Illinois Tool Works Inc. stock research
FY2024 Q1
Illinois Tool Works (ITW) Gross Margin — Quarter Ended Mar 31, 2024
Revenue remained stable compared to both the prior quarter and the same quarter last year. Gross profit increased year-over-year but decreased sequentially, while cost of revenue moved in the opposite direction, resulting in a gross margin that improved versus a year ago but weakened from the prior quarter.
Gross margin takeaway
Quarter ended Mar 31, 2024 · FY2024 Q1
Revenue remained stable compared to both the prior quarter and the same quarter last year. Gross profit increased year-over-year but decreased sequentially, while cost of revenue moved in the opposite direction, resulting in a gross margin that improved versus a year ago but weakened from the prior quarter.
- The most observable driver is the change in cost of revenue: compared to the prior quarter, cost increased substantially while revenue held steady, which directly compressed gross profit and margin. Year-over-year, cost declined relative to stable revenue, supporting margin expansion.
- Sequentially, gross margin weakened as cost of revenue rose significantly despite flat revenue. Year-over-year, gross margin improved as cost of revenue fell while revenue was nearly unchanged.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
51.7%
Gross profit
$2.1B
Revenue
$4.0B
Cost of revenue
$1.9B
Quarter-over-quarter change
-24.7 pts
Year-over-year change
+10.0 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Jun 30, 2023 | $4.1B | $1.7B | $2.3B | 42.5% |
| Sep 30, 2023 | $4.0B | $1.7B | $2.3B | 42.5% |
| Dec 31, 2023 | $4.0B | $3.0B | $940.0M | 76.4% |
| Mar 31, 2024 | $4.0B | $2.1B | $1.9B | 51.7% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Dec 31, 2023
-24.7 pts
Year-over-year change
Mar 31, 2023
+10.0 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The most observable driver is the change in cost of revenue: compared to the prior quarter, cost increased substantially while revenue held steady, which directly compressed gross profit and margin. Year-over-year, cost declined relative to stable revenue, supporting margin expansion.
Sequentially, gross margin weakened as cost of revenue rose significantly despite flat revenue. Year-over-year, gross margin improved as cost of revenue fell while revenue was nearly unchanged.
Monitor the trajectory of cost of revenue relative to revenue to assess whether the margin pressure from the prior quarter persists.