Microsoft’s fiscal first-quarter earnings outperformed analyst forecasts led by revenue in Intelligent Cloud rising 19 percent to $24.3bn.
Company revenue reached $56.5bn, increasing by 13 percent (up 12 percent in constant currency) while server products and cloud services revenue were up 21 percent. Satya Nadella, chairman and CEO of Microsoft, said that Azure, growing 29 percent this quarter, again took share as Microsoft continues to see more cloud migrations.
Nadella said: “With Azure Arc, we are meeting customers where they are, helping them run apps across on-prem, edge and multi-cloud environments. We now have 21,000 Arc customers, up 140 percent year-over-year. We are the only other cloud provider to run Oracle’s database services, making it simpler for customers to migrate their on-prem Oracle databases to our cloud…”
“And we are the cloud of choice for customers’ SAP workloads too. Companies like Brother Industries, Hanes, Zeiss and ZF Group all run SAP on Azure.”
Amy Hood, CFO of Microsoft, also explained that in its commercial business, the trends from the prior quarter continued, with solid renewals and higher AI consumption:
“We saw healthy renewals, particularly in Microsoft 365 E5, and growth of new business continued to be moderated for standalone products sold outside the Microsoft 365 suite. In Azure, as expected, the optimization trends were similar to Q4. Higher than expected AI consumption contributed to revenue growth in Azure.”
Hood also said that about three percentage points of this quarter’s Azure growth was tied to AI, while the company had forecast two points of Azure growth three months prior.
With this, the CEO outlined the company’s ambition to keep leaning on its AI bet.
“With copilots, we are making the age of AI real for people and businesses everywhere, we are rapidly infusing AI across every layer of the tech stack and for every role and business process to drive productivity gains for our customers,” Nadella said.
With respect to Microsoft’s forward-looking guidance, Hood called for fiscal second-quarter revenue between $60.4bn and $61.4bn, looking at 15 percent growth, which could beat LSEG analysts’ $60.9bn prognoses.
For the second half of the 2024 fiscal year, she said that Microsoft expects Azure growth at constant currency to remain stable at 26 percent to 27 percent, compared with the fiscal second quarter, with AI projected to give a further boost.