Microsoft Corp

Microsoft's FY2024 revenue rose 16% to $245.1B with net income of $88.1B and diluted EPS of $11.80, as Microsoft Cloud revenue increased 23% to $137.4B.

Revenue increased $33.2B or 16%, which management attributes to growth across each segment, with Intelligent Cloud driven by Azure, Productivity and Business Processes driven by Office 365 Commercial, and More Personal Computing driven by Gaming. Operating income increased $20.9B or 24% on the same segment growth. The prior-year period included a $1.2B Q2 charge (employee severance, hardware-related impairment, and lease consolidation costs) that reduced prior-year operating income, net income by $946M, and diluted EPS by $0.13.

Reported operating income of $109.4B includes no adjustment in fiscal 2024; the filing's non-GAAP adjusted operating income equals GAAP operating income at $109.4B. Prior-year GAAP operating income of $88.5B included a $1.2B Q2 charge (employee severance, hardware-related impairment, and lease consolidation costs); the filing reports adjusted operating income of $89.7B, adjusted net income of $73.3B, and adjusted diluted EPS of $9.81 for fiscal 2023. Other income (expense), net swung to a $1.6B expense from $788M income, which management attributes to higher equity impairments, lower gains on equity investments, higher interest expense due to commercial paper issuance, and net recognized losses on equity method investments.

Operating cash flow was 1.3x net income attributable to the parent (cash conversion); free cash flow of $74.1B (derived as operating cash flow minus the absolute selected capex cash-flow amount; not an issuer-defined or discretionary-cash measure).

Capital returned — dividends paid $21.8B (prior $19.8B), share repurchases $17.3B (prior $22.2B); capital expenditures $44.5B (prior $28.1B) (selected cash-flow amount, not necessarily total capital investment).

Financing cash flow for 2023-07-01 to 2024-06-30 was an outflow of $37,757,000,000, compared with an outflow of $43,935,000,000 for 2022-07-01 to 2023-06-30. Both periods had net outflows.

“Cash from operations increased $31.0 billion to $118.5 billion for fiscal year 2024, primarily due to an increase in cash received from customers. Cash used in financing decreased $6.2 billion to $37.8 billion for fiscal year 2024, primarily due to a $5.0 billion decrease in common stock repurchases and a $3.3 billion increase in proceeds from issuance of debt, net of repayments, offset in part by a $2.0 billion increase in dividends paid. Cash used in investing increased $74.3 billion to $97.0 billion for fiscal year 2024, primarily due to a $67.5 billion increase in cash used for acquisitions of companies, net of cash acquired, and purchases of intangible and other assets and a $16.4 billion increase in additions to property and equipment.”

Filing statement

“On October 13, 2023, we completed our acquisition of Activision Blizzard, Inc. (“Activision Blizzard”) for a total purchase price of $75.4 billion, consisting primarily of cash.”

Filing statement

Period net income attributable to the parent / period-end equity, not annualized: 32.8% (prior at 2023-06-30: 35.1%); period net income attributable to the parent / period-end assets, not annualized: 17.2% (prior at 2023-06-30: 17.6%).

No quantitative revenue or EPS guidance is provided in the 10-K. Management states it expects capital expenditures to increase in coming years to support growth in its cloud offerings and investments in AI infrastructure and training, and states that investments in cloud and AI infrastructure and devices will continue to increase operating costs and may decrease operating margins.

Leverage: Identified debt as of 2024-06-30 (carrying amount): long-term debt including current maturities of $44.9B; noncurrent long-term debt of $42.7B; current portion of long-term debt of $2.2B. Not separately reported in this filing's standardized data: short-term borrowings. Total debt, net debt and debt-to-equity are therefore not stated.

Liquidity: Cash, cash equivalents, and short-term investments totaled $75.5B at June 30, 2024 versus $111.3B at June 30, 2023. Management states it expects existing cash, cash equivalents, short-term investments, cash flows from operations, and access to capital markets to continue to be sufficient to fund operating activities and cash commitments for at least the next 12 months and thereafter for the foreseeable future.

Cash flow: Cash flow — operating $118.5B, investing $-97.0B, financing $-37.8B.

Working capital: Current assets $159.7B vs. current liabilities $125.3B (current ratio 1.27x). Prior reported balance sheet as of 2023-06-30: $184.3B vs. $104.1B (1.77x).