On July 30, 2024, Microsoft Corp (MSFT, Financial) released its 8-K filing for the quarter ended June 30, 2024. The company reported impressive financial results, surpassing analyst estimates for both revenue and earnings per share (EPS).
Company Overview
Microsoft develops and licenses consumer and enterprise software. It is known for its Windows operating systems and Office productivity suite. The company is organized into three equally sized broad segments: productivity and business processes (legacy Microsoft Office, cloud-based Office 365, Exchange, SharePoint, Skype, LinkedIn, Dynamics), intelligence cloud (infrastructure- and platform-as-a-service offerings Azure, Windows Server OS, SQL Server), and more personal computing (Windows Client, Xbox, Bing search, display advertising, and Surface laptops, tablets, and desktops).
Quarterly Performance Highlights
For the fourth quarter of fiscal year 2024, Microsoft Corp reported:
- Revenue of $64.7 billion, a 15% increase year-over-year (16% in constant currency), surpassing the estimated $64.36 billion.
- Operating income of $27.9 billion, up 15% year-over-year (16% in constant currency).
- Net income of $22.0 billion, a 10% increase year-over-year (11% in constant currency).
- Diluted earnings per share (EPS) of $2.95, exceeding the estimated $2.92 and marking a 10% increase year-over-year (11% in constant currency).
Segment Performance
Microsoft's performance across its key segments was robust:
- Productivity and Business Processes: Revenue was $20.3 billion, up 11% year-over-year (12% in constant currency). This growth was driven by a 13% increase in Office 365 Commercial revenue and a 19% rise in Dynamics 365 revenue.
- Intelligent Cloud: Revenue reached $28.5 billion, a 19% increase year-over-year (20% in constant currency), with Azure and other cloud services revenue growing by 29%.
- More Personal Computing: Revenue was $15.9 billion, up 14% year-over-year (15% in constant currency). Notably, Xbox content and services revenue surged by 61%, largely due to the Activision acquisition.
Annual Performance Highlights
For the fiscal year ended June 30, 2024, Microsoft Corp reported:
- Revenue of $245.1 billion, a 16% increase year-over-year (15% in constant currency).
- Operating income of $109.4 billion, up 24% year-over-year (22% non-GAAP, 21% in constant currency).
- Net income of $88.1 billion, a 22% increase year-over-year (20% non-GAAP).
- Diluted EPS of $11.80, up 22% year-over-year (20% non-GAAP).
Financial Metrics and Analysis
Key financial metrics from the income statement, balance sheet, and cash flow statement highlight Microsoft's strong financial health:
- Gross Margin: $45.0 billion for Q4, up from $39.4 billion in the same period last year.
- Research and Development: $8.1 billion for Q4, reflecting continued investment in innovation.
- Shareholder Returns: Microsoft returned $8.4 billion to shareholders through share repurchases and dividends in Q4.
Commentary
"Our strong performance this fiscal year speaks both to our innovation and to the trust customers continue to place in Microsoft," said Satya Nadella, chairman and chief executive officer of Microsoft. "As a platform company, we are focused on meeting the mission-critical needs of our customers across our at-scale platforms today, while also ensuring we lead the AI era."
"We closed out our fiscal year with a solid quarter, highlighted by record bookings and Microsoft Cloud quarterly revenue of $36.8 billion, up 21% year-over-year," said Amy Hood, executive vice president and chief financial officer of Microsoft.
Conclusion
Microsoft Corp's strong financial performance in Q4 and the fiscal year 2024 underscores its robust market position and growth potential, particularly in cloud services. The company's ability to exceed analyst estimates for both revenue and EPS highlights its operational efficiency and strategic focus on high-growth areas like cloud computing and AI.
Explore the complete 8-K earnings release (here) from Microsoft Corp for further details.
