What you need to know
- Microsoft just released its earnings for Q4 2023.
- The company brought in $56.2 billion in the quarter, which is an increase of 18%.
- Net income increased 20% to $20.1 billion.
Microsoft just released its earnings report for FY23 Q4 (period ending June 2023). With a company as large as Microsoft, divisions trend up and down separately, but the general consensus is that this was a good quarter for Microsoft.
- Surface and Windows revenue down 20%
- Xbox revenue increases year-over-year
- Microsoft 365 Copilot costs how much?!
The company's More Personal Computing division, which includes Surface, Windows, Xbox, and Bing, was $13.9 billion. That's a decrease of 4% overall but the division had a mix of ups and downs. Windows OEM revenue and devices revenue was down (12% and 20%, respectively) but Windows Commercial products and cloud services increased revenue by 2%. Xbox content and services increased its revenue by 5%.
Microsoft's search and news advertising revenue went up 8% (excluding traffic acquisitions).
Here are the highlights shared by Microsoft:
- Revenue was $56.2 billion and increased 8% (up 10% in constant currency)
- Operating income was $24.3 billion and increased 18% (up 21% in constant currency)
- Net income was $20.1 billion and increased 20% (up 23% in constant currency)
- Diluted earnings per share was $2.69 and increased 21% (up 23% in constant currency)
Generally speaking, it's more important to see how Microsoft did compared to estimates than focus on the raw numbers. In that category, Microsoft did stupendously. The $56.2 billion the company earned in revenue beat the estimate of $55.5 billion set by experts.
Microsoft also set financial records, including its highest gross sales and net income to date.
Forbes highlighted that Microsoft's $2.6 trillion market cap today made the company the second-most valuable in the world.
As it was the final quarter of the fiscal year, Microsoft also shared Fiscal Year 2023 results:
- Revenue was $211.9 billion and increased 7% (up 11% in constant currency)
- Operating income was $88.5 billion GAAP and increased 6%, and $89.7 billion non-GAAP and increased 8% (up 14% in constant currency)
- Net income was $72.4 billion GAAP and decreased slightly, and $73.3 billion non-GAAP and increased 6% (up 11% in constant currency)
- Diluted earnings per share was $9.68 GAAP and increased slightly, and $9.81 non-GAAP and increased 7% (up 12% in constant currency)
- GAAP results include the Q2 charge, a $1.2 billion negative impact to operating income, explained in the Non-GAAP Definition section below
Windows Central take
Microsoft's earnings report from January 2023 saw the company's More Personal Computing segment down 19% year-over-year. That dip was largely due to the drop in the PC market, as Microsoft's More Personal Computing Division includes Surface, Windows, Xbox, and Bing. While Microsoft saw another drop in Surface sales, there's plenty of good news for the company.
With interest in AI up, and Microsoft at the center of the surge of artificial intelligence, the tech giant's numbers are up. Stock increased 21% and revenue also increased.
“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,” said Microsoft CEO Satya Nadella.
“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.”
Microsoft invested billions of dollars into OpenAI earlier this year and has been on a mission to infuse artificial intelligence with all of its products. Windows, Office, Bing, and GitHub have all received AI features this year. The question is whether these investments will pay off financially.
Experts and the stock market certainly suggest that Microsoft will capitalize on interest in AI. The tech giant's value has increased $800 billion this year.
Microsoft only announced the price of Microsoft 365 Copilot last week. That news sent stocks soaring, but we'll have to see if that momentum carries throughout this quarter.
