Microsoft reports Q2 revenue up 2% YoY to $52.7B, net income down 12% YoY to $16.4B, Dynamics 365 revenue up 21% YoY, and LinkedIn revenue up 10% YoY
Earnings Release FY23 Q2 Microsoft Cloud Strength Drives Second Quarter Results REDMOND, Wash. — January 24, 2023 …
Microsoft
Context & Ripple Effects
Microsoft entered this quarter from a markedly faster base: its prior-year Q2 had 20% revenue growth and 21% net-income growth, while the current release shows a sharp slowdown in the consolidated business. Dynamics 365 and LinkedIn nevertheless remained positive-growth units within that weaker result.
The following quarter's return to 7% revenue growth and 9% net-income growth—along with faster Dynamics 365 growth—places this release as a trough in Microsoft’s near-term growth cadence rather than a uniform retreat across its portfolio.
First-order effects
- Microsoft’s 2% revenue growth and 12% net-income decline make Dynamics 365’s 21% growth and LinkedIn’s 10% growth comparatively more important contributors to the company’s growth profile.
- Dynamics 365 and LinkedIn gain internal strategic weight because both expanded while Microsoft’s consolidated earnings contracted.
Second-order effects
- Microsoft’s subsequent Q3 acceleration, including 25% Dynamics 365 growth, reinforces the case for directing attention toward the business application unit after this slower quarter.
- LinkedIn’s continued growth gives Microsoft a second business-facing revenue line alongside Dynamics, reducing the extent to which its near-term narrative rests on consolidated results alone.
Third-order effects
- If the pattern persists, Microsoft’s reported growth cycle will be increasingly defined by the relative performance of its business software and professional-network businesses rather than by a single company-wide rate.
- The later recovery suggests that large-platform earnings can move through short-term slowdowns while individual product lines continue to compound at different speeds.
The trend: Microsoft’s results illustrate a diversified software platform whose growth mix is shifting toward faster-growing business applications and professional services even as consolidated performance fluctuates.
Related: Microsoft · Dynamics · LinkedIn · Microsoft’s Q3 2023 earnings · Microsoft’s prior-year Q2 earnings
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Discussion
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@benjisales
Benji-Sales
on x
I'm just going to be honest these are not strong results at all. Especially Hardware being down so much is really not good this early in the generation Xbox needs a significantly better performance in 2023. Hopefully a much improved 1st party exclusive lineup this year helps
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@fxshaw
Frank X. Shaw
on x
Teams surpassed 280 million monthly active users this quarter, showing durable momentum since the pandemic. And we continue to take share across every category, from collaboration, to chat, to meetings, to calling.
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@tomwarren
Tom Warren
on x
the most interesting part of Microsoft's Q2 earnings is Satya Nadella calling the AI-powered Microsoft Cloud “a new computing platform” and that the “next major wave of computing is being born” just a day after a big $10 billion OpenAI investment https://www.theverge.com/... http…
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@carlquintanilla
Carl Quintanilla
on x
NADELLA: “The next major wave of computing is being born, as the Microsoft Cloud turns the world's most advanced AI models into a new computing platform.” @satyanadella $MSFT @JohnSpall247 #OpenAI https://www.microsoft.com/...
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@fxshaw
Frank X. Shaw
on x
We are leading in robotic process automation. Power Automate has more than 45,000 customers, up over 50% y/y. We're making it easier for anyone to streamline repetitive tasks, introducing new AI-powered features to turn natural language prompts into complex workflows.
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@genexdividend
@genexdividend
on x
Microsoft (I'm long $MSFT) beats on non-GAAP EPS of $2.32 vs $2.31 expected but misses on revenue of $52.7B vs $53.15B expected. #dividends https://www.microsoft.com/...
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@stephanie_link
Stephanie Link
on x
$MSFT: Pretty sure I am not buying something that sells at 24x forward EPS with GAAP OI down 8%, NI down 12% and EPS down 11%. Non GAAP just as bad. No touch for now.
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@jowens510
Jeremy C. Owens
on x
Here is how much things can change in 3 months. Wall Street in Oct. 2022: “Azure growth is only 35%? OH GOD, CLOUD BOOM OVER, SELL $MSFT!” https://www.marketwatch.com/ ... Wall Street in Jan. 2023: “Azure grew 31%? WHEW! BUY $MSFT!” https://www.marketwatch.com/ ... https://twitte…
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@fxshaw
Frank X. Shaw
on x
GitHub is now home to 100 million developers. And GitHub Copilot is the first at-scale AI product built for this era, fundamentally transforming developer productivity. More than one million people have used Copilot to date.
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@tomwarren
Tom Warren
on x
Microsoft's Q2, 2023 earnings are out: 🎮 Xbox hardware revenue down 13% 🕹️ Gaming down 13%, Xbox content + services down 12% ☁️ 63.2 million Microsoft 365 consumer subscribers 🖥️ Windows OEM revenue down 39% and devices down 39% full details here: https://www.theverge.com/...
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@rustybrick
Barry Schwartz
on x
Microsoft Bing Search and news advertising revenue excluding traffic acquisition costs increased 10% (up 15% in constant currency) https://twitter.com/...
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@wholemarsblog
@wholemarsblog
on x
Microsoft in the last quarter has likely recorded its slowest sales growth in over six years $MSFT https://www.wsj.com/...
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@fxshaw
Frank X. Shaw
on x
Microsoft 365 is rapidly evolving into an AI-first platform that enables every individual to amplify their creativity and productivity, with both our established applications, as well as new apps like Designer, Loop, and Stream.
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@microsoft
@microsoft
on x
“We are committed to helping our customers use our platforms and tools to do more with less today and innovate for the future in the new era of AI.” - Satya Nadella Read the full Microsoft's Q2 earnings release here: https://www.microsoft.com/...
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@epro
Emil Protalinski
on x
$MSFT Q2 2023 Revenue up 2% to $52.7 billion Net income down 12% to $16.4 billion Azure up 31% Office Commercial up 7% Office 365 Commercial up 11% Office Consumer down 2% LinkedIn up 10% Windows OEM down 39% Windows Commercial down 3% Devices down 39% Xbox down 12%
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@fxshaw
Frank X. Shaw
on x
All of this innovation is driving growth across our Azure AI services. Azure ML revenue alone has increased more than 100% for 5 quarters in a row.
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@patrickmoorhead
Patrick Moorhead
on x
Microsoft beats Q2 on earnings & misses on revenue. Up big after-hours. @Azure better than expected. -Rev +2% -OpInc -8% -NI -7% -EPS -6% -Up ~4% AH https://t.co/7KK6ZXWFgs (1/🧵) $MSFT https://t.co/NUO7yPNdVz
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@patrickmoorhead
Patrick Moorhead
on x
Intelligent Cloud highlights: -Rev +18% at $21.5B -@Azure +31% (that's down from 46% YoY); slightly better than expected -energy cost increases cited (interesting, not unexpected) (3/🧵) $MSFT https://twitter.com/...
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@epro
Emil Protalinski
on x
$MSFT Azure revenue growth Q1 2019: 76% Q2 2019: 76% Q3 2019: 73% Q4 2019: 64% Q1 2020: 59% Q2 2020: 62% Q3 2020: 59% Q4 2020: 47% Q1 2021: 48% Q2 2021: 50% Q3 2021: 50% Q4 2021: 51% Q1 2022: 50% Q2 2022: 46% Q3 2022: 46% Q4 2022: 40% Q1 2023: 35% Q2 2023: 31%
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@logmey92
Logan Meyer
on x
To be blunt - when the biggest news surrounding your platform for a whole year is an acquisition that is mired in regulatory process and you delayed the major titles expected for that year, the numbers aren't going to be fantastic. Gotta step up. https://twitter.com/...
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@tomwarren
Tom Warren
on x
some extra color on the Xbox hardware revenue situation. Microsoft says it was “driven by lower price and volume of consoles sold.” We may hear more about Xbox revenues on the earnings call in less than an hour
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@tomwarren
Tom Warren
on x
Microsoft CEO Satya Nadella on Xbox recent quarter: “We saw new highs for Game Pass subscriptions, game streaming hours, and monthly active devices. And monthly active users surpassed a record 120 million during the quarter.” https://www.theverge.com/...
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@astaniscia86
Giulio S.
on x
Xbox Game Pass MAUs surpassed a record 120 million during Q4 2022. But it isn't enough for Microsoft. The gaming segment is stagnant: it needs more quality content to sustain a solid growth. https://twitter.com/...