Executive Summary
Microsoft Corporation reported robust financial results for Q1 2024, with total revenue increasing by 13% year-over-year to $56.5 billion. This growth was primarily driven by the performance of Microsoft Cloud, which generated $31.8 billion in revenue, representing a 24% increase. The successful integration of AI functionalities across its product portfolio, particularly with products like Azure, Office 365, and GitHub Copilot, has positioned the company for sustainable long-term growth. Management expressed strong confidence in their strategy, citing effective expense management and ongoing demand for cloud services as core contributors to their positive outlook.
Key Performance Indicators
Key Insights
1. Total Revenue: $56.5 billion, up 13% YoY.
2. Cloud Revenue: $31.8 billion, up 24% YoY, indicating strong adoption of cloud products.
3. Gross Profit Margin: 71%, reflecting a slight year-over-year increase due to higher-margin product sales in Azure and Office 365.
4. Operating Income: $26.9 billion, up 25% YoY, with operating margins improving to 48%.
5. Net Income: $22.3 billion, representing a 27% increase YoY, maintaining a net profit margin of 39%.
6. Earnings Per Share (EPS): $2.99, up ...
Financial Highlights
1. Total Revenue: $56.5 billion, up 13% YoY.
2. Cloud Revenue: $31.8 billion, up 24% YoY, indicating strong adoption of cloud products.
3. Gross Profit Margin: 71%, reflecting a slight year-over-year increase due to higher-margin product sales in Azure and Office 365.
4. Operating Income: $26.9 billion, up 25% YoY, with operating margins improving to 48%.
5. Net Income: $22.3 billion, representing a 27% increase YoY, maintaining a net profit margin of 39%.
6. Earnings Per Share (EPS): $2.99, up 27% YoY.
Income Statement
Metric |
Value |
YoY Change |
QoQ Change |
Revenue |
56.52B |
12.76% |
0.58% |
Gross Profit |
40.22B |
15.99% |
2.08% |
Operating Income |
26.90B |
24.99% |
10.89% |
Net Income |
22.29B |
26.97% |
11.01% |
EPS |
3.00 |
27.66% |
11.11% |
Key Financial Ratios
operatingProfitMargin
47.6%
operatingCashFlowPerShare
$4.12
freeCashFlowPerShare
$2.78
dividendPayoutRatio
22.7%
Management Commentary
1. On Cloud Strategy: Satya Nadella highlighted, "We are rapidly infusing AI across every layer of the tech stack, and for every role and business process to drive productivity gains for our customers."
2. On Financial Performance: Amy Hood remarked, "This quarter's revenue was $56.5 billion, up 13% and 12% in constant currency."
3. Future of AI: Nadella noted, "With Copilots, we are making the age of AI real for people and businesses everywhere."
"We are off to a strong start to the fiscal year, driven by the continued strength in Microsoft Cloud, which surpassed $31.8 billion in quarterly revenue, up 24%."
β Satya Nadella
"Commercial bookings increased 14% and 17% in constant currency, in line with expectations, primarily driven by strong execution across our core annuity sales motions."
β Amy Hood
Forward Guidance
Microsoft projects continued robust growth for the next quarters, particularly in the cloud segment, forecasting a revenue increase of 17%-18% for the Intelligent Cloud segment in Q2. The company anticipates ongoing demand for Azure, with AI workloads expected to contribute significantly to future revenues. Management also plans to keep capital expenditures steady, focusing on cloud and AI infrastructure.