Jan 30, 2024 - Technology

Microsoft earnings top expectations on cloud strength

Illustration of a calculator with colorful buttons that make up the squares of the Microsoft logo

Illustration: Natalie Peeples/Axios

Microsoft on Tuesday reported quarterly earnings and revenue that topped analyst's expectations led by another period of strong growth in Azure and cloud computing.

Why it matters: The company has surged in value over the past months amid enthusiasm that investments in artificial intelligence will pay off via faster growth.

By the numbers:

  • Revenue was $62 billion, up 18% and ahead of estimates of around $61.1 billion
  • Per-share earnings were $2.93, up 33% and ahead of estimates of around $2.78.
  • Azure and other cloud services revenue are up 30% for the quarter.
  • Windows revenue is up 9% for the quarter.

What they're saying: "We've moved from talking about AI to applying AI at scale," CEO Satya Nadella said in a statement. "By infusing AI across every layer of our tech stack, we're winning new customers and helping drive new benefits and productivity gains across every sector."

Of note: LinkedIn revenue increased 9% compared with a year ago, while Microsoft's devices business saw revenue drop 9%.

  • Business sales of Office products and cloud services revenue rose 15%, while Office consumer revenue was up a more narrow 5%.

Between the lines: On a conference call with analysts, Nadella focused on the impact AI is having on Microsoft's business.

  • Microsoft now has 53,000 Azure AI customers, more than a third of whom are new Azure customers, Nadella said.
  • It also has more than 1.3 million paid customers for its GitHub Copilot, Nadella said.

Yes, but: Microsoft did not give a figure for the number of business customers paying for Copilot in conjunction with Microsoft 365.

  • "While it's early days for Microsoft 365 Copilot, we're excited about the addition we've seen to date and continue to expect revenue to grow over time," CFO Amy Hood told analysts.
  • Hood and Nadella said that, as was the case in the early days of the PC, businesses are likely to vary in how they adopt Copilot, with some giving the technology to all employees and others trying it out with a smaller group of employees first.

Editor's note: This story has been updated with additional detail.

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