Microsoft clocks $56.5Bn in revenue in Q1 FY24, Intelligent Cloud revenue up by 19%

The recently-ended quarter has seen a strong performance from tech titan Microsoft, if the company’s numbers are any indication. Its results for Q1 FY24 paints a strong picture of the Redmond-headquartered Microsoft, whose strategic investments in AI are clearly paying off. Cloud has been a big driver, even when rival Google Cloud is seeing a worrying slowness in its quarterly growth.

For the quarter ended September 2023, Microsoft reported earnings per share of $2.99, surpassing the anticipated $2.65, while the company’s revenue for the same period reached an impressive $56.52 billion, a substantial surplus over the estimated $54.50 billion. Its operating income rose by 25% to reach $26.9 billion, while its net income for the same period climbed by 27% to amount to $22.3 billion.

Speaking of Microsoft’s Productivity and Business Processes segment, this division posted a total revenue of $18.59 billion, which is a 13% increase. It comprises Microsoft 365 productivity app subscriptions, LinkedIn, and Dynamics enterprise software. Notably, Microsoft’s Teams communication app saw a significant surge in monthly active users, climbing from 300 million to over 320 million in just six months, while revenue from LinkedIn rose by 8%.

“With copilots, we are making the age of AI real for people and businesses everywhere,” said Satya Nadella, chairman and CEO of Microsoft. “We are rapidly infusing AI across every layer of the tech stack and for every role and business process to drive productivity gains for our customers.” “Consistent execution by our sales teams and partners drove a strong start to the fiscal year with Microsoft Cloud revenue of $31.8 billion, up 24% (up 23% in constant currency) year-over-year,” said Amy Hood, Executive VP and CFO of Microsoft. Going forward, Microsoft expects its revenue for the fiscal second quarter to range between $60.4-61.4 billion.

Furthermore, its More Personal Computing segment generated $13.67 billion in revenue, reflecting a 3% increase (2% in constant currency). Key highlights include growth in Windows revenue, an 8% growth in Windows commercial products and cloud services revenue, a 13% increase in Xbox content and services revenue, and a drop of 7% in Xbox hardware revenue. Despite facing challenges such as fluctuations in the PC market, Microsoft’s effective management and ability to meet consumer and enterprise technology needs have kept this segment on a growth trajectory.

Within Microsoft’s Intelligent Cloud segment, the company reported $24.26 billion in revenue, reflecting an impressive 19% increase. This category encompasses a range of services, including the Azure public cloud, SQL Server, Windows Server, Visual Studio, Nuance, GitHub, and enterprise services. Azure alone experienced a remarkable 29% increase in revenue, surpassing the 26% consensus among analysts.

The Azure AI services, including machine learning, bot, and cognitive services, were instrumental in driving a substantial portion of Azure’s 29% revenue growth. Over 18,000 organizations have now adopted the Azure OpenAI Service, said Microsoft. This not only contributes to financial gains but also solidifies Microsoft’s position in the rapidly growing AI market. Microsoft’s commitment to AI-driven solutions, including the $10 billion investment in OpenAI, is also driving substantial growth. The Azure OpenAI Service, along with other AI-focused endeavors, has resulted in impressive financial gains.