Earnings Results
- Microsoft’s Fiscal Year 2024 Third Quarter revenue was $61.9 billion, up 17% year-over-year.
- Earnings per share (EPS) were $2.94, showing a 20% increase from the previous year.
- Microsoft Cloud drove the quarter’s success, with revenue surpassing $35 billion, up 23%.
- Azure’s revenue growth was substantial at 31%, with significant contributions from AI services.
- Activision contributed a net impact of approximately 4 points to revenue growth but was a 2-point drag on operating income growth and had a negative $0.04 impact on EPS.
- LinkedIn, Bing, and Teams showed strong performance, with LinkedIn revenue up 10%, Bing reaching over 140 million daily active users, and Teams usage growing year-over-year.
- The company achieved record third-quarter game streaming hours, console usage, and monthly active devices, driven by new additions such as Diablo 4 to the Game Pass service.
- Total capital expenditures, including finance leases, were $14 billion, primarily to support cloud demand and scale AI infrastructure.
- Cash flow from operations was $31.9 billion, up 31%, with free cash flow of $21 billion, up 18% year-over-year.
Future Guidance
- Microsoft projects continued double-digit growth in revenue and EPS, driven by cloud and AI innovations.
- Investments in AI infrastructure are expected to continue to support Azure’s growth and innovation across Microsoft’s cloud services.
- The company emphasizes security as a top priority, focusing on protecting against cybersecurity threats across all layers of the tech stack.
- Further innovation and new capabilities in Microsoft 365, Dynamics 365, and consumer services like Bing and LinkedIn are anticipated to drive user engagement and revenue growth.
- Expansion in gaming through new titles, platform enhancements, and broadening availability on devices including PC, console, and mobile.
- Continued strategic acquisitions, partnerships, and investments, particularly in AI, cloud services, and gaming sectors, are expected to contribute to future growth.
The Microsoft Fiscal Year 2024 Third Quarter Earnings Report highlighted a period of significant growth and strategic advancements, underscored by a robust performance in its cloud and AI segments. The company experienced a 17% year-over-year increase in revenue and a 20% rise in earnings per share, demonstrating strong financial health. The results were fundamentally powered by Microsoft Cloud, which saw a 23% revenue increase, thanks in part to Azure’s market share gains and the integration of AI services. Additionally, the report emphasized continued innovation across the product spectrum—from Azure, Dynamics 365, and Microsoft 365 to consumer-focused platforms like Bing and LinkedIn—which has helped secure and expand Microsoft’s competitive edge in the technology market. The acquisition of Activision Blizzard also played a notable role in the quarter’s achievements, contributing to revenue growth, despite having a slight negative impact on operating income and EPS. Importantly, Microsoft’s commitment to security as a foundational pillar of its offerings was highlighted, addressing the growing importance of cybersecurity across the tech industry. These results and strategic focuses are set against the backdrop of evolving market conditions, where economic uncertainties persist, yet demand for cloud and AI solutions continues to rise. The overall sentiment conveyed in the earnings report is one of optimism and confidence in Microsoft’s direction, especially regarding its AI and cloud-based strategies, signaling strong future growth potential.
Notable Quotes
- ”It was a record third quarter powered by the continued strength of Microsoft Cloud, which surpassed $35 billion in revenue, up 23%.” - Satya Nadella
- ”More than 65% of the Fortune 500 now use Azure OpenAI service.” - Satya Nadella
- ”We are committed to meeting players where they are by bringing great games to more people on more devices.” - Satya Nadella
- ”Our third-quarter results exceeded expectations, and we delivered another quarter of double-digit top and bottom line growth with continued share gains across many of our businesses.” - Amy Hood
- ”Security underpins every layer of the tech stack and it’s our #1 priority.” - Satya Nadella
- ”With Copilot, we have an opportunity to create an entirely new category of devices, purpose-built for this new generation of AI.” - Satya Nadella