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AI and cloud power 18% YoY increase in Microsoft FY24 Q2 revenue

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Microsoft revenue

Technology giant Microsoft unveiled its latest earnings report on Tuesday, showcasing its most impressive quarterly revenue to date for the fifth consecutive quarter. This financial performance aligns with the growing interest among investors in the realm of artificial intelligence (AI) and the introduction of ChatGPT by Microsoft-backed OpenAI.

Microsoft’s Chairman and CEO, Satya Nadella, emphasized the company’s shift from merely discussing AI to implementing it on a large scale. Nadella stated, “By infusing AI across every layer of our tech stack, we’re winning new customers and helping drive new benefits and productivity gains across every sector.”

Microsoft’s revenue reached an impressive $62.0 billion, marking an 18% year-over-year increase in the quarter ending on December 31. Net income showed robust growth, reaching $21.87 billion, or $2.93 per share this quarter, compared to the $16.4 billion, or $2.20 per share in FY23 Q2. Operating income surged to $27.0 billion, reflecting a remarkable 33% increase, with a 25% increase in non-GAAP.

Amy Hood, Microsoft’s Executive Vice President and CFO, attributed the quarterly growth to the strong execution by sales teams and partners, propelling Microsoft Cloud revenue to $33.7 billion, up 24% year-over-year.

Breaking down the revenue figures, Productivity and Business Processes contributed $19.2 billion, showcasing a 13% surge.

Notable highlights in this segment include a 15% boost in revenue from Office Commercial products and cloud services, fueled by a robust 17% growth in Office 365 Commercial revenue. On the consumer front, Office Consumer products and cloud services revenue saw a 5% uptick, and the number of Microsoft 365 Consumer subscribers reached an impressive 78.4 million.

LinkedIn revenue experienced a 9% increase, while Dynamics products and cloud services revenue witnessed a remarkable 21% upswing, primarily driven by 27% growth in Dynamics 365 revenue.

The Intelligent Cloud segment registered a revenue of $25.9 billion, marking a substantial 20% increase. Server products and cloud services revenue within this category surged by 22%, propelled by 30% growth in Azure and other cloud services revenue.

In the More Personal Computing sector, revenue reached $16.9 billion, growing by 19%. Key highlights in this category include a 9% rise in Windows revenue, with Windows OEM revenue experiencing an 11% growth, and Windows Commercial products and cloud services revenue expanding by 9%.

Despite a 9% decrease in Devices revenue, Xbox content and services revenue witnessed an exceptional 61% increase, which is the impact of the acquisition of video game publisher Activision Blizzard in October 2023.

Additionally, Search and news advertising revenue, excluding traffic acquisition costs, also marked an 8% increase.

During the fiscal second quarter, the company also introduced custom cloud chips and launched a $30 monthly Copilot AI add-on for Microsoft 365 productivity software bundles. In 2024, Microsoft shares have surged by approximately 9%, outpacing the S&P 500 index, which gained 3% over the same period. The remarkable financial results and strategic initiatives highlight Microsoft’s strong position in the tech industry, especially within the growing landscape of artificial intelligence.

Read next: Deloitte acquires US-based Giant Machines to accelerate product delivery

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