Redmond, WA – In the second quarter of fiscal year 2024, Microsoft exhibited a robust financial performance, showcasing a remarkable 33% increase in net profit, reaching $21.9 billion compared to $16.4 billion in the corresponding quarter last year. The company’s revenue also experienced a substantial 18% growth, climbing to $62 billion from $52.7 billion in the year-ago period.
The driving force behind Microsoft’s stellar performance was the significant growth in its Cloud revenue, which reached $33.7 billion, marking a 24% increase year over year. This exceptional outcome was attributed to the strong execution by Microsoft’s sales teams and partners.
During the earnings call, Satya Nadella, Chairman and CEO of Microsoft, expressed the significance of the quarter, stating, ‘It was a record quarter, driven by the continued strength of the Microsoft Cloud. We’ve moved from talking about AI to applying AI at scale. By infusing AI across every layer of our tech stack, we’re winning new customers and helping drive new benefits and productivity gains.’
Microsoft, a key player in the cloud-computing industry competing with Amazon Web Services and Google Cloud, reported a 30% year-on-year revenue growth in Azure and other cloud services during Q2 FY24. Amy Hood, Executive Vice President and CFO of Microsoft, shared insights during the earnings call, stating, ‘In Azure, we expect Q3 revenue growth in constant currency to remain stable to our stronger-than-expected Q2 result. Growth will be driven by our Azure consumption business with continued strong contribution from AI.’
The company now boasts 53,000 Azure AI customers, with over one-third joining Azure in the past 12 months. Nadella highlighted the increasing number of larger and more strategic Azure deals, including billion-dollar-plus commitments.
Microsoft’s revenue is categorized under three segments—Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Revenue from Productivity and Business Processes was $19.2 billion in the quarter, up 13% year over year. Intelligent Cloud, including the Azure cloud computing platform, saw a 20% rise to $25.9 billion, while More Personal Computing, which includes various products and services, experienced a 19% increase at $16.9 billion.
The acquisition of Activision Blizzard in October 2023, reportedly the gaming industry’s biggest deal, contributed to the growth in the More Personal Computing segment. Xbox content and services revenue surged by 61%, making gaming Microsoft’s third-largest business, surpassing Windows.
Nadella emphasized the company’s commitment to infusing AI across every layer of the tech stack, with an ambitious goal for AI to become a first-class part of every PC in 2024. AI-powered features are already transforming Microsoft’s business-oriented online service, LinkedIn, which reported a 9% year-on-year revenue increase in Q2.
Looking ahead to Q3, Hood provided insights, stating, ‘Based on current rates, we expect FX to increase total revenue and segment level revenue growth by less than one point, and we expect no impact to COGS and operating expense growth.’ Microsoft anticipates operating expenses of $15.8 billion to $15.9 billion, including approximately $300 million from purchase accounting, integration, and transaction-related costs from the Activision acquisition.
Hood concluded, ‘At a total company level, we delivered strong results in H1, and demand for our Microsoft Cloud continues to drive the growth in our outlook for H2. We are focused on execution so our customers can realize the benefits of AI productivity gains as we invest to lead this AI platform wave.
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