Microsoft Earnings Up 16 Percent in Quarter

Microsoft announced that it earned a net income of $24.7 billion on revenues of $65.6 billion in the quarter ending September 30, 2024. Those figures are 11 percent and 16 percent gains year-over-year (YOY), and the star this quarter was Microsoft Cloud, with revenues of $38.9 billion, up 22 percent YOY.

“AI-driven transformation is changing work, work artifacts, and workflow across every role, function, and business process,” Microsoft chairman and CEO Satya Nadella said. “We are expanding our opportunity and winning new customers as we help them apply our AI platforms and tools to drive new growth and operating leverage.”

There was a not-so-subtle shift this quarter, thanks to a recent accounting change in which Windows commercial revenues are now reported as part of Microsoft 365, which is part of the company’s Productivity and Business Processes top-level business unit. And the net result–pardon the pun–is that this business unit is for the first time ever Microsoft’s biggest, with $28.3 billion in revenues, a gain of 12 percent YOY.

Intelligence Cloud, previously Microsoft’s biggest business unit by revenues, is now in second place, with $24.1 billion in revenues, up 20 percent YOY. And More Personal Computing, deprived of those Windows commercial revenues, was again in third, with revenues of $13.2 billion, up 17 percent.

I’ll be writing a bigger analysis piece about the earnings soon, but a few things stand out immediately.

Xbox content and services revenue increased 61 percent YOY (53 percentage points attributable to Activision Blizzard, of course). But Xbox hardware revenues continue their nosedive, falling 29 percent YOY on the quarter.

Microsoft combined Windows and Device (Surface) revenues to help mask both sides of that, but revenue was up just 2 percent overall. There was “a decline” in Surface, however.

Azure growth, once the primary driver of the company’s market value, was 33 percent.

Microsoft 365 commercial products and cloud revenue was up 13 percent, Microsoft 365 commercial cloud revenue was up 15 percent, and Microsoft 365 commercial products revenue was up 2 percent. Microsoft 365 consumer products and cloud services revenue was up 5 percent. There are now 84.4 million consumer Microsoft 365 subscribers, up 10 percent YOY.

More soon.