- Annual Revenue: More than $245 billion, up 15% year over year.
- Microsoft Cloud Revenue: Surpassed $135 billion, up 23% year over year.
- Q4 Revenue: $64.7 billion, up 15% year over year.
- Earnings Per Share (EPS): $2.95, increased 10% year over year.
- Commercial Bookings: Increased 17% year over year.
- Commercial Remaining Performance Obligation: $269 billion, up 20% year over year.
- Microsoft Cloud Gross Margin: 69%, decreased roughly 2 points year over year.
- Operating Income: Increased 15% year over year.
- Productivity and Business Processes Revenue: $20.3 billion, grew 11% year over year.
- Office 365 Commercial Revenue: Increased 13% year over year.
- Office Consumer Revenue: Increased 3% year over year.
- LinkedIn Revenue: Increased 10% year over year.
- Dynamics Revenue: Grew 16% year over year.
- Intelligent Cloud Revenue: $28.5 billion, increased 19% year over year.
- Azure and Other Cloud Services Revenue: Grew 29% year over year.
- More Personal Computing Revenue: $15.9 billion, increased 14% year over year.
- Windows OEM Revenue: Increased 4% year over year.
- Xbox Content and Services Revenue: Increased 61% year over year.
- Capital Expenditures: $19 billion for the quarter.
- Cash Flow from Operations: $37.2 billion, up 29% year over year.
- Free Cash Flow: $23.3 billion, up 18% year over year.
- Return to Shareholders: $8.4 billion through dividends and share repurchases.
Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Microsoft Corp (MSFT, Financial) reported annual revenue of over $245 billion, up 15% year over year.
- Microsoft Cloud revenue surpassed $135 billion, up 23% year over year.
- Azure AI customer base grew nearly 60% year over year, with over 60,000 customers.
- GitHub Copilot adoption increased by 180% year over year, contributing significantly to GitHub's $2 billion annual revenue run rate.
- LinkedIn saw accelerated member growth and record engagement, with premium sign-ups increasing by 51% this fiscal year.
Negative Points
- Azure growth was slightly lower than expected in some European regions due to economic softness.
- Operating expenses increased by 13%, partly due to the Activision acquisition.
- Microsoft Cloud gross margin percentage decreased by roughly 2 points year over year.
- Xbox hardware revenue decreased by 42%, reflecting challenges in the gaming hardware market.
- Capacity constraints in AI and Azure are expected to persist into the first half of the next fiscal year.
Q & A Highlights
Q: Right now, there's an industry debate ranging around the CapEx requirements around generative AI and whether the monetization is actually going to match with that. Is CapEx still an appropriate leading indicator for cloud growth?
A: Satya Nadella (CEO): We primarily start from the demand side, focusing on the product portfolio and customer value. The capital spend is driven by demand signals, with a significant portion allocated to long-term assets like data centers. Amy Hood (CFO): Half of our capital expenditure is for long-term infrastructure, which is flexible and can be adjusted based on demand signals.
Q: GenAI has been a bit of a roller coaster of a tech over the last year. How should we think about what it's going to take for GenAI to become more real across the industry and for it to become more visible within your SaaS offerings?
A: Satya Nadella (CEO): GenAI is translating into growth for our M365 SaaS offering, with Copilot showing faster growth than previous software generations. Customers are returning to buy more seats, and Dynamics is gaining share with GenAI built-in. Azure AI is also seeing strong growth, with 50% of users also using data meters.
Q: With Azure demand greater than available capacity, can you talk about both the near-term and long-term strategy around the AI partnerships that you're signing with the likes of Oracle and Cohere?
A: Amy Hood (CFO): We are constrained on AI capacity and have signed partnerships to extend the Azure platform. Satya Nadella (CEO): These partnerships are similar to leases and help us efficiently manage capacity constraints.
Q: With a couple of quarters of Copilot for M365 availability under your belt now, how are you assessing the capability of Copilot to replicate the productivity gains seen in developers for the broader population of knowledge workers?
A: Satya Nadella (CEO): The design system used in GitHub Copilot is being replicated in M365 Copilot, driving productivity across various functions like sales, marketing, and customer service. Copilot extensions are becoming the new line of business applications.
Q: How should investors think about the longer-term growth potential in gaming, especially with the significant investments, including the Activision deal?
A: Satya Nadella (CEO): Our investment in gaming aims to cover all platforms where people play games, including console, PC, and mobile. We are also expanding to new platforms like Amazon TV. Amy Hood (CFO): The goal is to build a software annuity and subscription business with enhanced transactions and IP ownership.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
