Microsoft Q2 2024 Earnings

Posted:

The Company Rides High on AI Wave with 5th-Straight Quarter of Record Earnings

Microsoft for the second quarter of 2024 reported earnings of $62.0 billion, increased by 18% on a year-on-year basis (YoY). Azure played a pivotal role in Microsoft's performance in the second quarter of 2024, surging by 30% in cloud revenue. The company's cloud segment had already attracted investors' attention in the preceding quarter. (Source: Microsoft)

The growth in revenue was driven by the introduction of new AI capabilities played a significant role in drawing customers to Microsoft's cloud and Windows services. (Source: Microsoft)

The company's net income rose to $21.87 billion, equivalent to $2.93 per share, as compared to $16.43 billion, or $2.20 per share from a year ago. Net income and diluted earnings per share both increased by 33% on a YoY basis. (Source: Microsoft)

Furthermore, on a segmental basis, Revenue from intelligent cloud business stood at $25.9 billion, which surged by 20%. The cluster comprises Azure cloud infrastructure, SQL Server, Windows Server, Nuance, GitHub, and enterprise services. intelligent cloud business growth was driven by Azure and other cloud services revenue growth of 30% during the quarter. (Source: Microsoft)

On the earnings call, Microsoft CEO Satya Nadella announced that Microsoft has reached a milestone of 53,000 Azure AI customers, and notably, one-third of these customers have joined the Azure platform within the past year. Additionally, Nadella highlighted an increase in commitments to spend over $1 billion on Azure across various agreements during the quarter. (Source: Microsoft)

The revenue from productivity and business processes which includes Office productivity software, LinkedIn, and Dynamics was at $19.2 billion, increased by 13%. (Source: Microsoft)

Moreover, the More Personal Computing segment generated $16.89 billion in revenue, demonstrating a growth of approximately 19% YoY. This segment encompasses Windows, Surface, Bing, and Xbox. (Source: Microsoft)

Apart from this, During the second quarter, the company completed the acquisition of video game publisher Activision Blizzard after a lengthy regulatory review making it the largest purchase ever. Activision Blizzard is the maker of games Call of Duty and World of Warcraft. (Source: BBC News)

Moreover, The company unveiled custom cloud chips and introduced a new Copilot AI add-on for Microsoft 365 productivity software bundles, priced at $30 per month. However, both Nadella and Microsoft CEO Amy Hood refrained from disclosing the specific number of clients who have begun paying for the Copilot service.  (Source: BBC News)

Microsoft continued with the layoffs in this quarter with Microsoft's LinkedIn subsidiary reducing its workforce by approximately 700 jobs in October, in addition to the previously announced 10,000 job cuts earlier in the year. Recently, Microsoft disclosed its plans to eliminate around 1,900 employees in its gaming unit, constituting about 9% of the overall headcount, following the completion of the Activision deal. (Source: BBC News)

Outlook

Microsoft has projected a fiscal third-quarter revenue ranging between $60 billion and $61 billion, with the midpoint of the range at $60.50 billion. However, the company anticipates that the cost of revenue and operating expenses for the quarter will be lower than initially expected. (Source: Microsoft)

Update

Last week, Microsoft achieved a historic milestone by surpassing a $3 trillion market capitalization for the first time. As of January 30's market close, it emerged as the world's most valuable company. Microsoft's valuation narrowly exceeded that of Apple, which had held the title of the world's largest company for a significant part of the past three years until Microsoft reclaimed the top position earlier this month. The resurgence of Microsoft on Wall Street is primarily attributed to its prominent role as a leader in the broader AI movement within the technology sector. (Source: Microsoft)

On January 30, 2024, Microsoft shares declined by over 2% and later recovered, reducing some of its initial losses after the company issued fiscal second-quarter results. (Source: CNBC)

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