8 Key Takeaways from Microsoft’s Q3 Earnings

April 26, 2024

Microsoft stock

Microsoft Corporation (NASDAQ: MSFT) recently unveiled its Q3 2024 earnings, surpassing expectations with robust revenue growth and significant advancements in its cloud and AI segments. The earnings report not only highlighted the tech giant’s strong financial performance but also its strategic positioning in critical growth areas like cloud computing and artificial intelligence. In line with the positive announcement, shares of Microsoft popped in afterhours trading, with prices up nearly 4% after the closing bell.

Here are 8 key takeaways from Microsoft’s Q3 2024’s earnings report:

  1. Earnings Beat: Microsoft reported earnings of $2.94 per share, surpassing the consensus estimate of $2.84. This performance reflects a stronger than anticipated quarter.
  2. Revenue Growth: The company’s revenue rose 17% year-over-year to $61.86 billion, exceeding expectations of $60.89 billion. This growth is indicative of robust overall business performance.
  3. Intelligent Cloud Division: This segment, which includes Azure, contributed significantly with $26.7 billion in revenue. Azure itself grew 31% year-over-year, outpacing analyst expectations for growth.
  4. Guidance for Q4: Microsoft provided revenue guidance for the fiscal fourth quarter in the range of $63.5 billion to $64.5 billion, slightly below the analysts’ expectations of $64.57 billion. Azure is expected to grow between 30% and 31% in constant currency during this period.
  5. Performance of New Acquisitions: The earnings included the results from Activision Blizzard for the first time, contributing to the Personal Computing segment’s $15.6 billion revenue.
  6. Productivity and Business Processes: This segment, which includes Office and Dynamics 365, saw revenue of $19.6 billion, up 12% year-over-year. Office Commercial and Dynamics 365 experienced significant growth rates of 13% and 19% respectively.
  7. LinkedIn Revenue: LinkedIn’s sales increased by 10% year-over-year, demonstrating continued strong performance in the business networking space.
  8. AI and Cloud Impact: CEO Satya Nadella highlighted the impact of Microsoft Copilot and AI transformation across various industries, signaling strategic growth areas for the company moving forward.

Solid financial health and strategic position to tap on AI growth story

Microsoft’s latest earnings report paints a picture of a company that is not only managing to exceed financial expectations but is also successfully navigating the complexities of technological innovation and market demands. With significant growth in Azure and promising developments in AI, Microsoft continues to reinforce its position as a leader in the technology sector. However, as the company’s valuation soars, it faces heightened expectations from investors who are keenly aware of the potential risks associated with such rapid growth. Moving forward, Microsoft will need to balance these expectations with consistent performance, especially as it further explores the realms of AI and cloud computing.

Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of the company mentioned.

Billy Toh

Billy is deeply committed to making investment accessible and understandable to everyone, a principle that drives his engagement with the capital markets and his long-term investment strategies. He is currently the Head of Content & Investment Lead for Prosperus and a SGX Academy Trainer. His extensive experience spans roles as an economist at RHB Investment Bank, focusing on the Thailand and Philippines markets, and as a financial journalist at The Edge Malaysia. Additionally, his background includes valuable time spent in an asset management firm. Outside of finance, Billy enjoys meaningful conversations over coffee, keeps fit as a fitness enthusiast, and has a keen interest in technology.

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