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

On January 25, Microsoft released its results for the second quarter of fiscal 2023 (October-December 2022) for the fiscal year ending December 31, 2022 (July 2022-June 2023) after the close of U.S. stocks on Tuesday. According to the results, Microsoft's second-quarter revenue was $52.7 billion (currently about 357.306 billion yuan), up 2% from a year earlier; net profit was $16.4 billion (currently about 111.192 billion yuan), down 12% from a year earlier; and diluted earnings per share were $2.20, down 11% from a year earlier. Microsoft shares fell more than 1 per cent in after-hours trading after the results were released.

Image source Pixabay the following are the main points of Microsoft's financial report for the second quarter:

Revenue was $52.7 billion, up 2% from $51.7 billion in the same period last year, but less than the average analyst estimate of $52.94 billion

-- net profit was $16.4 billion, down 12% from $18.8 billion in the same period last year.

Diluted earnings per share were $2.2, down 11% from $2.48 in the same period last year and below analysts' average expectations of $2.29

-- operating profit was $20.4 billion, down 8 per cent from $22.2 billion in the same period last year

-- Gross profit of $35.3 billion, up from $34.8 billion in the same period last year

Divided by department 1. Microsoft's second-quarter revenue from its productivity and business process (Productivity and Business Processes) division was $17 billion, up 7% from $15.9 billion in the same period last year and above analysts' consensus expectations of $16.79 billion. Where:

-- Office commercial products and cloud services revenue increased by 7% year-on-year, and Office 365 commercial product revenue increased by 11%.

-- revenue from Office consumer products and cloud services fell 2% year-on-year, while Microsoft's consumer users increased to 63.2 million

-- LinkedIn revenue growth of 10%

-- revenue from Dynamics products and cloud services grew by 13% and dynamics 365 by 21%.

two。 Revenue from Microsoft's intelligent cloud business (Intelligent Cloud) division was $21.5 billion in the second quarter, up 18% from $18.3 billion in the same period last year and slightly higher than the average analyst forecast of $21.44 billion. Where:

-- 20% growth in revenue from server products and cloud services

-- 31% growth in revenue from Azure and other cloud services

3. Microsoft's other personal computing division (More Personal Computing) had revenue of $14.2 billion in the second quarter, down 19% from $17.5 billion in the same period last year. Where:

-- Windows OEM revenue fell by 39%

-- Windows revenue from commercial products and cloud services fell by 3%

-- Xbox content and services revenue fell by 12%

-search and news advertising revenue, excluding traffic acquisition costs, increased by 10%

-equipment revenue fell by 39%

Cash flow as of December 31, 2022, Microsoft held cash, cash equivalents and short-term investments totaling $99.5 billion. As of June 30, 2022, the company's cash, cash equivalents and short-term investments totaled $104.8 billion.

In the second quarter of fiscal 2023, Microsoft returned $9.7 billion in cash to shareholders in the form of share buybacks and dividends, down 11% from the second quarter of fiscal 2022.

Satya Nadella, chairman and chief executive of Microsoft, said: "as Microsoft Cloud transforms the world's most advanced artificial intelligence model into a new computing platform, the next major computing wave is emerging. We are committed to helping customers use our platforms and tools, do more with fewer resources in the new era of artificial intelligence, and innovate for the future."

"while we continue to invest to drive growth, we focus on operational excellence," said Amy Hood, executive vice president and chief financial officer of Microsoft. Microsoft Cloud revenue reached $27.1 billion, up 22% year-on-year because our commercial products continue to create value for our customers. "

In the latest earnings report, Microsoft reported that its second-quarter revenue rose 2% from a year earlier, the slowest quarterly revenue growth since 2016. Net profit fell to $16.4 billion from $18.8 billion in the same period last year. Microsoft booked an additional $1.2 billion in second wealth because of the company's decision to cut 10, 000 jobs, improve its hardware lineup and integrate leasing facilities. The cost includes $800 million in severance pay.

Microsoft Chief Financial Officer Hood said on a conference call with analysts that the business was weak in December, including slower growth in consumption of Azure cloud services. New business growth in Microsoft's 365 productivity software subscriptions, Windows commercial products, and enterprise mobile and security products also fell short of management expectations during the month.

Revenue from Microsoft's smart cloud business was $21.5 billion, up 18% from a year earlier and slightly higher than analysts' consensus forecast of $21.44 billion. This department includes Azure public cloud, Windows Server, SQL Server, Nuance, and enterprise services. Revenue from Azure and other cloud services grew 31 per cent, slightly higher than the 31 per cent forecast by analysts.

Azure has also steadily grabbed more market share from Amazon's AWS. Bank of America global research estimates that Azure's share of the cloud computing market at the end of 2022 was 30%, up from 20% in 2018. AWS's market share fell to 55 per cent from 71 per cent in the same period.

Azure may get a boost from the growth of artificial intelligence. "We can introduce AI technology into specific products or improve existing products in a variety of ways," said Brett Iversen, head of investor relations at Microsoft. He was referring to the fact that the company is investing heavily in OpenAI, whose chatbot ChatGPT can generate works similar to Shakespeare or others through text input.

The productivity and business process divisions, including Office 365 (formerly Microsoft 365), LinkedIn and Dynamic, generated $17 billion in revenue, up 7% from a year earlier and exceeding analysts' consensus expectations of $16.79 billion. Nadella said on a conference call that the team collaboration app Teams now has more than 280 million active users per month.

More personal computing divisions (More Personal Computing), which are dominated by Windows, Xbox, Surface and search advertising, contributed $14.24 billion, down 19% from a year earlier. Windows licenses sold to equipment manufacturers fell about 39 per cent year-on-year, compared with a 15 per cent drop in the first quarter. Gartner, a technology research firm, estimates that Microsoft's PC business grew at its slowest pace since the mid-1990s in the fourth quarter of 2022.

According to Nadella, Microsoft generated more than $20 billion in security revenue in 2022, an increase of about 33 per cent over 2021 and a growth rate of about 45 per cent that year.

Microsoft's results kicked off the tech giant's earnings season, with the Nasdaq index plunging into its worst year since 2008 and its first four-quarter slump since the dotcom bubble burst. The layoffs at Microsoft come as Amazon, Alphabet, the parent company of Google, and Meta, the parent company of Facebook, all recently announced massive layoffs after they increased hiring during the outbreak and prolonged the bull market in the technology industry.

Raymond James analysts wrote in a research note to customers that Microsoft's decision to cut jobs shows that "despite unstable revenue, the company is still committed to maintaining profit margins." They suggested "buying" Microsoft stock.

In the second quarter, the Federal Trade Commission (FTC) also sued Microsoft to block its $69 billion acquisition of game publisher Activision Blizzard.

Microsoft shares closed down 0.25% at $241.97 on Tuesday. After the release of the results, as of this article, the stock fell more than 1% in after-hours trading and is now trading at $239.3. Microsoft shares are down 29% in the past 12 months as of Monday's close.

In the past 52 weeks, Microsoft shares have traded as low as $213.43 and as high as $315.95. Based on Tuesday's closing price, Microsoft has a market capitalization of about $1.804 trillion.

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