Aided by a successful cut in spending, after the market closed on Tuesday, Microsoft Corporation (Nasdaq: MSFT) reported better-than-anticipated fiscal 2024 first-quarter earnings and revenues. The company also issued a robust revenue outlook for the current quarter. The stock closed yesterday’s trading session at $330.53, up $1.21, or 0.37%, from the prior close. A big market response is anticipated in Wednesday’s trading session.
The Redmond, Washington-based company reported fiscal 2024 first quarter revenues of $56.52 billion, up 12.80% from $50.12 billion in the similar quarter of fiscal 2023.
For the first quarter, which ended September 30, 2023, Microsoft posted earnings of $22.29 billion, or $2.99 per share, compared with $17.56 billion, or $2.35 per share, in the quarter ended September 30, 2022.
Analysts surveyed by Refinitiv had anticipated the company to report earnings of $2.65 per share on revenues of $54.50 billion.
Commenting on the stunning quarterly results, Amy Hood, executive vice president and CFO of Microsoft, stated “Consistent execution by our sales teams and partners drove a strong start to the fiscal year…”
Segment wise:
- Microsoft’s Intelligent Cloud, which includes Windows Server, Nuance, Azure public cloud, Visual Studio, SQL Server, GitHub, and enterprise services, recorded revenues of $24.26 billion, an increase of 19% from last year. The reported figure surpassed StreetAccount forecasts of $23.49 billion.
- Specifically, Azure revenues surged 29% year-on-year and surpassed StreetAccount forecasts of 26% annual growth. Microsoft does not report the exact dollar revenue of Azure. Interestingly, the CFO disclosed that 3% of Azure’s quarterly growth was contributed by AI, up from 2% in the previous three months.
- Hood projected second-quarter Azure revenue growth to be in the range of 26% to 27%, with AI fueling the increase. Furthermore, the CFO expects Microsoft to record similar growth in the second half of fiscal 2024. The company also revealed the Azure OpenAI Service had 18,000 clients at the end of the September quarter, an increase from 11,000 clients in July. The growth was led by an increase in capacity for graphics processing units.
- Productivity and Business Processes, which includes Microsoft 365 productivity app subscriptions, LinkedIn, and Dynamics enterprise software, reported a 13% y-o-y rise in revenues to $18.59 billion and exceeded StreetAccount’s estimates of $18.19 billion. Notably, as per Microsoft, the Teams communication app currently has over 320 million monthly active users, an increase from 300 million six months ago.
- Personal Computing, which encompasses Xbox, Windows, Surface, and Bing, posted revenues of $13.67 billion, up 3% from last year and higher than StreetAccount consensus of $12.85 billion.
Looking ahead, Hood stated that Microsoft expects 2Q 2024 revenues in the range of between $60.40 billion and $61.40 billion, translating to a 15% y-o-y growth. Wall Street analysts currently expect the company to report $60.90 billion for the current quarter.
The historical price chart indicates that the stock of Microsoft is consolidating at the $330 level. The stock is also trading above its 50-day moving average, while the stochastic indicator is in the bullish zone. The next resistance is anticipated to be only near $345. Therefore, the stock is expected to rally after gaining momentum in the days ahead.
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