This is the Trace Id: 43a4b7482b6a0002fcf1e07199500113
Skip to main content
Investor Relations

Press Release & Webcast

Earnings Release FY24 Q2

Microsoft Cloud Strength Drives Second Quarter Results

REDMOND, Wash. — January 30, 2024 — Microsoft Corp. today announced the following results for the quarter ended December 31, 2023, as compared to the corresponding period of last fiscal year:

·        Revenue was $62.0 billion and increased 18% (up 16% in constant currency)

·        Operating income was $27.0 billion and increased 33%, and increased 25% non-GAAP (up 23% in constant currency)

·        Net income was $21.9 billion and increased 33%, and increased 26% non-GAAP (up 23% in constant currency)

·        Diluted earnings per share was $2.93 and increased 33%, and increased 26% non-GAAP (up 23% in constant currency)

Microsoft completed the acquisition of Activision Blizzard, Inc. (“Activision”) on October 13, 2023. Financial results from the acquired business are reported in the More Personal Computing segment.

"We’ve moved from talking about AI to applying AI at scale," said Satya Nadella, chairman and chief executive officer of Microsoft. "By infusing AI across every layer of our tech stack, we’re winning new customers and helping drive new benefits and productivity gains across every sector.”

“Strong execution by our sales teams and partners drove Microsoft Cloud revenue to $33.7 billion, up 24% (up 22% in constant currency) year-over-year,” said Amy Hood, executive vice president and chief financial officer of Microsoft.

The following table reconciles our financial results reported in accordance with generally accepted accounting principles (GAAP) to non-GAAP financial results. Additional information regarding our non-GAAP definition is provided below. All growth comparisons relate to the corresponding period in the last fiscal year.

 

Three Months Ended December 31,

 

 ($ in millions, except per share amounts)

Revenue

Operating Income

Net Income

Diluted Earnings per Share

2022 As Reported (GAAP)

$52,747

$20,399

$16,425

$2.20

Severance, hardware-related impairment, and lease consolidation costs

-

1,171

946

0.12

2022 As Adjusted (non-GAAP)

$52,747

$21,570

$17,371

$2.32

2023 As Reported (GAAP)

$62,020

$27,032

$21,870

$2.93

Percentage Change Y/Y (GAAP)

18%

33%

33%

33%

Percentage Change Y/Y Constant Currency

16%

30%

30%

30%

Percentage Change Y/Y (non-GAAP)

18%

25%

26%

26%

Percentage Change Y/Y (non-GAAP) Constant Currency

16%

23%

23%

23%

 

Business Highlights

Revenue in Productivity and Business Processes was $19.2 billion and increased 13% (up 12% in constant currency), with the following business highlights:

·        Office Commercial products and cloud services revenue increased 15% (up 13% in constant currency) driven by Office 365 Commercial revenue growth of 17% (up 16% in constant currency)

·        Office Consumer products and cloud services revenue increased 5% (up 4% in constant currency) and Microsoft 365 Consumer subscribers grew to 78.4 million

·        LinkedIn revenue increased 9% (up 8% in constant currency)

·        Dynamics products and cloud services revenue increased 21% (up 19% in constant currency) driven by Dynamics 365 revenue growth of 27% (up 24% in constant currency)

Revenue in Intelligent Cloud was $25.9 billion and increased 20% (up 19% in constant currency), with the following business highlights:

·        Server products and cloud services revenue increased 22% (up 20% in constant currency) driven by Azure and other cloud services revenue growth of 30% (up 28% in constant currency)

Revenue in More Personal Computing was $16.9 billion and increased 19% (up 18% in constant currency), with the following business highlights:

·        Windows revenue increased 9% with Windows OEM revenue growth of 11% and Windows Commercial products and cloud services revenue growth of 9% (up 7% in constant currency)

·        Devices revenue decreased 9% (down 10% in constant currency)

·        Xbox content and services revenue increased 61% (up 60% in constant currency) driven by 55 points of net impact from the Activision acquisition

·        Search and news advertising revenue excluding traffic acquisition costs increased 8% (up 7% in constant currency)

Microsoft returned $8.4 billion to shareholders in the form of share repurchases and dividends in the second quarter of fiscal year 2024.

Business Outlook

Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

Quarterly Highlights, Product Releases, and Enhancements 

Every quarter Microsoft delivers hundreds of products, either as new releases, services, or enhancements to current products and services. These releases are a result of significant research and development investments, made over multiple years, designed to help customers be more productive and secure and to deliver differentiated value across the cloud and the edge.

Here are the major product releases and other highlights for the quarter, organized by product categories, to help illustrate how we are accelerating innovation across our businesses while expanding our market opportunities.

Environmental, Social, and Governance (ESG)

To better execute on Microsoft’s mission, we focus our Environmental, Social, and Governance (ESG) efforts where we can have the most positive impact. To learn more about our latest initiatives and priorities, please visit our investor relations ESG website. 

Webcast Details

Satya Nadella, chairman and chief executive officer, Amy Hood, executive vice president and chief financial officer, Alice Jolla, chief accounting officer, Keith Dolliver, corporate secretary and deputy general counsel, and Brett Iversen, vice president of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/en-us/investor. The webcast will be available for replay through the close of business on January 30, 2025.

Non-GAAP Definition

Q2 charge. In the second quarter of fiscal year 2023, Microsoft recorded costs related to decisions announced on January 18th, 2023, including employee severance expenses, impairment charges resulting from changes to our hardware portfolio, and costs related to lease consolidation activities.

Microsoft has provided non-GAAP financial measures related to the Q2 charge to aid investors in better understanding our performance. Microsoft believes these non-GAAP measures assist investors by providing additional insight into its operational performance and help clarify trends affecting its business. For comparability of reporting, management considers non-GAAP measures in conjunction with GAAP financial results in evaluating business performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

Constant Currency

Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding our performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

Financial Performance Constant Currency Reconciliation

 

Three Months Ended December 31,

 ($ in millions, except per share amounts)

Revenue

Operating Income

Net Income

Diluted Earnings per Share

2022 As Reported (GAAP)

$52,747

$20,399

$16,425

$2.20

2022 As Adjusted (non-GAAP)

$52,747

$21,570

$17,371

$2.32

2023 As Reported (GAAP)

$62,020

$27,032

$21,870

$2.93

Percentage Change Y/Y (GAAP)

18%

33%

33%

33%

Percentage Change Y/Y (non-GAAP)

18%

25%

26%

26%

Constant Currency Impact

$756

$565

$510

$0.07

Percentage Change Y/Y Constant Currency

16%

30%

30%

30%

Percentage Change Y/Y (non-GAAP) Constant Currency

16%

23%

23%

23%

 

Segment Revenue Constant Currency Reconciliation

 

Three Months Ended December 31,

 ($ in millions)

Productivity and Business Processes

Intelligent Cloud

More Personal Computing

2022 As Reported (GAAP)

$17,002

$21,508

$14,237

2023 As Reported (GAAP)

$19,249

$25,880

$16,891

Percentage Change Y/Y (GAAP)

13%

20%

19%

Constant Currency Impact

$230

$367

$159

Percentage Change Y/Y Constant Currency

12%

19%

18%

 

Selected Product and Service Revenue Constant Currency Reconciliation        

 

Three Months Ended December 31, 2023

Percentage Change Y/Y (GAAP)

Constant Currency Impact

Percentage Change Y/Y Constant Currency

Microsoft Cloud

24%

(2)%

22%

Office Commercial products and cloud services

15%

(2)%

13%

Office 365 Commercial

17%

(1)%

16%

Office Consumer products and cloud services

5%

(1)%

4%

LinkedIn

9%

(1)%

8%

Dynamics products and cloud services

21%

(2)%

19%

Dynamics 365

27%

(3)%

24%

Server products and cloud services

22%

(2)%

20%

Azure and other cloud services

30%

(2)%

28%

Windows

9%

0%

9%

Windows OEM

11%

0%

11%

Windows Commercial products and cloud services

9%

(2)%

7%

Devices

(9)%

(1)%

(10)%

Xbox content and services

61%

(1)%

60%

Search and news advertising excluding traffic acquisition costs

8%

(1)%

7%

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

·        intense competition in all of our markets that may lead to lower revenue or operating margins;

·        focus on cloud-based services presenting execution and competitive risks;

·        significant investments in products and services that may not achieve expected returns;

·        acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our business;

·        impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;

·        cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position;

·        disclosure and misuse of personal data that could cause liability and harm to our reputation;

·        the possibility that we may not be able to protect information stored in our products and services from use by others;

·        abuse of our advertising, professional, marketplace, or gaming platforms that may harm our reputation or user engagement;

·        the development of the internet of things presenting security, privacy, and execution risks;

·        issues about the use of artificial intelligence in our offerings that may result in reputational or competitive harm, or legal liability;

·        excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;

·        quality or supply problems;

·        government enforcement under competition laws and new market regulation may limit how we design and market our products;

·        potential consequences of trade and anti-corruption laws;

·        potential consequences of existing and increasing legal and regulatory requirements;

·        laws and regulations relating to the handling of personal data that may impede the adoption of our services or result in increased costs, legal claims, fines, or reputational damage;

·        claims against us that may result in adverse outcomes in legal disputes;

·        uncertainties relating to our business with government customers;

·        additional tax liabilities;

·        an inability to protect and utilize our intellectual property may harm our business and operating results;

·        claims that Microsoft has infringed the intellectual property rights of others;

·        damage to our reputation or our brands that may harm our business and operating results;

·        adverse economic or market conditions that may harm our business;

·        catastrophic events or geo-political conditions, such as the COVID-19 pandemic, that may disrupt our business;

·        exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange and

·        the dependence of our business on our ability to attract and retain talented employees.

For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/en-us/investor.

All information in this release is as of December 31, 2023. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, rrt@we-worldwide.com

For more information, financial analysts and investors only:

Brett Iversen, Vice President, Investor Relations, (425) 706-4400

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. Pacific time conference call with investors and analysts, is available at http://www.microsoft.com/en-us/investor.


MICROSOFT CORPORATION


INCOME STATEMENTS

(In millions, except per share amounts) (Unaudited)


Three Months Ended

December 31,

Six Months Ended

December 31,

 

2023

 

2022

 

2023

 

2022

Revenue:

   Product

 $18,941

 $16,517

 $34,476

 $32,258

   Service and other

43,079

 

36,230

 

84,061

 

70,611

      Total revenue

62,020

 

52,747

 

118,537

 

102,869

Cost of revenue:

   Product

5,964

5,690

9,495

9,992

   Service and other

13,659

 

11,798

 

26,430

 

22,948

      Total cost of revenue

19,623

 

17,488

 

35,925

 

32,940

      Gross margin

42,397

35,259

82,612

69,929

Research and development

7,142

6,844

13,801

13,472

Sales and marketing

6,246

5,679

11,433

10,805

General and administrative

1,977

2,337

3,451

3,735

Operating income

27,032

 

20,399

 

53,927

 

41,917

Other expense, net

(506)

 

(60)

 

(117)

 

(6)

Income before income taxes

26,526

20,339

53,810

41,911

Provision for income taxes

4,656

 

3,914

 

9,649

 

7,930

Net income

 $21,870

 

 $16,425

 

 $44,161

 

 $33,981

Earnings per share:

   Basic

 $2.94

 $2.20

 $5.94

 $4.56

   Diluted

 $2.93

 $2.20

 $5.92

 $4.54

Weighted average shares outstanding:

   Basic

7,432

7,451

7,431

7,454

   Diluted

7,468

 

7,473

 

7,465

 

7,479

 


COMPREHENSIVE INCOME STATEMENTS

(In millions) (Unaudited)


Three Months Ended

December 31,

Six Months Ended

December 31,

 

2023

 

2022

 

2023

 

2022

Net income

 $21,870

 

 $16,425

 

 $44,161

 

 $33,981

Other comprehensive income (loss), net of tax:

  Net change related to derivatives

(3)

(32)

18

(25)

  Net change related to investments

1,331

348

1,071

(1,549)

  Translation adjustments and other

660

 

570

 

305

 

(205)

   Other comprehensive income (loss)

1,988

 

886

 

1,394

 

(1,779)

Comprehensive income

 $23,858

 

 $17,311

 

 $45,555

 

 $32,202

 


BALANCE SHEETS

(In millions) (Unaudited)


 

December 31,

2023

 

June 30,

2023

Assets

Current assets:

   Cash and cash equivalents

 $17,305

 $34,704

   Short-term investments

63,712

 

76,558

      Total cash, cash equivalents, and short-term investments

81,017

111,262

   Accounts receivable, net of allowance for doubtful
      accounts of $591 and $650

42,831

48,688

   Inventories

1,615

2,500

   Other current assets

21,930

 

21,807

      Total current assets

147,393

184,257

Property and equipment, net of accumulated
   depreciation of $72,949 and $68,251

112,308

95,641

Operating lease right-of-use assets

16,398

14,346

Equity investments

13,367

9,879

Goodwill

118,931

67,886

Intangible assets, net

29,896

9,366

Other long-term assets

32,265

 

30,601

            Total assets

 $470,558

 

 $411,976

Liabilities and stockholders' equity

Current liabilities:

   Accounts payable

 $17,695

 $18,095

   Short-term debt

27,041

0

   Current portion of long-term debt

2,250

5,247

   Accrued compensation

8,813

11,009

   Short-term income taxes

5,787

4,152

   Short-term unearned revenue

43,068

50,901

   Other current liabilities

16,362

 

14,745

      Total current liabilities

121,016

104,149

Long-term debt

44,928

41,990

Long-term income taxes

25,890

25,560

Long-term unearned revenue

2,966

2,912

Deferred income taxes

2,548

433

Operating lease liabilities

14,155

12,728

Other long-term liabilities

20,787

 

17,981

         Total liabilities

232,290

 

205,753

Commitments and contingencies

Stockholders' equity:

   Common stock and paid-in capital - shares authorized
      24,000; outstanding 7,432 and 7,432

97,480

93,718

   Retained earnings

145,737

118,848

   Accumulated other comprehensive loss

(4,949)

(6,343)

         Total stockholders' equity

238,268

 

206,223

            Total liabilities and stockholders' equity

 $470,558

 

 $411,976

 


CASH FLOWS STATEMENTS

(In millions) (Unaudited)


Three Months Ended

December 31,

Six Months Ended

December 31,

 

2023

 

2022

 

2023

 

2022

Operations

Net income

 $21,870

 $16,425

 $44,161

 $33,981

Adjustments to reconcile net income to
   net cash from operations:

   Depreciation, amortization, and other

5,959

3,648

9,880

6,438

   Stock-based compensation expense

2,828

2,538

5,335

4,730

   Net recognized losses on investments and derivatives

198

214

212

192

   Deferred income taxes

(1,702)

(1,305)

(2,270)

(2,496)

   Changes in operating assets and liabilities:

      Accounts receivable

(2,951)

(3,164)

8,083

8,565

      Inventories

1,474

1,305

969

762

      Other current assets

725

(392)

(71)

(724)

      Other long-term assets

(1,427)

(65)

(3,440)

(731)

      Accounts payable

(2,521)

(2,058)

(1,307)

(3,625)

      Unearned revenue

(5,538)

(5,186)

(9,664)

(8,508)

      Income taxes

(1,554)

(2,863)

(129)

(2,453)

      Other current liabilities

1,518

1,819

(2,588)

(2,205)

      Other long-term liabilities

(26)

 

257

 

265

 

445

         Net cash from operations

18,853

 

11,173

 

49,436

 

34,371

Financing

Proceeds from issuance (repayments) of debt, maturities of
  90 days or less, net

(8,490)

0

10,202

0

Proceeds from issuance of debt

10,773

0

17,846

0

Repayments of debt

(2,916)

(750)

(4,416)

(1,750)

Common stock issued

261

243

946

818

Common stock repurchased

(4,000)

(5,459)

(8,831)

(11,032)

Common stock cash dividends paid

(5,574)

(5,066)

(10,625)

(9,687)

Other, net

(201)

 

(317)

 

(508)

 

(581)

         Net cash from (used in) financing

(10,147)

 

(11,349)

 

4,614

 

(22,232)

Investing

Additions to property and equipment

(9,735)

(6,274)

(19,652)

(12,557)

Acquisition of companies, net of cash acquired, and purchases
   of intangible and other assets

(65,029)

(679)

(66,215)

(1,028)

Purchases of investments

(4,258)

(11,599)

(12,718)

(16,612)

Maturities of investments

4,150

6,928

19,868

13,590

Sales of investments

1,600

4,775

6,930

7,486

Other, net

1,347

(301)

365

(1,161)

         Net cash used in investing

(71,925)

 

(7,150)

 

(71,422)

 

(10,282)

Effect of foreign exchange rates on cash and cash equivalents

72

 

88

 

(27)

 

(142)

Net change in cash and cash equivalents

(63,147)

(7,238)

(17,399)

1,715

Cash and cash equivalents, beginning of period

80,452

 

22,884

 

34,704

 

13,931

Cash and cash equivalents, end of period

 $17,305

 

 $15,646

 

 $17,305

 

 $15,646

 


SEGMENT REVENUE AND OPERATING INCOME

(In millions) (Unaudited)

 

Three Months Ended

December 31,

 

Six Months Ended

December 31,

 

 

 

2023

 

2022

 

2023

 

2022

Revenue

 

 

 

 

 

 

 

Productivity and Business Processes

 $19,249

 

 $17,002

 

 $37,841

 

 $33,467

Intelligent Cloud

25,880

 

21,508

 

50,139

 

41,833

More Personal Computing

16,891

 

14,237

 

30,557

 

27,569

  Total

$62,020

 

$52,747

 

$118,537

 

$102,869

Operating Income

 

 

 

 

 

 

 

Productivity and Business Processes

 $10,284

 

 $8,175

 

 $20,254

 

 $16,498

Intelligent Cloud

12,461

 

8,904

 

24,212

 

17,882

More Personal Computing

4,287

 

3,320

 

9,461

 

7,537

  Total

 $27,032

 

$20,399

 

$53,927

 

$41,917

 

IMPORTANT NOTICE TO USERS (summary only, click here  for full text of notice); All information is unaudited unless otherwise noted or accompanied by an audit opinion and is subject to the more comprehensive information contained in our SEC reports and filings. We do not endorse third-party information. All information speaks as of the last fiscal quarter or year for which we have filed a Form 10-K or 10-Q, or for historical information the date or period expressly indicated in or with such information. We undertake no duty to update the information. Forward-looking statements are subject to risks and uncertainties described in our  Forms 10-Q and 10-K.
'max-age=0,s-maxage=900' $add_header('Cache-Control', $(xfMaxAgeHeaders))
'max-age=0,s-maxage=900' $add_header('Cache-Control', $(xfMaxAgeHeaders))


Related Information

'max-age=0,s-maxage=900' $add_header('Cache-Control', $(xfMaxAgeHeaders))

Microsoft Corp (MSFT)

ar2024

2024 ANNUAL REPORT

VIEW ONLINE 

DOWNLOAD NOW

 

'max-age=0,s-maxage=900' $add_header('Cache-Control', $(xfMaxAgeHeaders))
Follow us
Share this page
'max-age=0,s-maxage=900' $add_header('Cache-Control', $(xfMaxAgeHeaders))