Microsoft Corporation
CEO : Mr. Satya Nadella
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q2 | 2.0% YoY | -8.3% | -12.0% | 2023-01-24 |
Amy Hood says,
Revenue and Earnings
- Q2 revenue was $52.7 billion, up 2% and 7% in constant currency.
- The Q2 charge resulted in a negative impact on gross margin by $152 million, operating income by $1.2 billion, and earnings per share by $0.12.
- Excluding the charge, gross margin dollars increased 2% and 8% in constant currency, operating income decreased 3% and increased 6% in constant currency, and earnings per share was $2.32, which decreased 6% and increased 2% in constant currency.
Commercial Business Performance
- Commercial bookings increased 7% and 4% in constant currency, lower than expected.
- Modulated consumption growth in Azure and lower-than-expected growth in new business across standalone Office 365, EMS and Windows commercial products sold outside Microsoft 365 suite.
- Performance in the U.S. was weaker than expected.
- Continued to see share gains in data and AI, Dynamics, Teams, Security, and Edge.
Microsoft Cloud and Gross Margins
- Microsoft Cloud revenue was $27.1 billion and grew 22% and 29% in constant currency, ahead of expectations.
- Microsoft Cloud gross margin percentage increased roughly 2 points year-over-year to 72%, a point better than expected, driven by lower energy costs.
- Gross margin percentage decreased roughly 2 points, excluding the impact of the change in accounting estimate.
Intelligent Cloud and Azure Growth
- Revenue for the Intelligent Cloud segment was $21.5 billion, increasing 18% and 24% in constant currency in line with expectations.
- Growth in Azure continued to moderate, particularly in December, and we exited the quarter with Azure constant currency growth in the mid-30s.
More Personal Computing and Revenue Decline
- Revenue for More Personal Computing was $14.2 billion, decreasing 19% and 16% in constant currency, below expectations driven by Surface, Windows Commercial and search.
- Windows OEM revenue decreased 39%, year-over-year, in line with expectations.
Satya Nadella says,
Microsoft Cloud Exceeded $27 Billion in Quarterly Revenue
- Revenue for Microsoft Cloud exceeded $27 billion in Q2 2023, up 22% and 29% in constant currency.
Innovation in Azure
- Enterprises have moved millions of calls to Azure with twice as many calls being run on the cloud today than two years ago.
- Azure Arc doubled its customers to more than 12,000, including Citrix, Northern Trust, and PayPal.
AI is the New Computing Platform
- Microsoft is leading in AI with the most powerful AI supercomputing infrastructure in the cloud being used by customers and partners like OpenAI to train state-of-the-art models and services.
- Azure ML revenue alone has increased more than 100% for five consecutive quarters with companies like AXA, FedEx, and H&R Block choosing the service to deploy, manage and govern their models.
Microsoft 365 and Teams
- Teams surpassed 280 million monthly active users in Q2 2023, showing durable momentum since the pandemic and is the market leader in cloud calling.
- Microsoft Viva has created a new market category for employee experience and organizational productivity.
- Windows 11 adoption continues to grow because of its differentiated security and productivity value proposition.
Security and LinkedIn
- Over the past 12 months, Microsoft’s security business surpassed $20 billion in revenue as the company helps customers protect their digital estate across clouds and endpoint platforms.
- LinkedIn once again saw record engagement among its more than 900 million members.
Q & A sessions,
Strong Renewal Rates and Suite Performance
- High renewal rates and good suite performance at renewal, leading to recapture.
- Challenges observed in standalone sales of new products.
- Strong E5 and ARPU growth consistency observed.
OpenAI Partnership
- Investing in AI as the next big platform wave.
- Working on building training supercomputers and inference infrastructure to transform Azure services for the core infrastructure business.
- Expected incorporation of AI in every layer of the stack, including productivity and consumer services.
- Commercial partnership with OpenAI to drive innovation and competitive differentiation in all Microsoft solutions.
No bad stock 