Microsoft Accelerates Azure Growth as Revenue Rises 18%
Quarterly revenue reached $90.0 billion as cloud and services took a larger share of the business.
Microsoft Corp. (MSFT), the software and cloud-computing company, accelerated Azure revenue growth to 43% in the June quarter, extending a four-quarter pickup as demand shifted further toward cloud services.
The acceleration strengthened Intelligent Cloud’s position as Microsoft’s main growth engine while its productivity and personal-computing businesses lost momentum. Microsoft Cloud revenue rose 27% to $59.3 billion, easing from 29% growth in the March quarter but exceeding the 26% rates recorded in December and September.
Total revenue rose 18% from a year earlier, matching the March quarter’s pace after 17% growth in December. Operating income increased 18% to $40.6 billion, though that growth slowed from 20% in March and 21% in December. Net income climbed 31% to $35.8 billion, while diluted earnings rose 32% to $4.81 a share.
The earnings increase included a swing from a $1.58 billion OpenAI-related loss a year earlier to a $480 million gain. Excluding OpenAI investments, net income rose 22% and diluted earnings increased 23%, compared with 20% underlying net-income growth in the March quarter. A $3.2 billion Anthropic investment gain and lower-than-expected voluntary-retirement costs, partly offset by severance and Xbox impairment charges, added a net $0.27 a share relative to Microsoft’s April guidance.
Intelligent Cloud revenue rose 32% to $39.3 billion, accelerating from 30% growth in March, while segment operating income increased 31%. Annual Azure revenue surpassed $100 billion for the first time, up from more than $75 billion in the prior fiscal year. Commercial remaining performance obligations reached $678 billion, though growth slowed to 84% from 99% in March.
Productivity and Business Processes revenue increased 14% to $37.8 billion, slowing from 17% growth in March. Microsoft 365 Commercial cloud revenue rose 14% as reported, while Dynamics 365 growth fell to 13% from 22% in the prior quarter. LinkedIn held its growth rate at 12%.
More Personal Computing revenue fell 4% to $12.9 billion as segment operating income declined 14%. Windows OEM and Devices revenue dropped 7%, and Xbox content and services revenue fell 10%, deepening declines from the March quarter.
Microsoft 365 Copilot has exceeded 30 million paid seats. The company returned $10.2 billion to shareholders, unchanged from the March quarter and up from $9.4 billion a year earlier, as rising cloud infrastructure costs compressed gross margin to about 67.2% from 68.6%.