1min read Microsoft Corporation (MSFT) released its quarterly earnings report for the second quarter of its fiscal year 2023 (Q2). The tech giant reported revenue of $62.02 billion, representing growth of 16% and surpassing analyst estimates of $61.14 billion. The higher-than-expected revenue can be attributed to strong performances across all segments, including Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The earnings per share (EPS) stood at $2.93, outpaced consensus by 16 cents.
In terms of business segments, the Productivity and Business Processes segment brought in revenue of $19.25 billion, exceeding the estimated $19.03 billion. Office 365 Commercial revenue grew by 17% at constant currency, while Microsoft 365 Consumer subscribers reached 78.4 million. LinkedIn revenue also increased by 9% (+8% CC), and Dynamics 365 revenue grew by 27% (+24% CC).
Microsoft's Intelligent Cloud segment, driven by its flagship product Azure, experienced remarkable growth in Q2. Revenue reached $25.9 billion, surpassing previous guidance. Azure and other cloud services reported a growth of 30% (28% in constant currency), outpacing earlier expectations. These numbers were in line with "whisper" expectations. Microsoft's strategic focus on artificial intelligence (AI) further boosted Azure revenue growth by 6%. These figures solidify Microsoft's position as a leader in the cloud computing market.
Personal Computing, which includes Activision, Windows, Surface, and Xbox, reported revenue of $16.89 billion, higher than the estimated $16.8 billion. Windows OEM revenue grew by 11%, while Windows Commercial products and cloud services revenue grew by 9%.
Devices revenue decreased by 9% (-10% CC). Xbox content and services revenue increased by 61% (+60% CC ), driven by a 55-point net impact from the Activision acquisition.
Microsoft's capital expenditure during this period amounted to $9.74 billion, while the operating income stood at $27.03 billion.
The company provided guidance for the upcoming quarter (Q3, Mar) with a revenue expectation of $60-61 billion. In the Productivity and Business Processes segment, Microsoft anticipates revenue to be between $19.3-19.6 billion. For the Intelligent Cloud segment, the company expects revenue to range between $26.0-26.3 billion , with Q3 Azure revenue growth remaining stable to Q2 at constant currency.
For the More Personal Computing segment, Microsoft sees revenue between $14.7-15.1 billion.
In addition, Microsoft is reportedly in talks to lead a funding round for figure AI, a robotics startup looking to raise as much as $500 million. The company aims to develop humanlike robots in partnership with OpenAI, furthering its commitment to advancements in artificial intelligence (AI).
Shares of MSFT are little changed in after hours. The results did not blow away investors but they were good enough to suggest MSFT can sustain its current growth rates ands earn its valuation.