Microsoft (NASDAQ:MSFT) Posts A Double Beat On Earnings, Shares Gain Slightly
Microsoft (NASDAQ:MSFT) kicked off its fiscal year 2025 with impressive results for the quarter ending September 30, 2024. MSFT reported substantial increases across its key financial metrics, driven largely by the strength of its cloud services and advancements in artificial intelligence. The company beat estimates of $3.10 in EPS by reporting $3.30 in EPS, and revenue of $65.585 billion beat the $64.569 billion estimate. Shares are up slightly in after-hours trading as of 4:35PM EST.
"We're witnessing AI-driven transformation reshaping every facet of work, from individual roles to entire business processes," said Satya Nadella, Microsoft's chairman and CEO. "Our AI platforms and tools are not only expanding our opportunities but also attracting new customers eager to drive growth and efficiency."
Financial Highlights:
Revenue: Reached $65.6 billion, marking a 16% rise compared to the same period last year.
Operating Income: Grew by 14% to $30.6 billion.
Net Income: Climbed 11% to $24.7 billion, or a 10% increase in constant currency terms.
Earnings Per Share: Diluted EPS stood at $3.30, up 10% from the previous year.
Amy Hood, Microsoft's executive vice president and CFO, commented, "Our sales teams and partners executed strongly, delivering a solid start to the fiscal year. Microsoft Cloud revenue hit $38.9 billion, up 22% year-over-year."
Business Segment Performance:
Productivity and Business Processes:
Revenue: $28.3 billion, up 12% from the prior year (13% in constant currency).
Highlights:
Microsoft 365 Commercial: Revenue increased by 13%, driven by a 15% growth in commercial cloud revenue.
Microsoft 365 Consumer: Saw a 5% revenue uptick, with consumer cloud revenue growing by 6%.
LinkedIn: Revenue rose by 10%.
Dynamics Products and Cloud Services: Revenue grew by 14%, with Dynamics 365 experiencing an 18% increase.
Intelligent Cloud:
Revenue: $24.1 billion, a 20% increase year-over-year (21% in constant currency).
Highlights:
Server Products and Cloud Services: Revenue surged by 23%, fueled by a 33% growth in Azure and other cloud services.
More Personal Computing:
Revenue: $13.2 billion, up 17% from the same quarter last year.
Highlights:
Windows OEM and Devices: Revenue increased by 2%.
Xbox Content and Services: Revenue soared by 61%, significantly boosted by the recent acquisition of Activision.
Search and News Advertising: Revenue, excluding traffic acquisition costs, grew by 18%.
Shareholder Returns:
During the quarter, Microsoft returned $9.0 billion to shareholders through dividends and share buybacks.
Looking Ahead:
Microsoft plans to provide further guidance and insights during its earnings conference call and webcast scheduled for later today.
Strategic Initiatives and Highlights:
Artificial Intelligence: Microsoft's substantial investments in AI are paying off, as the technology becomes increasingly integral to the company's offerings and customer solutions.
Cloud Services: With a 22% increase in Microsoft Cloud revenue, the company continues to solidify its position as a leader in cloud computing.
Valuation: What Is MSFT’s P/E Ratio Now?
In the last year, MSFT generated $12.12 in adjusted EPS. At the current share price of $439, this gives it a P/E ratio of 36.22x.
You can use our free valuation calculators to help you determine if MSFT stock is undervalued or overvalued.
