Microsoft reports $64.7 billion FY24 Q4 revenue, the seventh consecutive Surface decline, and big jumps for Xbox and cloud

What you need to know

Following the conclusion of Microsoft’s fiscal year 2024, the company has published its FY24 Q4 results in a new earnings report.
Microsoft reports $64.7 billion in revenue for the quarter (a 15% increase) and $245.1 billion full the full year (up 16%), with positive growth across all of its divisions.
Notably, Xbox and gaming saw a huge 61% revenue jump, with most of that increase coming from Microsoft’s acquisition of Activision Blizzard King late last year. Server products, cloud services, and search and news advertising revenue rose substantially as well.
Xbox hardware is down 42%, which indicates that Xbox Series X|S sales have slowed. Surface revenue has also fallen 11%; this is the seventh consecutive decline for Microsoft’s devices division.

As a seasoned observer of tech giants and their financial performances, I must say that Microsoft’s FY24 Q4 earnings report is a testament to their strategic moves and market adaptability. The 15% increase in revenue for the quarter and 16% for the full year speaks volumes about their robustness amidst the ever-evolving tech landscape.

At the conclusion of the last quarter (Q4) of Microsoft’s fiscal year 2024 on July 30, they published their FY24 Q4 financial results. This document offers detailed insights into the condition of the company’s multiple sectors and initiatives to both consumers and investors.

In contrast to the same timeframe of the last fiscal year, total revenue has increased by 15%. This year, Microsoft reported $64.7 billion for the quarter and a staggering $245.1 billion for the entire year, marking a 16% surge. The following are some key figures from this quarter’s results: operating income, net income, and diluted earnings per share.

Operating income was $27.9 billion, and is up 15% (up 16% in constant currency)
Net income was $22 billion, and is up 10% (up 11% in constant currency)
Diluted earnings per share was $2.95, and is up 10% (up 11% in constant currency)

As an analyst, I can assert that Microsoft’s persistent expansion is primarily driven by the robustness of its cloud servers and services, Office suite, and Xbox content and offerings. In the realm of Productivity and Business Processes, we saw a revenue surge of $20.3 billion, marking an 11% increase. The Intelligent Cloud segment experienced a more pronounced growth, with revenues soaring by 19% to reach $28.5 billion. Lastly, the More Personal Computing sector also showed improvement, with revenues amounting to $15.9 billion, registering a 14% rise.

In a significant leap, Xbox’s content and service revenues skyrocketed by an astounding 61% compared to the previous year. This dramatic increase was primarily driven by Microsoft’s purchase of Activision Blizzard King at the beginning of the fiscal year, contributing approximately 58 points to the overall growth. Moreover, server products and cloud services experienced a substantial 21% rise, while search and news advertising revenue (without traffic acquisition costs) grew by 19%.

While the majority of the report highlights positive aspects, it’s important to note a significant drop of 42% in Xbox hardware earnings, suggesting that sales for Microsoft’s Xbox Series X|S consoles may be decreasing. Additionally, there was an 11% decrease in revenue from devices, which includes Microsoft’s Surface products. Remarkably, this is the seventh straight quarter with a decline in devices revenue, implying that Microsoft is finding it challenging to expand its Surface userbase.

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2024-07-31 01:09

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