Microsoft (NASDAQ: MSFT) announced its 2023 Q2 financial results on January 24, 2023. According to the announcement, total revenue was up 2% (3 months, YoY). However, operating income and net income were down 8% and 12%, respectively (GAAP, 3 months, YoY).
Looking at segment revenues, intelligent cloud was up 18% (3 months, YoY). It was followed by productivity and business processes of up 7%. On the other hand, more personal and computing was down 19% (3 months, YoY).
Reviewing by product, Azure and other cloud services were up 31%, followed by Microsoft cloud revenue of up 22% (3 months, YoY). Windows OEM and devices was down 39% and Xbox content and services was down 12%.
Among the total revenue, service revenue accounts for 69%, up 886bp (3 months, YoY). In addition, gross margin was 69% while operating margin was 39%. These figures of profitability show that Microsoft maintained superior business performance.
Net cash from operation was down 67% year-over-year while free cash flow recorded decrease of 176 million USD (3 months). In this regard, Microsoft spent 10,525 million USD in paying dividends and repurchasing the shares in 2023 Q2.
As you may be aware, more than half of Microsoft’s revenue is derived from its service segment and its growth potential is very high.
Generally, the cloud business tends to increase its operating margin as its scale becomes larger. We believe that this is one of the reasons why Microsoft is recording the high profitability in their business.
- Watanabe & Brothers’ Investment is holding shares of Microsoft Corporation.
- This report is provided solely for informational purpose and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell any specific products.
- Any opinions or statements expressed in this report are based on the author’s personal and subjective views, and are not the official views of the organization to which the author belongs. In addition, although we have done our best efforts in making accurate assessments on the original financial statements, we cannot guarantee any complete accuracy of this report. We do not guarantee either that any future forecasts referred to in this report will certainly be realized. Investment in listed stocks, ETFs, etc. should be carried out under the responsibility of each investor, and even if the investor who read this report suffers a loss due to investment activities, Watanabe & Brothers’ Investment is not responsible for any liability.
- This report was originally prepared in English, and translated into the other languages with plugin utilizing Google Translation API. We hereby notify that the translations are provided only for the sake of reference, and any opinions or statements in this report should be interpreted in original English. We ask any investors reading this report to refer to the original financial statements issued by the company.