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Company Analysis

Microsoft Corporation MSFT

A comprehensive view of key metrics, scores, and financial health for Microsoft Corporation

Overview of Microsoft Corporation

MSFT NMS
Technology Software - Infrastructure Framework: Software & SaaS Mega Cap
Microsoft Corporation (MSFT), is a Mega Cap company, in the Software - Infrastructure industry, last closed at $493.95, about 56.0% overvalued vs fair value, -3.1% 1Y return, placing in the top 25% of its sector.
Metrics Gross Margin 67.9%
USD 493.95
-1.15%
(Delayed)
• Vol 90d: 40.6%
52-Week Range
Market Cap
$2.86T
Enterprise Value
$2.89T
Overall Score
View breakdown
Overall
Growth
Good
Profitability
Good
Health
Fair
Efficiency
Fair
Valuation
Good
Growth
Good
Profitability
Good
Health
Fair
Efficiency
Fair
Valuation
Good
Completeness: 100%
Confidence: 63%
Updated: Sep 12
Top Beats
No strong beats yet

Quick Facts

Website https://www.microsoft.com
HQ Redmond, WA
Employees 228,000
Fiscal year Jun 30

Next Events

Earnings Oct 28 Estimated

Fair Value Snapshot

Bear Base Bull
$201
$217
$237
Current: $493.95 -56% vs base

Engine Room Money Flow™

Mega Cap

Software & SaaS - Where revenue goes and how value is created

Flow Steps
Total Revenue
$331.8B
17.8%%
Gross Profit
$225.5B
16.3%%
Operating Income (GAAP)
$155.2B
20.8%%
Operating Cash Flow
$182.9B
34.4%%
Free Cash Flow
$67.0B
-6.5%%
Capital Allocation
$-48.7B
Money Flow Bridge
Flow Direction: Money moves from left to right
Components: Breakdown shows composition of each stage
Industry-Specific: Software & SaaS

Quality & Reliability Indicators

Gross Margin
67.9%
Good

Gross Profit / Revenue — pricing power and product moat (SaaS benchmark: >70%)

FCF Margin FY2026
20.2%
Excellent

Free Cash Flow / Revenue

Free Cash Flow / Revenue — primary investor metric for software companies

Rule of 40
38.0
Fair

Revenue Growth (%) + FCF Margin (%) — SaaS health score: ≥40 healthy, ≥60 elite

SBC % of Revenue
3.7%
Excellent

Stock-Based Compensation / Revenue — real dilution cost excluded from GAAP FCF; 5–15% typical for growth SaaS

R&D Intensity
10.7%
Good

R&D Expense / Revenue — growth investment intensity (10–25% typical for SaaS)

Operating Margin (GAAP)
46.8%
Excellent

Operating Income / Revenue — GAAP profitability; negative is common for high-growth SaaS

FCF Yield
2.3%
Fair

Free Cash Flow / Market Cap — investor return potential

Owner's Pocket - Capital Allocation

Total Returned to Shareholders

Combined dividends, buybacks, and debt reduction

$48.7B
72.7% of FCF
Dividends
$26.4B
% of FCF 39.5%
Buybacks
$22.3B
% of FCF 33.2%

Where It Leaks

Cash Flow Health critical
Significant cash flow inefficiencies identified. Multiple high-impact leaks require attention.
3
Active Leaks
0/3
Improving
0
High Impact
1
Critical
Key Insights

Key concerns identified: CapEx Hunger

Moat Analysis Software & SaaS Specialized

Competitive Advantage Assessment

Evaluating Microsoft Corporation's durable competitive advantages across 6 defense dimensions

Overall Moat Strength
73
/100
Moderate
Scores based on quantitative metrics and qualitative factors
Full moat analysis

Key strengths

  • Premium Software Margins Gross margin quality is strong versus peers (score 0.79), consistent with premium software economics.
  • Asset-Light Returns Return profile is strong (score 0.89), supporting a capital-efficient model.

Key risks

  • FCF Trend Is Softening FCF trend is weak (score 0.22), suggesting cash scalability is deteriorating.

The dashed ring is the peer median. Defense scores are percentile ranks against peers, so 50 is roughly the typical company in this group.

Select any axis label to open that defense below.

Pricing Power

Strong
85

Ability to sustain premium gross margins and defend profitability against competition

Key signals
Gross Margin Quality 79/100
Operating Margin
45.6% vs 1.2% median P99
Gross Profit Margin
67.9% vs 59.2% median P59
Margin Durability 94/100
Operating Margin
— vs 12.0% median
STRENGTHS
  • Premium Software Margins Gross margin quality is strong versus peers (score 0.79), consistent with premium software economics.
  • Margins Hold Through Cycles Margin durability is strong (score 0.94), pointing to resilient pricing power.

Evidence that customers renew, expand, and keep revenue streams predictable

Key signals
Revenue Consistency 87/100
Rev Growth YoY
— vs 17.6% median
Contracted Demand 55/100
Revenue CAGR 3Y
12.4% vs 11.1% median P52
Def Rev Growth
11.8% vs 9.0% median P58
STRENGTHS
  • Consistent Subscription Growth Revenue consistency is strong (score 0.87), pointing to a sticky customer base.

Capacity to reinvest in product development without losing the growth-profit balance

Key signals
R&D Commitment 60/100
R&D Intensity
11.5% vs 18.2% median P66
Rev Growth YoY
14.9% vs 13.8% median P54
Innovation Payoff 62/100
Revenue CAGR 3Y
12.4% vs 11.1% median P52
Rule of 40
40.4% vs 22.8% median P72
STRENGTHS
  • R&D Reinvestment Supports Growth R&D commitment is strong relative to peers (score 0.60).
  • Innovation Converts to Outcomes Innovation payoff is strong (score 0.62), supported by Rule of 40 and revenue compounding.

Ability to translate revenue growth into durable operating and free cash flow

Key signals
Cash Conversion 92/100
FCF Margin
25.4% vs 7.8% median P86
Operating Cash Flow Margin
48.3% vs 13.0% median P98
FCF Trend 22/100
FCF Margin
— vs 2.8% median
STRENGTHS
  • Revenue Converts Cleanly to Cash Cash conversion is strong (score 0.92), showing scalable economics.
RISKS
  • FCF Trend Is Softening FCF trend is weak (score 0.22), suggesting cash scalability is deteriorating.

Returns generated by an asset-light platform without relying on leverage

Key signals
Return Profile 89/100
ROE
33.3% vs 2.0% median P86
ROIC
27.3% vs 1.3% median P92
Return Durability 86/100
ROIC
— vs 12.0% median
STRENGTHS
  • Asset-Light Returns Return profile is strong (score 0.89), supporting a capital-efficient model.
  • Returns Hold Over Time Return durability is healthy (score 0.86), indicating durable capital efficiency.

Capacity to keep investing through downturns without balance sheet stress

Key signals
Debt Capacity 84/100
Interest Coverage (EBIT)
52.84x vs -0.49x median P91
Cash Flow to Debt Ratio
1.39x vs 0.52x median P78
Liquidity Position 47/100
Current Ratio
1.35x vs 1.64x median P39
Net Debt/EBITDA
0.37x vs 0.85x median P55
STRENGTHS
  • Debt Covered by Cash Generation Debt capacity is solid (score 0.84), supporting resilience through cycles.

Trade-Off Ledger™

Where management spends the performance budget - Growth, Profitability, or Safety

Software SaaS vs Industry Peers 100% Coverage
Trade-Off Triangle Visualization A ternary plot showing MSFT's balance between Growth (29.8%), Profitability (41.2%), and Safety (29.0%). Growth 30% Safety 29% Profitability 41%

Click axes to expand details. Marker shows current allocation.

Loading 3-year trend analysis...

Growth

58th percentile vs peers
59
Key Signals
Rev Growth YoY 14.9% 62p Revenue CAGR 3Y 12.4% 58p Def Rev Growth 11.8% 57p TSR 10.4% 60p Buyback % -0.1% 69p
Strengths
  • FCF Margin in top 20% of peers (25.4%, 86th percentile)
  • Interest Coverage Ratio in top 20% of peers (52.84, 89th percentile)
  • Superior capital returns - 2 return metrics above peer median
  • Operating Cash Flow Margin in top 20% of peers (48.3%, 97th percentile)
Risks

No significant risks identified for this axis.

Two Futures

Scenario-based fair value ranges for Microsoft Corporation.

User assumptions applied -
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This company cannot be valued using standard models.

What this means: The Scenario Theatre requires financial data (revenue, cash flow, shares outstanding) to calculate fair value estimates. This data may be unavailable for:

  • Recently listed companies (IPOs, SPACs)
  • Shell companies or holding companies
  • Companies that haven't filed recent financials
  • Foreign companies with limited data coverage
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