Microsoft Corporation (MSFT)

Return on equity (ROE)

		Jun 30, 2025	Mar 31, 2025	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020
Net income (ttm)	US$ in thousands	101,832,000	96,635,000	92,750,000	90,512,000	88,136,000	86,181,000	82,541,000	77,096,000	72,361,000	69,020,000	67,449,000	69,789,000	72,738,000	72,456,000	71,185,000	67,883,000	61,271,000	56,015,000	51,310,000	47,496,000
Total stockholders’ equity	US$ in thousands	343,479,000	321,891,000	302,695,000	287,723,000	268,477,000	253,152,000	238,268,000	220,714,000	206,223,000	194,683,000	183,136,000	173,566,000	166,542,000	162,924,000	160,010,000	151,978,000	141,988,000	134,505,000	130,236,000	123,392,000
ROE		29.65%	30.02%	30.64%	31.46%	32.83%	34.04%	34.64%	34.93%	35.09%	35.45%	36.83%	40.21%	43.68%	44.47%	44.49%	44.67%	43.15%	41.65%	39.40%	38.49%

June 30, 2025 calculation

ROE = Net income (ttm) ÷ Total stockholders’ equity
= $101,832,000K ÷ $343,479,000K
= 29.65%

The analysis of Microsoft Corporation's return on equity (ROE) over the specified period reveals a trend of gradual decline following a peak in late 2021. Initially, the ROE demonstrated steady growth, increasing from approximately 38.49% on September 30, 2020, to a peak of 44.67% on September 30, 2021. This upward trajectory suggests that Microsoft was effectively generating more profit relative to shareholders' equity during this phase, potentially due to operational efficiency, successful strategic initiatives, or favorable market conditions.

Following the peak in late 2021, the ROE experienced a consistent decreasing trend. By December 31, 2021, it slightly retreated to 44.49%, and this decline persisted through the subsequent quarters, reaching approximately 34.64% as of December 31, 2023. The continued downward movement persisted into 2024 and 2025, with the most recent data indicating a ROE of around 29.65% on June 30, 2025.

This sustained reduction implies that although Microsoft still maintains a relatively high ROE compared to many industry peers, its ability to generate returns from shareholders’ equity has diminished over time. Possible contributing factors include increased equity base, changes in profit margins, shifts in asset management efficiency, or broader macroeconomic influences impacting profitability. Generally, a declining ROE might also reflect increased internal reinvestment, share issuance, or a strategic shift affecting profitability ratios.

Overall, the data suggests that while Microsoft experienced a period of robust profitability and capital efficiency between 2020 and 2021, recent years have seen a gradual erosion of these levels, indicating either a normalization from previous highs or evolving business conditions influencing profitability metrics.