Microsoft Reports Blockbuster Quarter, Blockbuster Year

Microsoft delivered another blockbuster quarter, capping off the final quarter of its fiscal year with a net income of $20.1 billion on revenues of $56.2 billion. Those figures represent year-over-year (YOY) gains of 20 percent and 8 percent, respectively.

The software giant’s fiscal 2023 saw a total net income of $72.4 billion on revenues of $211.9 billion, with gains of 11 percent and 7 percent, respectively.

“Organizations are asking not only how—but how fast—they can apply this next generation of AI to address the biggest opportunities and challenges they face—safely and responsibly,” Microsoft CEO Satya Nadella said. “We remain focused on leading the new AI platform shift, helping customers use the Microsoft Cloud to get the most value out of their digital spend, and driving operating leverage.”

And that, folks, is the only time that “AI” is mentioned in this earnings announcement: despite the astronomical costs associated with AI, Microsoft did not directly call out how this impacted its earnings this past quarter.

Intelligent Cloud was again Microsoft’s biggest business unit, delivering $24 billion in revenues (up 15 percent YOY) on the strength of server and cloud services revenue growth of 17 percent. Azure and other cloud services grew 26 percent YOY, and Enterprise Mobility saw its installed base grow by 11 percent to over 256 million seats.

Productivity and Business Processes was Microsoft’s second-biggest business, with $18.3 billion in revenues, a gain of 10 percent YOY. Here, Microsoft reported that Office commercial revenue was up 12 percent, Office 365 commercial revenues were up 15 percent, and Office consumer revenues were up 3 percent. Microsoft 365 consumer subscribers grew 12 percent to 67 million customers.

More Personal Computing once again brought up the rear, with $13.9 billion in revenues, a decline of 4 percent YOY. Windows revenues from PC makers declined 12 percent. Surface (and HoloLens, but really just Surface) revenues were down 20 percent YOY, as that product line continues to struggle. Gaming revenue overall was up 1 percent, with Xbox hardware revenues down 13 percent YOY and Xbox content and services revenues up 5 percent, “driven by growth in third-party content and Xbox Game Pass.”

I’m sure that analysts and the press will ask about the impact of AI on Microsoft’s financials during the post-earnings conference call, so I’ll check back in tomorrow and see if there’s more to report.