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Microsoft shared in its latest earnings release that it gathered $52.7 billion for its revenue during its FY23 Q2, translating to a 2% increase. However, it said that its profit fell 12% to $16.4 billion during the said period.
Microsoft’s newest earnings release shows the different sections where the company is succeeding and being challenged now. Among all the details shared, the main highlight of the giant’s success in FY23 Q2 is its Intelligent Cloud revenue which hit $21.5 billion or an 18% increase, thanks to the 31% revenue growth of Azure and other cloud services. Nonetheless, it is important to note that the numbers are lower than last year’s second quarter, where Intelligent Cloud and Azure had 26% and 46%, respectively. On a positive note, Microsoft Cloud revenue was $27.1 billion, a 22% increase.
Microsoft’s Productivity and Business Processes (composed of Office Commercial products and cloud services, Office Consumer products and cloud services, LinkedIn, and Dynamics products and cloud services) segment received a total revenue of $17.0 billion, a 7% increase. However, it reported that its More Personal Computing segment (includes Windows OEM, Windows Commercial products and cloud services, Xbox content and services, search and news advertising, and devices) took a hit by having a 19% decrease in Q2 as its $14.2 billion revenue was under the $14.5-14.9 billion estimated by the company. In this section, Windows OEM and devices revenue contributed the most to the fall, with sales of both down to 39% last quarter.
Another element that impacted the More Personal Computing segment is the Xbox content and services, which revealed how the company’s gaming business performed in Q2. According to Microsoft, Xbox content and services saw a 12% decrease in revenue. Nonetheless, it was expected by the company, given the high demand for its gaming products and services in the past year. In relation to that, Xbox’s monthly active devices and streaming hours increased, a piece of good news for Microsoft despite the decline in the revenue of Xbox sales in the period. Microsoft CEO Satya Nadella applauded this, highlighting the growth of Game Pass.
“We saw new highs for Game Pass subscriptions, game streaming hours, and monthly active devices,” said Nadella. “And monthly active users surpassed a record 120 million during the quarter.”
In general, the report shows Microsoft’s slowest growth in six years. The next quarter, however, doesn’t look anything better for the giant. As its executives believe, it might continue until March, with customers being more careful in their spending.
Despite all these challenges, the Redmond company is determined to pursue a better future. As of now, it is still fighting for the approval of its proposed $69 billion Activision megadeal that might help a lot in its gaming business. It also laid off 10,000 employees recently in hopes of cutting business costs. In relation to that, the company decided to take a $1.2 billion charge in its Q2 earnings for severance costs, building leases, and “changes to our hardware portfolio.” Aside from that, the company announced this week the third phase of its “multibillion dollar investment” in OpenAI, which reportedly costs $10 billion.