Shulou(Shulou.com)11/24 Report--

According to the news on the morning of October 26, Beijing time, Microsoft today released the company's first-quarter results for fiscal year 2023. Microsoft expects exchange rate factors to reduce sales growth by 5% in the second quarter, and weak demand for personal computers and advertising will continue in the second quarter. Microsoft shares fell more than 6% in after-hours trading after the results were released, and rose 1.42% to $250.76 in normal trading.

According to the report, Microsoft's revenue in the first quarter was $50.122 billion, up 11% from $45.317 billion in the same period last year, up 16% year-on-year, excluding exchange rate changes, and net profit was $17.556 billion, down 14% from $20.505 billion in the same period last year. Diluted earnings per share were $2.35, down 13% from $2.71 in the same period last year, and 7% year-on-year excluding exchange rate changes.

After the announcement, executives such as Microsoft CEO Satyanadra (Satya Nadella), executive vice president and CFO Amy Hood (Amy Hood) and chief accounting officer Alice Jolla attended the subsequent earnings call to interpret the main points of the results and answer analysts' questions. The following is the main content of the question and answer session of the analyst in this conference call:

Keith Weiss, Morgan Stanley analyst: it is not easy for the company to achieve impressive performance in such a difficult environment. Investors want me to ask Amy a question about the growth rate, that is, at a fixed exchange rate, the growth rate of Azure cloud services has been lower than the company's expectations for two consecutive quarters. Investors are worried or concerned about whether there are inherent growth fluctuations in this business. Make it impossible for management to accurately predict its growth? Will the company be more cautious in predicting the future of the business? How is the growth of the business throughout the year?

Amy Hood: thank you for your question. I also know that this is a focus that investors pay close attention to every quarter. Your understanding is accurate. Azure cloud services do have inherent growth fluctuations, sometimes we do a little better than quarterly growth forecasts, and sometimes we do a little worse than quarterly growth forecasts. In our view, the overall growth of the business is still very fast, each sub-business and regional markets are the same, from this point of view, it is basically in line with our expectations. In the first quarter of fiscal 2023, sales continued to focus on acquiring and serving customers, proactively helping customers optimize their workload and help them achieve greater success, despite the more complex macroeconomic situation in the quarter. Our goal remains unchanged and these efforts will create value for our customers. We see that customers' digital budgets and budget expenditures have been growing, and we believe that digitization will continue to drive companies to solve business problems, improve problem-solving capabilities, and improve operational efficiency and performance growth. This is basically the case in all vertical industries. In some few areas, we also work with partners to help customers optimize their workload.

I know the focus of investors, but for the company, we, and our partners, are more concerned about increasing market share, increasing customer loyalty, and driving customer business growth. The company expects this inherent growth volatility to continue in the future, and we will continue to invest in this business to enhance solutions to help customers achieve optimized workload and success. These businesses remain our focus and remain our most important opportunity for TAM growth in areas such as infrastructure, data and artificial intelligence.

Satyanadra: this is also a business where the company has achieved good growth from a large base, and we will continue to focus on improving customer loyalty and helping them optimize spending efficiency for some time to come, which is a long-term benefit for both the company and shareholders.

Bernstein analyst Mark Moerdler: I also have a follow-up question about Azure. According to the company's outlook, growth will continue to slow in the second quarter. Is this the result of business optimization, or is there any other reason? In particular, how do companies understand this slowdown when both service bookings and residual fulfillment value (RPO) are growing?

Amy Hood: first-quarter service bookings are really good, and RPO's long-term growth is good-customers promise to continue to use the company's services, and the plan to continue to invest in this area remains the same. Our outlook, including the business optimization considerations you mentioned, as well as the newly signed business, of course, these are not one-to-one correspondence, nor do they constitute an impact on the growth trend. We have put more emphasis on consumption before, but another factor that we have not mentioned before is a disadvantage in terms of average growth per user, including the non-renewal of some major customers. Generally speaking, our business plate is relatively large and the situation is relatively complex, so (the reason for the slowdown) cannot be simply understood as the result of business optimization.

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