Vole issued quarterly revenue guidance that slightly fell short of what the cocaine nose jobs of Wall Street expected and some analysts are expecting to hear of cuts and lay offs to keep the company trim.
On a conference call with analysts, Amy Hood, Microsoft’s finance chief, called for $53.8 billion to $54.8 billion in fiscal first-quarter revenue. The middle of that range, at $54.30 billion, implies eight percent growth, and falls short of the $54.94 billion consensus among analysts polled by Refinitiv.
The operating segment featuring the Windows operating system came up short, with Hood seeing $12.5 billion to $12.9 billion in revenue, below the $13.22 billion analysts expected.
According to a statement, revenue rose eight per cent year over year in the fiscal fourth quarter, which ended on June 30. Growth has come in under ten per cent for three consecutive quarters for the first time since 2017. Net income totalled $20.08 billion, up from $16.74 billion, or $2.23 per share, in the year-ago quarter.
Microsoft’s Intelligent Cloud segment contributed $23.99 billion in revenue, up 15 per cent and above the $23.79 billion consensus of analysts surveyed by StreetAccount. The unit comprises the Azure public cloud, SQL Server, Windows Server, Visual Studio, Nuance, GitHub and enterprise services.
Azure revenue grew 26 per cent during the quarter, faster than the 27 per cent growth in the previous quarter and 40 per cent in the year-ago quarter. Analysts polled by CNBC and by StreetAccount had expected 25% growth from Azure, which competes with Amazon
Microsoft doesn’t report quarterly Azure revenue in dollars. But on a conference call with analysts, Microsoft CEO Satya Nadella said “Microsoft Cloud surpassed $110 billion in annual revenue, up 27 per cent in constant currency, with Azure all up accounting for more than half of the total for the first time.”
“As expected in Azure, we saw a continuation of the optimisation and new workload trends from the prior quarter,” Hood said on the call.
With the more careful cloud spending, the three prominent US cloud providers have trimmed their own expenses.
For the first time since 2016, Microsoft’s research and development costs declined year over year. In May, Nadella told employees the company won’t lift salaries this year. And on July 10, he issued a memo about a fresh round of job cuts separate from the round of layoffs affecting 10,000 workers that kicked off in January.
Microsoft’s productivity and business processes segment, which contains Office, LinkedIn and Dynamics delivered $18.29 billion in revenue, up 10 per cent and more than the StreetAccount consensus of $18.06 billion.
The More Personal Computing segment, which contains Windows, devices, gaming and search advertising, posted $13.91 billion in revenue. The division declined four per cent year over year, yet it still topped the $13.58 billion StreetAccount consensus.
Sales of Windows licenses to device makers decreased by 12 per cent, better than management had expected, Hood said. Consumers and companies rushed to buy PCs after the onset of Covid, making comparisons difficult for the past year. Technology industry researcher Gartner estimated that PC shipments, including Apple’s
Investors are eager for a resolution in Microsoft’s arrangement to buy Activision Blizzard for almost $69 billion, which was agreed upon in January 2022. Earlier this month, an appeals court denied the Federal Trade Commission’s motion to stop the transaction. Activision shares have climbed past $92.50, close to the $95 that Microsoft agreed to pay, reflecting optimism that the deal will close.
Microsoft’s Azure OpenAI Service that companies can use to access language models and other developer tools now has over 11,000 customers, up from over 4,500 in May, Nadella said.
Hood said that as Microsoft invests to meet rising demand for AI services, the company should see the impact of higher revenue in the second half of the 2024 fiscal year rather than the first half.
“Even with strong demand and a leadership position, growth from our AI services will be gradual as Azure AI scales and our Copilots reach general availability dates,” she said. Microsoft has not said when the Copilot assistant for its Microsoft 365 productivity applications will become available for any customer to buy. Those capabilities will cost $30 per person per month in addition to existing subscriptions to Microsoft 365, the company said last week.
Microsoft shares have gained 46 per cent this year.