Microsoft (MSFT) Q4 2024 Earnings Report

Microsoft The company’s shares fell as much as 7% in after-hours trading Tuesday as investors looked past better-than-expected earnings and revenue to focus instead on disappointing cloud results. But executives’ forecast for accelerated cloud growth in the first half of 2025 offered a glimmer of optimism.

Compared to the London Stock Exchange consensus, the company has performed as follows:

• Earnings per share: $2.95, expected $2.93
• income: $64.73 billion, higher than the expected $64.39 billion

According to Microsoft’s financial report, Microsoft’s revenue in the fourth quarter ending June 30 increased 15% year-on-year. statement. Net income was $22.04 billion, up from $20.08 billion, or $2.69 per share, in the year-ago period.

In terms of performance guidance, Microsoft expects first-quarter revenue to be between $63.8 billion and $64.8 billion, which means a growth rate of 13.8%, which is in the middle of the range. Analysts surveyed by LSEG expected revenue of $65.24 billion. The forecast includes operating expenses of $15.25 billion, which is in the middle of the range and lower than StreetAccount’s expectation of $16.1 billion.

The company’s main business unit, Intelligent Cloud, generated $28.52 billion in revenue. It includes the Azure public cloud, Windows Server, Nuance and GitHub. Total revenue grew about 19%, below the $28.68 billion forecast by analysts polled by StreetAccount. Microsoft CEO Satya Nadella said on a call with analysts that GitHub’s revenue is now growing at an annual rate of more than $2 billion.

Revenue from Azure and other cloud services grew 29% in the quarter. Analysts polled by CNBC and StreetAccount expected growth of 31%. Microsoft hasn’t missed Azure estimates since 2022. Microsoft doesn’t disclose revenue in dollars for the category.

Last week’s Google Parents letter said revenue from its cloud business, which includes Workspace productivity software and Google Cloud Platform infrastructure, grew about 29%.

Microsoft’s cloud computing unit is particularly important to Wall Street because the company is working with Amazon Web Services and Google provide AI workloads. As generative AI models develop rapidly, all three companies are investing heavily in improving their AI capabilities and trying to attract startups and large companies. For Amazon, AWS has been an important source of profit for a decade.

Microsoft said that of the 29% growth in Azure and other cloud services, 8 percentage points came from AI services.

“This year, our market share gains have accelerated, driven by AI,” Nadella said. But Microsoft Chief Financial Officer Amy Hood said demand for Azure AI services remains higher than available capacity. The company noted the trend In AprilShe said Azure’s growth in parts of Europe was slightly below expectations in June.

Hood said Microsoft expects Azure revenue to grow 28% to 29% in constant currency in the first quarter and faster in the second quarter. Analysts polled by StreetAccount expect Azure revenue to grow 30.6% in the second quarter.

The Productivity and Business Processes segment, which includes Office software and LinkedIn, generated $20.32 billion in revenue. That figure was up 11% and above StreetAccount’s consensus of $20.13 billion.

Microsoft’s More Personal Computing division, which includes the Windows operating system, games, devices and search advertising, contributed $15.9 billion in revenue. The result was up 14% and above StreetAccount’s estimate of $15.49 billion.

The results benefited from the stability of the PC market. Sales of Windows licenses to device manufacturers increased by 4%. Technology industry research firm Gartner estimated that PC shipments grew 1.9% in the fourth quarter, up from 0.9% in the previous quarter.

In the gaming space, Microsoft currently has more than 500 million monthly active users across various consoles, PCs, and mobile devices, a feat achieved following its acquisition of Activision Blizzard. closure Nadella said in October.

In the fourth quarter, Microsoft began selling Surface PC With AI capabilities, it can run certain models locally without an internet connection. Dell, HP and other device makers have also launched their own so-called Copilot+ PCs. Nadella In a press release in May, the company said “we are bringing true joy and wonder back to creating on the PC.”

Excluding after-hours moves, Microsoft shares have risen 12% so far in 2024, while the S&P 500 has risen 13% over the same period.