr
What the receipts whisper · what a headline number hides
Share count
−1.2%
7.5bn → 7.5bn diluted shares since FY22. Broadly flat, so EPS moves with net income rather than with the share count.
Capex step-up
$115.9B
▲80% YoY in FY26, largest jump in this window; watch free-cash-flow conversion.
Returns vs FCF
73%
$48.7B returned vs $67.0B of FCF in FY26. Buybacks + dividends covered by cash flow.
What the income statement says · FY22–FY26
Where every revenue dollar goes · FY26 ($B)
40¢ of every revenue dollar becomes profit. The biggest cost lever is COGS.
Margin trend · direction beats level Gross Operating Net
Over this window: gross 68.4% → 67.9%. Net margin 40.3% is more than double the sector median.
The receipt · income statement · FY22–FY26 USD millions except per-share & ratios · hover a line for its definition
| Line item | TTM † | FY26 | FY25 | FY24 | FY23 | FY22 | YoY | CAGR 22→26 |
|---|---|---|---|---|---|---|---|---|
| Revenue & profitability | ||||||||
Revenue | 318,273.0 | 331,839.0 | 281,724.0 | 245,122.0 | 211,915.0 | 198,270.0 | ▲17.8% | +13.7% |
Cost of revenue | 100,863.0 | 106,374.0 | 87,831.0 | 74,114.0 | 65,863.0 | 62,650.0 | ▲21.1% | +14.2% |
Gross profit | 217,410.0 | 225,465.0 | 193,893.0 | 171,008.0 | 146,052.0 | 135,620.0 | ▲16.3% | +13.6% |
Research & development | 34,394.0 | 35,562.0 | 32,488.0 | 29,510.0 | 27,195.0 | 24,512.0 | ▲9.5% | +9.7% |
Selling, general & admin | 7,659.0 | 7,956.0 | 7,223.0 | 7,609.0 | 7,575.0 | 5,900.0 | ▲10.1% | +7.8% |
Total operating expenses | 68,453.0 | 70,228.0 | 65,365.0 | 61,575.0 | 57,529.0 | 52,237.0 | ▲7.4% | +7.7% |
Operating incomefeeds ROC rank | 148,957.0 | 155,237.0 | 128,528.0 | 109,433.0 | 88,523.0 | 83,383.0 | ▲20.8% | +16.8% |
Other income, net | 5,546.0 | 10,697.0 | −4,901.0 | −1,646.0 | 788.0 | 333.0 | — | — |
Pretax income | 154,503.0 | 165,934.0 | 123,627.0 | 107,787.0 | 89,311.0 | 83,716.0 | ▲34.2% | +18.7% |
Income tax | 29,287.0 | 32,185.0 | 21,795.0 | 19,651.0 | 16,950.0 | 10,978.0 | ▲47.7% | +30.9% |
Net incomePiotroski ROA ✓feeds Buffett Quality owner earnings | 125,216.0 | 133,749.0 | 101,832.0 | 88,136.0 | 72,361.0 | 72,738.0 | ▲31.3% | +16.4% |
| Per share | ||||||||
Diluted EPSbuyback-sensitive | 16.80 | 17.95 | 13.64 | 11.80 | 9.68 | 9.65 | ▲31.6% | +16.8% |
Diluted shares (bn) | 7.45 | 7.45 | 7.46 | 7.47 | 7.47 | 7.54 | ▼0.2% | −0.3% |
| Margins | ||||||||
Gross margin66th pct in Technology | 68.3% | 67.9% | 68.8% | 69.8% | 68.9% | 68.4% | ▼0.9pp | −0.5pp |
Operating margin | 46.8% | 46.8% | 45.6% | 44.6% | 41.8% | 42.1% | ▲1.2pp | +4.7pp |
Net margin97th pct in Technology | 39.3% | 40.3% | 36.1% | 36.0% | 34.1% | 36.7% | ▲4.2pp | +3.6pp |
† TTM = trailing four quarters through 2026-03-31.
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These lines feed the tenet checklists: see which gates passTenets →Margins & returns continue as sector-ranked ratiosStatistics →
Annual report filed 2026-07-29 · view filings on SEC EDGAR ↗ · reported currency USD · as-filed figures may be later restated.
Statements normalized in our fundamentals DB · Not investment advice.
Statements normalized in our fundamentals DB · Not investment advice.
Annual and quarterly statements as filed, normalized into one comparable shape · Not investment advice.