- Microsoft’s total revenue for the fiscal second quarter increased by 2% y/y to $52.75 billion, the slowest rate since 2016.
- Revenue from Microsoft’s Intelligent Cloud segment, beat consensus, and was up 18% to $21.51 billion. The unit includes the Azure public cloud, Windows Server, SQL Server, Nuance and Enterprise Services.
- Revenue from Azure and other cloud services, which Microsoft does not report in dollars, grew by 31%.
The More Personal Computing business segment, that features Windows Xbox, Surface and search advertising, saw revenue decrease 19% to $14.24 billion. - Non-GAAP operating income was and $21.6 billion, and decreased only 3%. Net income for the period fell 7% to $17.4 billion, or $2.32 a share.
- Microsoft issued a disappointing revenue forecast for the current quarter. It expects between $50.5 billion and $51.5 billion in revenue, or 3% implied growth, for the third fiscal quarter.
- That’s on the back of a contraction in the PC market, which should result in a 17% y/y decline in the More Personal Computing business – Gartner research suggests that during the fourth quarter of 2022 the PC business market had its slowest growth since records began in the mid-1990s. Microsoft also expects Azure cloud growth to also slow again in the third quarter.
- The tech giant recently announced a multi-year, multibillion dollar investment in OpenAI. OpenAI is the creator of popular artificial intelligence image generation software Dall-E and chatbot ChatGPT. ChatGPT is a tool which is able to provide responses to questions and which, when added to Microsoft’s Bing search engine, could rival Google’s search capabilities. Microsoft products are a mainstay in businesses across the world, for presentations, data analytics and communication. It is a stock we own in the Cratos BCI Worldwide Equity Fund and in managed portfolios.
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