Microsoft rips past earnings expectations with strong FY23 thanks to ‘new era of AI transformation’
The age of AI looks like it will be very friendly to Microsoft’s bank accounts.
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What you need to know
Microsoft just reported its earnings for FY24 Q3, which ended March 31, 2024. The quarter saw large increases in revenue (up 17%), operating income (up 23%), net income (up 20%), and diluted earnings per share (up 20%). The tech giant beat industry expectations in several key areas, including operating income and earnings per share.
Microsoft saw strong numbers across the board, thanks in large part to the growing demand for AI. “Microsoft Copilot and Copilot stack are orchestrating a new era of AI transformation, driving better business outcomes across every role and industry,“said Microsoft CEO Satya Nadella.
Microsoft highlighted the main takeaways of its most recent quarter:
The company’s $12.5 billion in operating income exceeded industry expectations, which were $12.1 billion according toFactSetand as reported on byForbes. Earnings per share also beat expectations by hitting $2.94 per share compared to the expected $2.82 per share.
Gaming revenue went up in the quarter 51%with that growth coming largely from the addition of Activision Blizzard revenue.Microsoft officially acquired Activision Blizzardafter a drawn-out legal battle. With the deal finished, Microsoft’s revenue from the most recent quarter is compared year-over-year with a quarter that did not include Activision Blizzard revenue.
AI everywhere
AI is one of the hottest topics in tech, so it’s not surprising that a company withbillions of dollars invested in AIwould see strong financial results. Microsoft integrates AI into several of its services, but Microsoft earns a large portion of its revenue from cloud computing and powering services. As AI demand increases, so will Microsoft revenue. There are also knock-on effects from interest in AI rising, such as people looking to purchase new computers to be able to use the latest AI features.
This isn’t the first time AI has driven Microsoft to beat expectations. The companyrecorded its strongest quarter ever in FY23 Q4, and AI drove much of that revenue.
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This is a developing story and will be updated as more information arrives, including quotes from Microsoft’s upcoming webcast.
Microsoft FY24 Q3: Business Highlights
Revenue in Productivity and Business Processes was $19.6 billion and increased 12% (up 11% in constant currency), with the following business highlights:
Revenue in Intelligent Cloud was $26.7 billion and increased 21%, with the following business highlights:
Revenue in More Personal Computing was $15.6 billion and increased 17%, with the following business highlights:
Sean Endicott is a tech journalist at Windows Central, specializing in Windows, Microsoft software, AI, and PCs. He’s covered major launches, from Windows 10 and 11 to the rise of AI tools like ChatGPT. Sean’s journey began with the Lumia 740, leading to strong ties with app developers. Outside writing, he coaches American football, utilizing Microsoft services to manage his team. He studied broadcast journalism at Nottingham Trent University and is active on X @SeanEndicott_ and Threads @sean_endicott_.
