On Tuesday, Microsoft Corp. released Q1 data, which shows that revenue was up 13% (up 12% in constant currency). Microsoft shares rose 4.4% in after-hours trading.
Operating income reached $26.9 billion, reflecting a 25% increase (or 24% in constant currency). Net income amounted to $22.3 billion, a 27% rise (or 26% in constant currency).
According to Amy Hood, executive vice president and chief financial officer at Microsoft, “consistent execution by our sales teams and partners drove a strong start to the fiscal year with Microsoft Cloud revenue of $31.8 billion, up 24% (up 23% in constant currency) year-over-year”.
In the last quarter, Microsoft’s Intelligent Cloud division, home to the Azure cloud computing platform, generated $24.3 billion in revenue, surpassing analysts’ expected $23.49 billion, according to LSEG data.
Azure’s revenue increased by 29%, surpassing the 26.2% Visible Alpha estimate.
According to Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, “Microsoft’s come out the gate swinging this quarter. A resilient set of numbers highlights how well it’s placed to capitalise on the world’s growing need for cloud solutions. So few companies can afford a seat at this table that Microsoft’s able to dig in. With that said, growth is expected to moderate, despite being resilient in the scheme of things.”
“End customers are likely going to trim spending while they ride out the economic storm, meaning blockbuster tech budgets are on the chopping block. The potential for Microsoft to do exceptionally well with generative AI remains, but the exact moment in time that this technology will be adopted at large will depend on when corporate spending picks up pace, and confidence needs to improve before that can happen,” Sophie Lund-Yates concluded.