10-QPeriod: Q2 FY2024

MICROSOFT CORP Quarterly Report for Q2 Ended Dec 31, 2023

Filed January 30, 2024For Securities:MSFT

Summary

Microsoft Corporation reported strong financial results for the second quarter of fiscal year 2024, ending December 30, 2023. Total revenue grew 18% year-over-year to $62.02 billion, driven by robust performance across all segments. The Intelligent Cloud segment saw a significant 20% revenue increase, largely fueled by Azure and other cloud services growing 30%. The Productivity and Business Processes segment also performed well, with a 13% revenue increase driven by Office 365 Commercial. The More Personal Computing segment showed a 19% revenue increase, significantly boosted by the gaming division, which included the impact of the Activision Blizzard acquisition. Net income for the quarter rose by 33% to $21.87 billion, translating to diluted earnings per share of $2.93, a 33% increase. This strong performance reflects Microsoft's continued success in its cloud transition and strategic acquisitions. The company highlighted significant investments in AI infrastructure and the ongoing integration of Activision Blizzard, which is expected to drive future growth.

Financial Highlights

53 data points
Beta

Revenue

$62.02B

68.4% Gross Margin

Net Income

$21.87B

35.3% Net Margin

EPS (Diluted)

$2.93

Total Assets

$470.56B

Cash & Equivalents

$17.30B

Free Cash Flow

$9.12B

Financial Statements
Beta
Revenue$62.02B
Cost of Revenue$19.62B
Gross Profit$42.40B
R&D Expenses$7.14B
Operating Income$27.03B
Interest Expense$909.00M
Net Income$21.87B
EPS (Basic)$2.94
EPS (Diluted)$2.93
Shares Outstanding (Basic)7.43B
Shares Outstanding (Diluted)7.47B

Key Highlights

  • 1Total revenue increased 18% to $62.02 billion, exceeding analyst expectations.
  • 2Intelligent Cloud revenue grew 20% to $25.88 billion, with Azure and other cloud services up 30%.
  • 3Productivity and Business Processes revenue rose 13% to $19.25 billion, driven by Office 365 Commercial growth.
  • 4More Personal Computing revenue increased 19% to $16.89 billion, significantly boosted by gaming following the Activision Blizzard acquisition.
  • 5Net income surged 33% to $21.87 billion, demonstrating strong profitability.
  • 6Diluted Earnings Per Share (EPS) grew 33% to $2.93.
  • 7Microsoft Cloud revenue increased 24% to $33.7 billion, underscoring the success of its cloud strategy.

Frequently Asked Questions

Microsoft's total revenue for the quarter ended December 30, 2023, was $62.02 billion, an increase of 18% compared to $52.75 billion in the same period last year.

The acquisition of Activision Blizzard, completed on October 13, 2023, significantly impacted the More Personal Computing segment. Xbox content and services revenue increased by 61%, with the acquisition contributing 55 percentage points to this growth. The financial results of Activision Blizzard are included in Microsoft's consolidated statements from the acquisition date.

Microsoft Cloud revenue grew 24% to $33.7 billion for the quarter. Specifically, Azure and other cloud services revenue increased by 30%, demonstrating strong demand for Microsoft's cloud infrastructure and services.

The company is making significant investments in AI infrastructure to support the growing demand for AI services. This investment is noted as a factor that may temper the gross margin percentage in the short term, but is expected to drive future growth.