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.
Microsoft Corporation (NASDAQ: MSFT) Stock Chart
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