According to Microsoft's latest earnings report for the quarter that ended in December, the company's revenue grew by 17.58% to US$62 billion, with gross profit, operating income, and net income recording double-digit rise year-on-year.
Revenue in the Intelligent Cloud segment increased by 20% from a year ago, driven by Azure and other cloud services revenue growth of 30%. Sales in the Productivity and Business Processes rose by 13% year-over-year, while revenue in the More Personal Computing increased by 19% for the same period. Among all products and services, the Devices business under the More Personal Computing segment was the only one that recorded sales fall from a year ago.
Microsoft chairman and CEO Satya Nadella said in the press release that the company had moved from talking about AI to applying AI at scale, and by infusing AI across every layer of our tech stack, it's winning new customers and helping drive new benefits and productivity gains across every sector.
Microsoft expects the Intelligent Cloud revenue for the current quarter to be US$26-26.3 billion. Sales for the Productivity and Business Processes segment are anticipated to range from US$19.3 billion to US$19.6 billion, and revenue for More Personal Computing is expected to be between US$14.7 billion and US$15.1 billion.
Besides, Microsoft expects the Azure revenue growth to remain stable in the current quarter and server product revenue to grow in low- to mid-single digits. Windows OEM revenue for the current quarter is expected to be flat year-over-year, and the Devices business may keep declining in the January-March quarter.
Microsoft CFO Amy Hood said at the earnings call that capital expenditures for the last quarter were lower than expected due to delivery for a third-party capacity contract shifting from the previous quarter to the current quarter. Microsoft expects capital expenditures to increase materially sequentially, driven by investments in its cloud infrastructure and a flip of a delivery date from the third-party provider.
Microsoft completed the acquisition of Activision-Blizzard on October 13, 2023, and the results are reported in the More Personal Computing segment. Nadella said the acquisition added hundreds of millions of gamers to Microsoft's ecosystem. This transaction has allowed Microsoft to increase its revenue by US$2.08 billion. However, due to an increase in operating expenses by US$1.59 billion, the operating income has consequently decreased by US$440 million.
Microsoft financial summary (US$m) | ||||||
Financial | 2QFY23 | 3QFY23 | 4QFY23 | 1QFY24 | 2QFY24 | YoY for 2QFY24 (%) |
Revenue | 52,747 | 52,857 | 56,189 | 56,517 | 62,020 | 17.58 |
Gross profit | 35,259 | 36,729 | 39,394 | 40,215 | 42,397 | 20.24 |
Operating income | 20,399 | 22,352 | 24,254 | 26,895 | 27,032 | 32.52 |
Net income | 16,425 | 18,299 | 20,081 | 22,291 | 21,870 | 33.15 |
Source: Microsoft, January 2024
Microsoft Segment revenue (US$m) | ||||||
Segment | 2QFY23 | 3QFY23 | 4QFY23 | 1QFY24 | 2QFY24 | YoY for 2QFY24 (%) |
Intelligent Cloud | 21,508 | 22,081 | 23,993 | 24,259 | 25,880 | 20.33 |
Productivity & Business Processes | 17,002 | 17,516 | 18,291 | 18,592 | 19,249 | 13.22 |
More Personal Computing | 14,237 | 13,260 | 13,905 | 13,666 | 16,891 | 18.64 |
Source: Microsoft, January 2024
