Microsoft tops estimates as Azure passes $100 billion annually
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Annelise Capossela/Axios
Microsoft on Wednesday reported quarterly revenue and earnings that beat Wall Street expectations, while announcing that annual Azure revenue has surpassed $100 billion.
Why it matters: Microsoft got an early AI lead through its OpenAI partnership but is now broadening its strategy to rely on a mix of in-house and third-party models.
By the numbers: Microsoft said it earned $35.8 billion, or $4.81 per share, on revenue of $90 billion.
- Those results included a $3.2 billion gain from its stake in Anthropic, which increased per-share earnings by 33 cents. Meanwhile, Microsoft noted that per-share earnings would have been 7 cents lower if it included its stake in OpenAI.
- Analysts had been projecting revenue of $86 billion, with per-share earnings of about $4.24, per Yahoo Finance.
Zoom in: Microsoft's cloud revenue reached $59.3 billion for the quarter, up 27% from a year ago.
- LinkedIn revenue increased 12%.
- Revenue from Windows and devices dropped 7% from the prior year, while Xbox services and content revenue was down 10%.
What they're saying: "We are advancing the frontier on the cost-to-outcome curve, ensuring every customer can turn tokens into business results," CEO Satya Nadella said in a statement.
What we're watching: Microsoft said to expect continued growth in the current quarter and coming year, though the increase in business cloud spending will be slightly offset by challenges in the PC market.
- For the current quarter, which runs through the end of September, Microsoft forecast revenue of $89.85 billion to $90.95, up 16% to 17% from the prior year. Capital expenses for the quarter should top $50 billion, it said.
- For the coming fiscal year, which started July 1, Microsoft sees double digit revenue and operating income growth.
- Full year profit margins should be down less than one percentage point and the company expects to be cash flow positive despite higher capital spending.
