- Revenue grew to $64.7 billion, up 15%, with $22 billion in net income.
- Intelligent Cloud revenues increased by 19%, now comprising nearly 45% of total revenue.
OUR TAKE
Microsoft’s strong performance in cloud and gaming highlights its strategic pivot towards high-growth areas. The robust revenue from cloud services and Xbox content showcases Microsoft’s adaptability in leveraging new opportunities. However, the consistent decline in hardware revenues signals the need for innovation in consumer devices to maintain a competitive edge.
— Zoey Zhu, BTW reporter
What happened
Microsoft posted impressive financial results for Q4 FY24, with $64.7 billion in revenue and $22 billion in net income, representing a 15% increase in revenue and a 10% rise in net income year-over-year. The company’s Intelligent Cloud segment, including server products and cloud services, generated $28.5 billion in revenue, a 19% increase from the previous year, now comprising nearly 45% of Microsoft’s total revenue.
Despite these gains, Microsoft’s consumer devices, particularly Xbox hardware and Surface products, continued to struggle. Xbox hardware revenue declined by 42%, and Surface revenue saw its seventh consecutive quarterly decline, dropping 11% this quarter. However, the company’s new Surface Laptop and Surface Pro devices, launched in June, are expected to impact the next quarter’s results.
Also read: Microsoft’s Azure growth below estimates amid AI investment rises
Also read: Microsoft falls on Cloud results, while AI chipmakers rally
Why it’s important
Microsoft’s strong cloud and gaming revenues underscore its strategic focus on high-growth sectors. The 19% increase in Intelligent Cloud revenue and the significant contribution from AI services to Azure’s growth reflect the company’s successful pivot towards cloud computing and artificial intelligence, which are becoming central to global business operations.
The persistent decline in consumer devices indicates challenges in Microsoft’s hardware strategy. The upcoming launches of new Surface models and a disclose Xbox Series X console may provide opportunities for recovery. The gaming sector’s robust performance, driven by Xbox Game Pass and Activision Blizzard, highlights the importance of strategic acquisitions and subscriptions in driving revenue growth.
Microsoft’s comprehensive approach, including strategic cloud investments and proactive AI service integration, positions the company well for sustained growth. Balancing this with revitalising its hardware offerings will be critical for long-term success.
