Microsoft Reports $56.19 Billion in Revenue for Q4 2022, Azure Cloud Growth Slows to 26%

Microsoft has announced its fiscal fourth quarter earnings, reporting revenue of $56.19 billion, surpassing expectations of $55.47 billion. Earnings per share came in at $2.69, higher than the expected $2.55.

The company experienced an 8% year-over-year revenue growth, the first time it has fallen below 10% since 2017. Net income for the quarter reached $20.08 billion, compared to $16.74 billion in the same period last year.

Microsoft’s Intelligent Cloud segment, which includes Azure, SQL Server, and other enterprise services, contributed $23.99 billion in revenue, up 15% from the previous year. Azure revenue grew 26%, slightly lower than the 27% growth in the previous quarter. The cloud provider does not disclose Azure revenue in dollars.

Microsoft’s Productivity and Business Processes segment, encompassing Office products, LinkedIn, and Dynamics, generated $18.29 billion in revenue, a 10% increase from the previous year. The More Personal Computing business, consisting of Windows, devices, gaming, and search advertising, reported $13.91 billion in revenue, a decline of approximately 4%.

Sales of Windows licenses to device manufacturers declined by 12%, largely due to the surge in PC purchases during the COVID-19 pandemic, which made year-over-year comparisons challenging.

In terms of costs, Microsoft’s research and development expenses decreased year over year for the first time since 2016. The company’s operating expenses rose about 2% in the quarter, partially due to a fine from Ireland’s Data Protection Commission related to a potential privacy violation by its LinkedIn unit.

During the quarter, Microsoft announced a new chatbot for data analysis, leveraging technology from startup OpenAI. The chatbot will help employees analyze data and developers will have the opportunity to build plugins to enhance its functionality.

Microsoft shares slipped by 1% in after-hours trading following the earnings announcement. However, the stock has gained 44% year to date, outperforming the S&P 500, which is up 19%.

Investors are closely watching Microsoft’s acquisition of Activision Blizzard for nearly $69 billion, which is expected to close soon. An appeals court recently denied the Federal Trade Commission’s attempt to block the transaction.

Microsoft executives will discuss the financial results and provide guidance during a conference call with analysts at 5:30 p.m. ET.