Microsoft Corp CAPEX jumped on 43.1% and Revenue jumped on 14.3%
19/07/2018 • About Microsoft Corp (
$4338) • By InTwits
Microsoft Corp reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 41.1% in FY2018 vs. 39.1% in FY2017 vs. 38.0% in FY2014
- Microsoft Corp has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.2%. At the same time it's a lot of higher than industry average of 5.7%.
- CAPEX is quite volatile: 4,984 in FY2018, 9,925 in FY2017, 12,613 in FY2016, 16,008 in FY2015, 9,292 in FY2014
- The company has highly profitable business model: ROIC is at 19.8%
- It operates with high leverage: Net Debt/EBITDA is 1.6x while industry average is -2.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Microsoft Corp ($4338) key annual financial indicators
| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 86,833 | 93,580 | 91,154 | 96,571 | 110,360 | 14.3% |
| Gross Profit | 59,755 | 60,542 | 58,374 | 62,310 | 72,007 | 15.6% |
| SG&A | 20,488 | 20,324 | 19,198 | 19,942 | 22,223 | 11.4% |
| EBITDA | 32,971 | 24,118 | 32,700 | 37,803 | 45,319 | 19.9% |
| Net Income | 22,074 | 12,193 | 20,539 | 25,489 | 16,571 | -35.0% |
Balance Sheet
|
|---|
| Cash | 8,669 | 5,595 | 6,510 | 7,663 | 11,946 | 55.9% |
| Short Term Debt | 2,000 | 7,484 | 12,904 | 11,544 | 5,397 | -53.2% |
| Long Term Debt | 20,645 | 27,808 | 40,557 | 81,445 | 77,810 | -4.5% |
Cash flow
|
|---|
| Capex | 5,485 | 5,944 | 8,343 | 8,129 | 11,632 | 43.1% |
Ratios
|
|---|
| Revenue growth | 11.5% | 7.8% | -2.6% | 5.9% | 14.3% | |
| EBITDA growth | 8.0% | -26.9% | 35.6% | 15.6% | 19.9% | |
| Gross Margin | 68.8% | 64.7% | 64.0% | 64.5% | 65.2% | 0.7% |
| EBITDA Margin | 38.0% | 25.8% | 35.9% | 39.1% | 41.1% | 1.9% |
| Net Income Margin | 25.4% | 13.0% | 22.5% | 26.4% | 15.0% | -11.4% |
| SG&A, % of revenue | 23.6% | 21.7% | 21.1% | 20.7% | 20.1% | -0.5% |
| CAPEX, % of revenue | 6.3% | 6.4% | 9.2% | 8.4% | 10.5% | 2.1% |
| ROIC | 26.2% | 15.6% | 20.0% | 17.5% | 19.8% | 2.2% |
| ROE | 26.2% | 14.4% | 25.2% | 29.8% | 19.4% | -10.4% |
| Net Debt/EBITDA | 0.4x | 1.2x | 1.4x | 2.3x | 1.6x | -0.7x |
Revenue and profitability
The company's Revenue surged on 14.3%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.3 pp from 18.0% to 19.3% in FY2018.
Gross Margin increased slightly on 0.72 pp from 64.5% to 65.2% in FY2018. SG&A as a % of Revenue decreased slightly on 0.51 pp from 20.7% to 20.1% in FY2018.
Net Income marign dropped on 11.4 pp from 26.4% to 15.0% in FY2018.
Capital expenditures (CAPEX) and working capital investments
Microsoft Corp's CAPEX/Revenue was 10.5% in FY2018. CAPEX/Revenue increased on 4.2 pp from 6.4% in FY2015 to 10.5% in FY2018. For the last three years the average CAPEX/Revenue was 9.4%.
Return on investment
The company operates at good ROIC (19.76%) and ROE (19.45%). ROIC increased on 2.2 pp from 17.5% to 19.8% in FY2018. ROE dropped on 10.4 pp from 29.8% to 19.4% in FY2018.
Leverage (Debt)
Debt level is 1.6x Net Debt / EBITDA and 1.8x Debt / EBITDA. Net Debt / EBITDA dropped on 0.7x from 2.3x to 1.6x in FY2018. Debt dropped on 10.5% while cash surged on 55.9%.
Appendix 1: Peers in Software
Below we provide Microsoft Corp benchmarking against other companies in Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
