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Microsoft (MSFT) released its Q4 FY23 report (ending June 2023) last week.
Today at a glance:
Microsoft Q4 FY23.
Recent business highlights.
Key quotes from the earnings call.
What to watch looking forward.
“Every AI app starts with data, and having a comprehensive data and analytics platform is more important than ever.“
CEO Satya Nadella reminded us that a successful AI strategy begins with a strong data strategy. This theme resonates with the company’s recent launch of Microsoft Fabric, a comprehensive data and analytics platform. We’ll look at this product launch in more detail today.
Let's dive in.
1. Microsoft Q4 FY23
Management always emphasizes the growth of Microsoft Cloud, so let’s clarify the difference with the Intelligent Cloud segment.
Microsoft Cloud is a broad term encompassing all of Microsoft's cloud offerings:
☁️ Azure: Microsoft's public cloud platform offers various cloud services, including computing, analytics, storage, and networking. Azure is “more than half” of Microsoft Cloud, but management doesn’t break it down.
📝 Microsoft 365: A subscription-based cloud service that provides access to Office applications like Word, Excel, PowerPoint, and additional online productivity and security services.
📊 Dynamics 365: A suite of business applications that provide CRM and ERP capabilities.
🖥️ Windows Server: Hosting services for Windows-based applications.
🌐 And more: Various other products and services, such as enterprise mobility and security tools.
Microsoft Cloud grew +23% Y/Y in constant currency to $30.3 billion, representing 54% of the company’s total revenue (vs. 48% in Q4 FY22).
Intelligent Cloud is a more specific segment focusing on public, private, and hybrid cloud solutions:
☁️ Azure: Just like in the broader Microsoft Cloud category, Azure is central to the Intelligent Cloud segment, providing a variety of Infrastructure, Platform, and Software-as-a-Service offerings.
⚙️ Server Products and Cloud Services: This includes products like Windows Server, SQL Server, Visual Studio, Nuance, and Github.
💼 Enterprise Services: Includes premier support services and Microsoft consulting services for enterprise customers.
Intelligent Cloud grew +17% Y/Y in constant currency to $24.0 billion in Q4 FY23 and contributed 43% of the overall revenue, marking an all-time high.
Income statement:
Here is a bird’s-eye view of the income statement.
Revenue grew +8% Y/Y to $56.2 billion ($0.7 billion beat), or +10% fx neutral.
📊 Productivity and Business Processes grew +10% Y/Y to $18.3 billion (+12% Y/Y fx neutral, the high-end of guidance).