The above graph represents the Microsoft costs and expenses by quarter, starting from fiscal Q1 1995 to the most recently completed quarter. The company has always been spending a significant amount of its quarterly revenue on Research and development, Sales and marketing, General and administrative activities. In FY Q2 2020, Microsoft cost of revenue amounted to $12,358 million, with a negligible decline of 0.5% YoY.
|Source||Microsoft Quarterly reports, SEC Filings|
|Note||Microsoft financial year – from July 1 to June 30|
Microsoft R&D expenses increased a considerable 13% YoY in FY Q2 2020, to a record-high $4,603 million. The growth was primarily driven by the company’s investments in cloud engineering, LinkedIn, and Gaming. R&D expenses accounted for 12.5% of Microsoft’s total revenue generated during the December quarter of 2019 (FY Q2 2020).
With 7.5% YoY, the company also increased its sales and marketing expenses in fiscal Q2 2020, amounting to $4,933 million – highest-ever till date. The growth was driven by investments in LinkedIn and commercial sales. Microsoft sales and marketing expenses accounted for 13.4% of the company’s total revenue.
On the other hand, Microsoft General and administrative expenses declined $11 million or nearly 1% YoY in fiscal Q2 2020, to $1,121 million.
About Microsoft Corporation
Microsoft Corporation (NASDAQ: MSFT) is an American multinational technology company, founded by Bill Gates and Paul Allen on April 4, 1975. The company is best known for its software products such as Microsoft Windows OSs, Microsoft Office Suite, and web browsers such as Internet Explorer and Microsoft Edge.
Microsoft rose to dominate the personal computer operating system market during the 1980-81 when it formed a partnership with IBM to provide MS-DOS (Microsoft Disk Operating System) for IBM PCs. This implied that for every computer sold by IBM having Microsoft’s OS, a royalty was paid to Microsoft.
On November 20, 1985, Microsoft launched Windows – a graphical operating environment that runs on MS-DOS.
On March 13, 1986, Microsoft had a highly successful initial public offering (IPO) for $21 per share. By the end of the day, the stock price had risen to $35.50, which made Bill Gates an instant multi-millionaire, with 44.8% of the company’s stock.
On May 22, 1990, Microsoft launched Windows 3.0. Interestingly, Microsoft’s Windows 3.0 became the first widely successful version of Windows, from the very first day.
Microsoft has made ten acquisitions worth over one billion dollars: Skype (2011), aQuantive (2007), Fast Search & Transfer (2008), Navision (2002), Visio Corporation (2000), Yammer (2012), Nokia’s mobile and devices division (2013), Mojang (2014), LinkedIn (2016) and GitHub (2018).
Microsoft recently overtook Apple to become the world’s most valuable company, clocking $1 trillion valuation.
Here are some more interesting facts about Microsoft.
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