10-QPeriod: Q3 FY2024

MICROSOFT CORP Quarterly Report for Q3 Ended Mar 31, 2024

Filed April 25, 2024For Securities:MSFT

Summary

Microsoft Corporation reported strong financial results for the third quarter and the first nine months of fiscal year 2024, demonstrating robust revenue and profit growth. Total revenue for the quarter ending March 31, 2024, rose 17% year-over-year to $61.9 billion, driven by broad-based strength across all segments: Intelligent Cloud, Productivity and Business Processes, and More Personal Computing. Net income for the quarter increased 20% to $21.9 billion, or $2.94 per diluted share, reflecting effective cost management and strong operational performance, particularly in cloud services. The acquisition of Activision Blizzard continues to be integrated, significantly boosting the Gaming segment's revenue. The company highlighted continued growth in its Microsoft Cloud offerings, with revenue up 23% to $35.1 billion, underscoring its strategic focus on cloud and AI. Looking ahead, Microsoft maintains a strong liquidity position and continues to invest in AI infrastructure and innovation, signaling confidence in future growth drivers. The company's commitment to returning capital to shareholders through dividends and share repurchases remains a key aspect of its capital allocation strategy.

Financial Highlights

53 data points
Beta

Revenue

$61.86B

70.1% Gross Margin

Net Income

$21.94B

35.5% Net Margin

EPS (Diluted)

$2.94

Total Assets

$484.27B

Cash & Equivalents

$19.63B

Free Cash Flow

$20.96B

Financial Statements
Beta
Revenue$61.86B
Cost of Revenue$18.50B
Gross Profit$43.35B
R&D Expenses$7.65B
Operating Income$27.58B
Interest Expense$800.00M
Net Income$21.94B
EPS (Basic)$2.95
EPS (Diluted)$2.94
Shares Outstanding (Basic)7.43B
Shares Outstanding (Diluted)7.47B

Key Highlights

  • 1Total revenue for the three months ended March 31, 2024, increased 17% to $61.9 billion compared to the prior year quarter.
  • 2Net income for the quarter grew 20% to $21.9 billion, resulting in diluted earnings per share of $2.94, up 20% year-over-year.
  • 3Microsoft Cloud revenue surged 23% to $35.1 billion, driven by strong performance in Azure and other cloud services which grew 31%.
  • 4The acquisition of Activision Blizzard significantly impacted the 'More Personal Computing' segment, contributing substantially to the 51% revenue growth in Gaming.
  • 5Operating income increased by 23% to $27.6 billion, showcasing improved profitability across segments.
  • 6The company returned $8.4 billion to shareholders in the third quarter of fiscal year 2024 through share repurchases and dividends.
  • 7Research and development expenses increased by 10% to $7.7 billion, reflecting continued investment in innovation, particularly in Gaming and AI.

Frequently Asked Questions

Revenue growth was driven by strong performance across all segments. Intelligent Cloud saw significant growth from Azure and other cloud services (up 31%). Productivity and Business Processes benefited from Office 365 Commercial growth (up 15%). The More Personal Computing segment experienced a substantial boost in Gaming revenue (up 51%) due to the Activision Blizzard acquisition, alongside solid growth in Windows OEM and Commercial.

The acquisition of Activision Blizzard, completed in October 2023, has significantly contributed to the revenue growth in the 'More Personal Computing' segment, particularly within the Gaming category. This integration is reflected in increased revenue and operating expenses for that segment, as well as a higher contribution to research and development and sales and marketing expenses.

Microsoft is making substantial investments in AI infrastructure and innovation. The company explicitly mentions scaling its AI infrastructure as a factor in its gross margin performance for Azure and Office 365 Commercial. This indicates AI is a core strategic priority and a significant area for future investment and growth.

Microsoft maintained a strong liquidity position with $80.0 billion in cash, cash equivalents, and short-term investments as of March 31, 2024. The company returned $8.4 billion to shareholders in the third quarter through share repurchases and dividends, signaling a continued commitment to capital return.