Let’s look at the numbers and main takeaways from Microsoft’s FY24 Q2 earnings. Not surprisingly, there’s a lot of talk about AI with Satya Nadella saying:
“We’ve moved from talking about AI to applying AI at scale.
By infusing AI across every layer of our tech stack, we’re winning new customers and helping drive new benefits and productivity gains.”
Headline numbers
Revenue = $62 billion (increase of 18%)
Net Income = $21.9 billion (increase of 33%)
Within that, what they call “Microsoft Cloud” accounted for $33.7 billion of the revenue – an increase of 24%.
Productivity & Business Processes
Revenue = $19.2 billion (increase of 15%)
- Office 365 Commercial up 17%
- LinkedIn up 9% (better than expected)
- Dynamics 365 up 27%
Intelligent Cloud
Revenue = $25.9 billion
Azure growth was 30% this quarter. That’s 1% higher than last quarter although, in constant currency (where the impact of exchange rates is minimised) it was 28% i.e. 1% lower. Either way, it’s strong growth from Azure again, in no small part thanks to 6 percentage points added by AI.
Side note: The latest quarterly results for Amazon AWS (Q4 FY23) was $24.2 billion -so Azure is, for the first time I think (?), bigger than it’s long standing – and still market leading rival…at least on a quarterly basis.
Earnings Call Highlights
Over 53,000 Azure AI customers and over 1/3 of them are new Azure customers within the last 12 months.
Nadella mentions “an increase in the number of billion-dollar-plus Azure commitments“, citing Vodafone’s $1.5 billion commitment over the next 10 years.
Cosmos DB gets another shout out – and 42% YoY increase in data transactions…definitely a golden child product at the moment.
Over 400 million paid Office 365 seats which is a 9% YoY increase, primarily driven by SMB and Frontline SKUs.
On-premises server revenue increased 3% – driven by Windows Server 2012 end of life. That could be customers upgrading to newer versions but I’d wager a lot of it is Extended Security Update (ESU) revenue…
Nadella mentions the upcoming dedicated “Copilot” key on new Windows devices…
Cloudy with a chance of Licensing 