Microsoft (MSFT) Net Profit Margin History: Quarterly Data 2020–2025
Microsoft quarterly net profit margin from 2020 Q3 through 2025 Q4. Tracks expansion from ~29% to ~37% as Azure and 365 scale.
| Quarter | Net Profit Margin (%) | YoY Change |
|---|
Source: SEC EDGAR XBRL (NetIncomeLoss). Quarters marked * are derived (annual filing minus prior three quarters). Calendar year quarters shown.
Microsoft Net Profit Margin: 2020–2025
Microsoft (MSFT) posted a net profit margin of 47.3% in 2025 Q4. The calendar-year 2025 average net profit margin was 38.9%, up from 35.4% in 2024. Net profit margin expansion has been the compounding outcome of gross margin expansion (cloud mix) plus operating leverage (revenue growing faster than expenses) plus interest income (from the investment portfolio at higher rates).
Microsoft Annual Net Profit Margin by Year
| Year | Net Margin | Change |
|---|---|---|
| 2025 | 38.9% | +3.5 pp |
| 2024 | 35.4% | +-0.9 pp |
| 2023 | 36.3% | — |
| 2022 | 33.1% | — |
| 2021 | 38.6% | — |
Source: SEC EDGAR XBRL. Net margin = net income / revenue.
Three Levers of Net Margin Expansion
Gross margin expansion (cloud mix): As Azure and 365 grow relative to hardware, more revenue flows through at 70%+ gross margins. Operating leverage (revenue growing faster than opex): R&D and S&M as a percentage of revenue decline annually. Interest income: Microsoft’s large cash and investment portfolio generates meaningful below-the-line income, which grows with rising interest rates and growing portfolio size.
Net margin at Microsoft now consistently runs above 35%, which is exceptional for a company investing $25B+ annually in R&D and tens of billions more in AI infrastructure. Compare with Palantir’s net profit margin history for a parallel trajectory from deep losses to strong profitability, though Palantir operates at a fraction of Microsoft’s scale.
Quarterly Volatility
Microsoft’s net margin shows modest quarter-to-quarter volatility, partly driven by the timing of tax provisions, equity-method investment adjustments (OpenAI), and seasonal revenue patterns. The December quarter (calendar Q4) typically shows the strongest margin due to high revenue on a relatively fixed expense base.
Comparison with Meta
Meta’s net profit margin is broadly comparable to Microsoft’s in years without one-time charges. Meta’s Family of Apps operates at extremely high margins (~40%+), but Reality Labs losses drag the consolidated net margin down. In 2025, Meta’s Q3 net margin was anomalously depressed by a large charge, making the annual comparison less meaningful.
Frequently Asked Questions
Q: What is Microsoft’s net profit margin? ~38.9% in 2025 — combination of cloud mix, operating leverage, and interest income.
Q: Higher than Apple’s? Yes, ~38.9% vs. Apple’s ~25%, though Apple has much higher total revenue and earnings.
Related: Microsoft Net Income · Microsoft Operating Margin · Palantir Net Profit Margin · Net Income Glossary
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