• Microsoft’s fiscal third-quarter results exceeded estimates on the top and bottom lines, with revenue growing 17% year-over-year.
• The Intelligent Cloud segment, including Azure, saw revenue growth of 21%, with Azure and other cloud services growing 31%.
• The Productivity and Business Processes segment grew 12%, while the More Personal Computing segment, including Windows, Surface, and Xbox, grew 18%, boosted by the Activision Blizzard acquisition.
Microsoft beat revenue and earnings expectations in its fiscal third quarter results, driven by strong growth in its cloud computing business.
Financial Results Exceed Estimates
- Earnings per share were $2.94 vs $2.82 expected
- Revenue was $61.86 billion vs $60.80 billion expected
- Total revenue grew 17% year-over-year
- Net income was $21.94 billion or $2.94 per share, up from $18.30 billion or $2.45 per share a year ago
Cloud Business Drives Growth
- Revenue from Intelligent Cloud segment was $26.71 billion, up 21% and exceeding expectations
- Azure and other cloud revenue grew 31% compared to 30% last quarter
- 7 percentage points of Azure growth were related to artificial intelligence
- Microsoft provides cloud services for ChatGPT and companies are adopting Azure AI services
Productivity Segment Grows Steadily
- Revenue from Productivity and Business Processes was $19.57 billion, up around 12%
- Segment contains Office, LinkedIn, Dynamics, and Copilot
- Copilot is a new AI add-on for Microsoft 365 subscriptions
More Personal Computing Up on Xbox and Windows
- Revenue from More Personal Computing was $15.58 billion, up around 18%
- Segment includes Windows, Surface, Xbox, and search
- Xbox content revenue up 62% due to Activision Blizzard acquisition
- Windows revenue up 11% as PC shipments increased
Outlook
- Microsoft continues to accelerate investment in AI capabilities
- Hired DeepMind co-founder to run new Microsoft AI group
- Surface PCs now have quick access to Copilot chatbot
- Copilot subscriptions now available for small businesses
- Microsoft stock up 6% so far this year, in line with S&P 500
