Microsoft (MSFT.US) traded 3% lower yesterday in the after-market session following the release of fiscal-Q4 2023 earnings (calendar Q2 2023). Results were not that bad but have hinted that growth in some key parts of Microsoft's business is slowing. Let's take a closer look at earnings release from Microsoft!
Results mostly in-line, cloud growth slows
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Create account Try a demo Download mobile app Download mobile appMicrosoft results for fiscal-Q4 2023 (April - June 2023) were mostly in-line with market expectations. Total revenue grew by 8.3% YoY, slightly more than expected. This was driven by solid performance of the Intelligent Cloud segment. Total cloud sales reached $30.3 billion during the quarter and were 21% YoY higher. Growth in Microsoft's Azure Cloud at constant currency reached 27% during the quarter. While this is a slowdown, pace of deceleration begins to moderate and it is seen as a positive. Capital expenditure was much higher than expected during the quarter but it is expected to ease after a few years of rising investments, in spite of Microsoft rolling out and boosting its AI offering.
Fiscal-Q4 2023 results
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Revenue: $56.19 billion vs $55.49 billion expected (+8.3% YoY)
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Productivity and Business Processes: $18.29 billion vs $18.1 billion expected (+10% YoY)
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Intelligent Cloud: $23.99 billion vs $23.8 billion expected (+15% YoY)
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More Personal Computing: $13.91 billion vs $13.58 billion expected (-4% YoY)
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Microsoft Cloud revenue: $30.3 billion vs $30.05 billion expected (+21% YoY)
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EPS $2.69 vs $2.56 expected ($2.23 in fiscal-Q4 2022)
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Operating income: $24.25 billion vs $23.28 billion expected (+18% YoY)
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Net income: $20.1 billion (+20% YoY)
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Capital expenditure: $8.94 billion vs $7.85 billion expected
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Revenue at constant currency: +10% vs +8.52% expected
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Capital distribution: $97 billion
Full fiscal-2023 highlights
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Total revenue: $211.9 billion (+7%)
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Operating income: $89.7 billion (+8%)
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Net Income: $73.3 billion (+6%)
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EPS: $9.81 (+7%)
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Microsoft Cloud revenue above $110, up 27% at constant currency
Bleak forecast for fiscal-Q1 2024
While analysts are upbeat that deceleration in cloud is moderating, turnaround may still be some time away. Company expects total revenue in fiscal-Q1 2024 (July - September 2023) to grow around 8% YoY, to $53.8-54.8 billion. While this is in-line with fiscal-Q4 2023 revenue growth, the market's forecast of $54.94 was above the top range of the company-provided forecast. Microsoft expects growth in Azure cloud to slow further this quarter, to 25-26%. That's down from 27% in fiscal-Q4 2023 and 42% in fiscal-Q1 2023. While Microsoft said that it has over 11,000 clients for its Azure OpenAI product already (an increase from 4,500 in mid-May), increase in revenue from AI products are likely to materialize gradually.
Fiscal-Q1 2024 forecasts
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Revenue: $53.8-54.8 billion vs $54.94 billion expected (+8~% YoY)
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Azure growth at constant currency: 25-26% YoY
A look at the chart
Shares of Microsoft (MSFT.US) trade around 3.5% lower in premarket today. Stock reached the $350 resistance zone yesterday but failed to break above. Shares currently trade near $339 in pre-market - below 200-hour moving average (purple line) but above a short-term uptrend line. A support zone to watch can be found in the $335 area, where previous price reactions as well as the aforementioned trendline can be found.
Source: xStation5
Microsoft - financial dashboard
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