Microsoft's latest earnings, FY24Q4, correspond to the actual period of 2024 Q2.
Microsoft FY2024 Q4 Earnings Summary:
Revenue rose 15% to a record $64.727B, operating income rose 15% to a sixth straight record at $27.925B, and net income increased 10% to a record $22.036B.
Productivity and Business Processes revenue was $20.3B, up 11% year over year, the seventh consecutive quarterly record; operating income was $10.1B, up 12% year over year.
Office revenue was ~$14.3B, up 11% year over year; Microsoft 365 E5 demand is strong, coupled with rising Copilot penetration, driving continued ARPU expansion; Copilot is the fastest-growing suite in Microsoft 365 history; Office Commercial seat growth is driven primarily by SMBs; Microsoft 365 Copilot has become a work habit, with daily active users nearly doubling sequentially, customer count up 60%+ sequentially, and the vast majority of customers prepared to purchase more seats; customers with over 10k seats purchased doubled sequentially, e.g., EY bought over 150k seats; custom Copilot Studio now has over 50k organizations using it, up 70%+ sequentially; Teams usage continues to grow year over year; Teams Premium paid seats exceed 3M, up nearly 4x year over year.
LinkedIn revenue was $4.3B, up 10% year over year; LinkedIn user count and engagement continue to grow; Premium sign-ups grew 51% year over year this fiscal year; recruiting market share continues to expand.
Dynamics revenue was $1.7B, up 16% year over year; Dynamics 365 Business Central is used by over 40k organizations as a core ERP; Dynamics 365 now accounts for nearly 90% of Dynamics revenue.
Intelligent Cloud revenue was $28.5B, up 19% year over year, the seventh consecutive quarterly record; operating income was $12.9B, up 22% year over year, the sixth consecutive quarterly record.
Azure revenue was ~$19.1B, up 29% year over year; Azure growth fell short of the prior quarter's upper guide of 30% due to slightly weaker non-AI growth in certain European markets in June, but Azure consumption growth continues to exceed overall Azure growth, and the momentum persists into the second half; AI contributed 8 percentage points of growth (growing from $1B to $1.2B sequentially), constrained by AI supply (compute) shortages, which are expected to persist through FY25H1; FY25H2 (calendar H1 2025) is expected to see Azure accelerate as AI capacity increases; Azure market share continues to rise; Azure AI customers exceed 60k, up nearly 60% year over year, with average spend per customer continuing to grow; Azure Arc has 36k customers, up 90% year over year; MaaS (Model as a Service) paid customers doubled sequentially.
Azure AI customers also using data/analytics tools grew nearly 50% year over year; Fabric paid customers exceed 14k, up 20% sequentially; GitHub Copilot is used by over 77k organizations, up 180% year over year; GitHub revenue run rate exceeds $2B, with Copilot contributing 40%+ of GitHub revenue growth (implying quarterly revenue ~$100M), and revenue scale has surpassed the original GitHub acquisition price.
DAX Copilot for healthcare is now used by over 400 healthcare organizations, up 40%+ sequentially; over 1,000 companies use Copilot for Security; the security business has over 1.2M enterprise customers, with over 800k using four or more products/services, up 25% year over year; cloud security revenue exceeded $1B over the past 12 months.
More Personal Computing revenue was $15.9B, up 14% year over year; operating income was $4.9B, up 5% year over year.
Windows revenue was ~$6.0B, up 7% year over year; Windows 11 active devices grew 50% year over year.
Gaming revenue was $5.0B, up 44% year over year; Xbox hardware revenue down 42% year over year, software revenue up 61% year over year; gaming MAU exceeds 500M; Activision Blizzard contributed $1.68B in revenue, $780M in gross profit, and a $570M operating loss; excluding Activision Blizzard, gaming revenue declined 17% year over year this quarter.
Search and news advertising revenue was ~$3.8B, up 19% year over year; Edge and Bing market share continue to rise.
Devices revenue declined 11% year over year.
Growth in Azure/Microsoft 365 deals above $10M and $100M drove Commercial RPO to a new record of $269B, up 20% year over year; annuity mix 97%.
Fiscal year operating cash flow exceeded $100B for the first time, reaching $119B.
FY25Q1 revenue is guided to grow 13% year over year, operating income up 10% year over year; Azure up 28%-29% year over year, with AI contribution continuing to rise, but AI supply constraints persisting through FY25H1, and Azure expected to accelerate in FY25H2 as AI capacity increases; Office 365 up 14% year over year; gaming revenue up mid-30% year over year, with 40% from Activision Blizzard.
This quarter's capex was almost entirely AI and Cloud related; roughly half went to building and leasing data centers, half to purchasing servers; FY25 capex is expected to continue growing; the heavy AI spend is driven by strong customer demand.
FY25 full-year revenue and operating income are guided to grow double digits year over year; opex up single digits year over year; operating margin down 1 percentage point year over year.
Overall, this report again highlights the stability of Microsoft's results; although Azure growth came in slightly below expectations, management provided guidance for an Azure acceleration once AI supply eases, and Azure AI revenue run rate is now approaching $5B. Meanwhile, the Copilot-infusion across Microsoft's SaaS portfolio is progressing well, continually lifting ARPU; Microsoft's AI twin towers—Azure AI + Copilot—retain significant optionality.
The market remains anxious about tech giants' intense AI spending, even though Microsoft and Google's latest results again proved that massive AI investment does not hurt profits—indeed, Microsoft repeatedly emphasized that "AI capacity constraints" limited growth—yet the narrative persists: AI monetization is too slow, investment too high, returns too low. It has the feel of the early cloud era.
*All segment revenue figures above are estimates.