Microsoft (MSFT) Q2 2023 Earnings

Microsoft (MSFT) reported the second fiscal quarter 2023 financial results after the market close. EPS beat the low estimates but revenue came below expectations, Azure cloud unit showed strong growth. Here are the key points:

Earnings per share came at $2.32 a decline from $2.48 a share a year ago but topping the expectations of $2.27.

Revenue for the quarter came at $52.7 billion below the expectations of $52.94 billion. Revenue growth is 2% (YoY) which is the slowest pace since 2016.

The Intelligent cloud revenue reported at $21.51 billion below the estimates of $21.43 billion.

Server products and cloud services revenue increased 20% driven by Azure and other cloud services revenue growth of 31%. 

Azure grew 38% (YoY) topping the consensus of 37%. Here are the last quarters Azure growth:

Q3 ’21: 48%

Q4 ’21: 46%

Q1 ’22: 49%

Q2 ’22: 46%

Q3 ’22: 42%

Q4 ’22: 38%

Revenue in Productivity and Business Processes was $17.0 billion.

Revenue in More Personal Computing was $14.2 billion and decreased 19%.

Operating income was $20.4 billion GAAP and $21.6 billion non-GAAP

Diluted earnings per share were $2.20 GAAP and $2.32 non-GAAP

Here is Microsoft’s $MSFT December Quarter Revenue since 2006

2006: $12.5B

2007: $16.4B

2008: $16.6B

2009: $19B

2010: $20B

2011: $20.9B

2012: $21.5B

2013: $24.5B

2014: $26.5B

2015: $23.8B

2016: $25.8B

2017: $28.9B

2018: $32.5B

2019: $36.9B

2020: $43.1B

2021: $51.7B

2022: $52.7B

Microsoft Analyst’s Expectations and latest Price Target

Analysts expected Microsoft to report earnings per share of $2.27 and revenue of $52.94. Revenue growth for the Azzure segment is expected to grow by 37%.

On January 20, Mizuho reiterated Microsoft at Buy and reduced the price target from $305 to $290. Guggenheim on January 17, downgraded MSFT from Neutral to Sell and set a price target of $212.