From Morningstar: 2024-10-31 10:25:52

Microsoft reported strong results for the September quarter, with revenue up 16% to $65.59 billion. Azure revenue grew 34%, driven by AI services contributing 12 points of growth. Commercial bookings increased 23%, supported by ongoing Azure strength. Second-quarter guidance is slightly below estimates, but Azure growth is expected to accelerate next year.

Microsoft’s intelligent cloud segment performed well, with cloud revenue up 22% to $38.9 billion. Azure growth exceeded guidance at 34%, with AI services contributing significantly. Office and Dynamics powered performance in the productivity and business processes segment, growing revenue by 13%. Microsoft expects to surpass $10 billion in ARR from AI services next quarter.

In the more personal computing segment, revenue grew 17% to $13.18 billion, driven by strength in search and news advertising. Gaming performed well, with record revenue for Gamepass and strong engagement. Despite investments in Azure and the Activision acquisition, Microsoft delivered strong margins. Second-quarter guidance is slightly below estimates, but Azure growth is expected to accelerate in the future.

Microsoft’s ability to manage margins despite investments and acquisitions is impressive. GAAP operating margin was 46.6%, driven by careful cost management and favorable product mix. Second-quarter guidance is slightly below estimates, but Microsoft expects Azure to grow 31% to 32%. Capital expenditures are expected to increase in fiscal 2025, with a focus on long-term assets related to Azure. 1. The stock market experienced a sharp decline today, with the Dow Jones Industrial Average dropping by 500 points. This was attributed to concerns over rising inflation and interest rates, causing investors to sell off their shares.

2. The United Nations released a report stating that global carbon emissions reached a record high in 2021, despite efforts to reduce them. The report highlighted the urgent need for countries to take stronger action to combat climate change and prevent further environmental damage.

3. In sports news, the defending champions were upset in a thrilling overtime game last night. The underdog team scored a last-minute goal to secure the victory, shocking fans and analysts alike. This upset has set the stage for an exciting playoff race in the coming weeks.



Read more at Morningstar: Microsoft Earnings: Strength in Cloud, Guidance Mixed