Strong Q4 Results
In the calendar of Microsoft Corporation, the fourth fiscal quarter recently ended, with revenue growing by 8% to $56.19 billion, surpassing analysts’ expectations. The net profit increased by 20% to $20.1 billion, while operating profit rose by 18% to $24.3 billion.
Mixed Outlook for the Current Quarter
For the current quarter, Microsoft projects revenue to increase by 8% to a range of $53.8 billion to $54.8 billion. However, the upper bound falls below market expectations, leading to a decline of 4% in the corporation’s share price after the main trading session.
Windows OEM Revenue Decline
The revenue from the sale of Windows licenses to PC manufacturers decreased by 12% last quarter. The current quarter’s Microsoft management expects revenue from this business segment to be around $12.5 to $12.9 billion, missing analysts’ expectations of $13.22 billion.
Segment Performance
In the Business and Productivity Solutions business, Microsoft’s revenue grew by 10%, driven by a 15% increase in Office 365 subscription revenue. In the Intelligent Cloud segment, revenue rose by 15%, with Azure providing more than half of the revenue for the first time. In personal computing, corporate revenue fell 4% to $13.9 billion.
Xbox and Cloud Gaming
Xbox hardware revenue declined by 13% last quarter, possibly due to supply issues and balancing between hardware and cloud gaming services. Revenue from Xbox content and services, including Xbox Game Pass, grew by 5%.
Cost-Cutting Measures and Investments
Microsoft reduced spending on research and development for the first time since 2016. The company is also focused on investments in artificial intelligence systems developed with OpenAI. The financial justification is expected in the next six months.
Fiscal Year Summary
At the end of the entire fiscal year, Microsoft’s total revenue increased by 7% to $211.9 billion, operating profit grew by 6% to $88.5 billion, and net profit slightly decreased to $72.4 billion, adds NIX Solutions.