Microsoft Earnings Report - Q4 2024
Microsoft for the fourth quarter of 2024 reported revenue of $64.7 billion increased by 15% year-over-year (YoY).
On a segmental basis, Microsoft's Azure growth, though generally slowing, saw a significant contribution from AI services in the June quarter, accounting for an 8% point increase in revenue, up from 7% in the previous quarter.
Despite not disclosing absolute revenue figures for Azure, which is poised to benefit from the rising interest in AI, CEO Satya Nadella highlighted that Azure AI is now used by over 60,000 customers. This marks a nearly 60% year-on-year increase, with the average spend per customer also on the rise.
The company's leading segment, Intelligent Cloud, generated $28.52 billion in revenue, a 19% increase. This segment includes the Azure public cloud, Windows Server, Nuance, and GitHub. This growth highlights the strong performance of Azure and its associated services despite the overall slowing growth rate.
Revenue from Microsoft's personal computing business, which encompasses Windows and devices like the Xbox and Surface computers, increased by 14%. This growth was supported by stabilizing personal computer sales. According to research firm IDC, the PC market expanded for the second consecutive quarter during the April-June period.
The Productivity and Business Processes unit, which includes Office software and LinkedIn, generated $20.32 billion in revenue, representing an 11% increase YoY.
Net income rose to $22.04 billion, up from $20.08 billion, or $2.69 per share, in the same quarter last year.
The results were bolstered by a strengthening PC market, with Windows license sales to device makers rising by 4%.
In gaming, Microsoft now boasts over 500 million monthly active users across various consoles, PCs, and mobile devices, following the Activision Blizzard acquisition that was finalized in October, according to Satya Nadella.
"Our share gains accelerated this year driven by AI," said CEO Satya Nadella. However, according to Amy Hood, Microsoft’s finance chief, demand for Azure AI services exceeded available capacity. This trend was noted in April. She also mentioned that Azure's growth in June was slightly below expectations in some parts of Europe.
Regarding guidance, Microsoft projected fiscal first-quarter revenue between $63.8 billion and $64.8 billion, implying a 13.8% growth rate at the midpoint of the range. According to Amy Hood, Microsoft anticipates fiscal first-quarter Azure revenue growth between 28% and 29% at constant currency, with faster growth expected in the second half of the fiscal year.
Microsoft shares dropped by as much as 7% in extended trading on Tuesday. Despite reporting better-than-expected earnings and revenue, investors were more concerned with the disappointing cloud results.
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Sources:
1. Microsoft
2. CNBC
On a segmental basis, Microsoft's Azure growth, though generally slowing, saw a significant contribution from AI services in the June quarter, accounting for an 8% point increase in revenue, up from 7% in the previous quarter.
Despite not disclosing absolute revenue figures for Azure, which is poised to benefit from the rising interest in AI, CEO Satya Nadella highlighted that Azure AI is now used by over 60,000 customers. This marks a nearly 60% year-on-year increase, with the average spend per customer also on the rise.
The company's leading segment, Intelligent Cloud, generated $28.52 billion in revenue, a 19% increase. This segment includes the Azure public cloud, Windows Server, Nuance, and GitHub. This growth highlights the strong performance of Azure and its associated services despite the overall slowing growth rate.
Revenue from Microsoft's personal computing business, which encompasses Windows and devices like the Xbox and Surface computers, increased by 14%. This growth was supported by stabilizing personal computer sales. According to research firm IDC, the PC market expanded for the second consecutive quarter during the April-June period.
The Productivity and Business Processes unit, which includes Office software and LinkedIn, generated $20.32 billion in revenue, representing an 11% increase YoY.
Net income rose to $22.04 billion, up from $20.08 billion, or $2.69 per share, in the same quarter last year.
The results were bolstered by a strengthening PC market, with Windows license sales to device makers rising by 4%.
In gaming, Microsoft now boasts over 500 million monthly active users across various consoles, PCs, and mobile devices, following the Activision Blizzard acquisition that was finalized in October, according to Satya Nadella.
"Our share gains accelerated this year driven by AI," said CEO Satya Nadella. However, according to Amy Hood, Microsoft’s finance chief, demand for Azure AI services exceeded available capacity. This trend was noted in April. She also mentioned that Azure's growth in June was slightly below expectations in some parts of Europe.
Regarding guidance, Microsoft projected fiscal first-quarter revenue between $63.8 billion and $64.8 billion, implying a 13.8% growth rate at the midpoint of the range. According to Amy Hood, Microsoft anticipates fiscal first-quarter Azure revenue growth between 28% and 29% at constant currency, with faster growth expected in the second half of the fiscal year.
Microsoft shares dropped by as much as 7% in extended trading on Tuesday. Despite reporting better-than-expected earnings and revenue, investors were more concerned with the disappointing cloud results.
Visit Us: https://graniteshares.com/institutional/uk/en-uk/
Capital at Risk | Sophisticated Investors Only
Sources:
1. Microsoft
2. CNBC
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