Microsoft ended the first quarter of its 2023 fiscal year with still solid results but the slowdown of Azure worries. Evidenced by the fall of 7.72% of the action Wednesday, red lantern on Wall Street. Microsoft, however, exceeded expectations in terms of revenue and profit. Revenue reached $50.12 billion, up 11% (+16% at constant exchange rates) year-on-year, while analysts were expecting $49.60 billion. Net profit fell 14% to $7.56 billion, or $2.35 per share, against a consensus of $2.29.
Cloud business as a whole is up 24% to $25.7 billion, more than half of Microsoft’s overall revenue. The “Intelligent Cloud” division which includes the Azure platform, servers and cloud computing services grew by 20% to reach 20.3 billion dollars. Azure remains the locomotive with a growth of 35% but it was still 40% in the previous quarter. Microsoft Chief Financial Officer Amy Hood also warned that a further 5-point sequential decline (at constant exchange rates) was expected in the current quarter.
The “Productivity and Business Processes” business line, which includes Office, Dynamics and LinkedIn, posted a more moderate increase in revenue of 9% to $16.5 billion. Office products grew by 7%, both on the professional and consumer side. LinkedIn and Dynamics do better, with 17% and 15% respectively.
The “More Personal Computing” business line (Windows, terminals and games) suffered the most this quarter due to the fall in the PC market. It is down slightly as a whole ($12.32 billion against 12.36 a year earlier). The Windows OEM segment drinks the cup with a decline of 15%. Fortunately for the publisher, the segment of professional versions of Windows is holding up better with growth of 8% and Surface sales are up 2%.
With the combined slowdown of Azur and consumer products, Microsoft expects revenues for the current quarter to be between 52.35 and 53.35 billion dollars. This time it would be below analysts’ expectations, which are targeting $56.2 billion.