McKesson Corporation stock research
FY2023 Q4
McKesson (MCK) Gross Margin — Quarter Ended Mar 31, 2023
Revenue decreased from the prior quarter but increased from the same quarter last year, while gross profit declined in both comparisons. Cost of revenue moved in the same direction as revenue but at a different pace, causing gross margin to weaken both sequentially and year-over-year.
Gross margin takeaway
Quarter ended Mar 31, 2023 · FY2023 Q4
Revenue decreased from the prior quarter but increased from the same quarter last year, while gross profit declined in both comparisons. Cost of revenue moved in the same direction as revenue but at a different pace, causing gross margin to weaken both sequentially and year-over-year.
- The relationship between cost of revenue and revenue is the primary observable driver. Sequentially, cost of revenue fell less than revenue; year-over-year, cost of revenue rose more than revenue, each compressing gross margin.
- Compared to the prior quarter, revenue, gross profit, and cost of revenue were all lower, but gross margin weakened as cost of revenue did not decline proportionally. Compared to the same quarter last year, revenue was higher while gross profit was lower, as cost of revenue increased more than revenue, resulting in a lower gross margin.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
4.4%
Gross profit
$3.1B
Revenue
$68.9B
Cost of revenue
$65.8B
Quarter-over-quarter change
n/a
Year-over-year change
-0.6 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 |
|---|---|---|---|---|
| Mar 31, 2023 | $68.9B | $3.1B | $65.8B | 4.4% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Previous quarter unavailable
n/a
Year-over-year change
Mar 31, 2022
-0.6 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The relationship between cost of revenue and revenue is the primary observable driver. Sequentially, cost of revenue fell less than revenue; year-over-year, cost of revenue rose more than revenue, each compressing gross margin.
Compared to the prior quarter, revenue, gross profit, and cost of revenue were all lower, but gross margin weakened as cost of revenue did not decline proportionally. Compared to the same quarter last year, revenue was higher while gross profit was lower, as cost of revenue increased more than revenue, resulting in a lower gross margin.
Monitor the trend of cost of revenue relative to revenue, as its differential movement has been the key factor behind gross margin compression in both sequential and year-over-year comparisons.