Microsoft CEO Satya Nadella. Photo: SeongJoon Cho/Bloomberg via Getty Images
Microsoft on Tuesday reported its slowest quarter of sales growth in six years as the company deals with a cooling economy and a slowing PC market. Quarterly revenue of $52.7 billion came in slightly below Wall Street estimates, though its adjusted per-share earnings slightly topped expectations.
Between the lines: Its earnings report comes less than a week after Microsoft said it was cutting 10,000 employees, or less than 5% of its staff. Microsoft also announced in recent days it is investing billions more in OpenAI to incorporate that company's generative AI products like ChatGPT and Dall-E into various Microsoft products.
By the numbers:
- Revenue was $52.7 billion, up 2% from a year ago and below analysts' expectations of about $52.9 billion.
- Per-share earnings, excluding certain items were $2.32, ahead of estimates of around $2.30.
On a segment-by-segment basis:
- Server product and cloud revenue was up 20%, with Azure and other cloud services up 31%.
- Commercial sales of Office were up 7%, while the consumer side of Office was down 2%.
- Windows revenue from PC makers as well as Microsoft's own Surface devices were both down 39%.
- Revenue from search and advertising, as well as LinkedIn, were both up 10%.
- Xbox content and services revenue was down 12%. Xbox hardware was down 13%.
Shares of Microsoft rose in after-hours trading following the earnings report, changing hands recently at $251.25, up $9.21 or nearly 4%.