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