Microsoft (NASDAQ:MSFT) has reported third-quarter fiscal 2024 earnings of $2.94 per share, surpassing the Consensus Estimate by 4.63% and marking a 20% improvement compared to the previous year. Adjusted for constant currency (cc), earnings saw a similar 20% year-over-year increase.

The company’s revenues reached $61.85 billion, reflecting a 17% rise compared to the previous year and exceeding the Consensus Estimate by 2%. At constant currency, revenues also grew by 17% year over year.

Key Highlights

Commercial Bookings Surge: Commercial bookings increased by 29% year over year and 31% at cc, outperforming expectations. This growth was driven by Azure commitments, with an increase in average deal size and length, alongside strong execution in core annuity sales motions.

Robust Cloud Performance: Microsoft Cloud revenues reached $35.1 billion, rising by 23% year over year and at cc, fueled by effective sales strategies and partnerships.

Solid Consumer Business: Demand in the personal computer (PC) market was slightly higher than anticipated, benefiting Windows OEM. Additionally, gaming saw a strong performance, particularly with Activision titles, following Microsoft’s acquisition of Activision Blizzard in October 2023.

Segmental Details

Productivity & Business Processes: Revenues increased by 12% year over year to $19.6 billion, primarily driven by better-than-expected results in LinkedIn.

Intelligent Cloud: Segment revenues grew by 21% year over year to $26.7 billion, led by a 31% increase in Azure and other cloud services revenue.

More Personal Computing: Revenues rose by 17% year over year to $15.6 billion, driven by strong performances in Gaming and Windows OEM.

Azure Driving Growth: Azure continues to be a major growth driver, witnessing an increase in large deals across various industries. The number of 100 million dollar-plus Azure deals rose by more than 80% year over year.

GitHub Copilot’s Success: GitHub Copilot is enhancing developers’ productivity, with Microsoft reporting 1.8 million paid subscribers and over 35% quarter-over-quarter growth. Over 90% of the Fortune 100 are now GitHub customers.

Financial Performance: Gross profit increased by 18% year over year to $43.3 billion, with an expanded gross margin of 70.1%. Operating income reached $27.5 billion, up by 23.4% year over year, while operating margin expanded by 230 basis points to 44.6%.

Guidance: For the fiscal fourth quarter, Microsoft anticipates revenue growth across its segments, with Office 365 Commercial revenue growth projected at approximately 14% at cc and Azure revenue growth expected between 30% and 31% at cc.

In summary, Microsoft’s Q3 performance showcases its continued strength in cloud services, solid growth across segments, and successful strategic initiatives like the GitHub Copilot. The company remains optimistic about future growth prospects, backed by its diverse product offerings and strong market position.

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