Microsoft Beat Q1 FY2023 Earnings Expectations

MSFT beat earnings forecasts, helped by cloud revenue

Key Takeaways

  • Intelligent Cloud revenue increased by 20% to $20.3 billion, matching analyst predictions.
  • Cloud computing is one of Microsoft's fastest-growing businesses, although it faces stiff competition from rivals including Inc. and Alphabet Inc.
  • Microsoft beat analyst estimates for both adjusted earnings per share (EPS) and revenue, although EPS was down year-on-year.
Microsoft Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Adjusted Earnings Per Share Beat $2.35 $2.30
Revenue Beat $50.1B $49.5B
Intelligent Cloud Revenue Match $20.3B $20.3B

Source: Predictions based on analysts' consensus from Visible Alpha

Microsoft (MSFT) Financial Results: Analysis

Microsoft Corp. (MSFT), the world's largest software company by revenue, beat analyst expectations for both profit and revenue in its first-quarter fiscal 2023, driven by growth in its cloud business that was partially offset by declines in personal computing business. Microsoft's 2022 fiscal year (FY) ended June 30, 2022.

Microsoft’s adjusted earnings per share (EPS), excluding certain items, slipped 13% to $2.35 but beat a consensus estimate of $2.30. Revenue rose 11% to $50.1 billion, above expectations, as cloud revenue soared. Microsoft stock was off more than 2% in after-hours trading shortly after the 1Q figures were released.

A strong dollar and accelerating inflation have threatened Microsoft's financial performance. To make matters worse, sales of computing hardware such as PCs have slumped in recent months following a surge early in the pandemic related to the increase in hybrid and work-from-home setups. The company said that healthy demand in its commercial cloud business and particularly its server products and cloud services helped to overcome these challenges.

MSFT Intelligent Cloud Revenue

Microsoft reported Intelligent Cloud revenue of $20.3 billion, a 20% increase that matched analyst predictions. Microsoft's Intelligent Cloud segment, including the company's Azure and other cloud services, is a key component and fast-growing part of its business by offering a comprehensive set of services to developers, IT professionals, and enterprises.

Supply chain-related shortages of servers and IT equipment have helped fuel growth for Microsoft as businesses turn to providers like it that already have key infrastructure in place, according to October 2022 Goldman Sachs equity research on Microsoft. Still, major rivals including Inc.'s (AMZN) Amazon Web Services and Alphabet Inc.'s (GOOGL) Google Cloud are competing for an increasing share of the business.

MSFT Outlook and Stock Performance

Microsoft did not provide forward guidance at the time of its earnings release on Oct. 25.

Shares of Microsoft traded down 2.38% after the earnings release as of 5:22 p.m. New York time. The company's stock has fallen 18% in the last year while the S&P 500 has dropped by 15%.

Microsoft's next earnings report (for Q2 FY 2023) is expected to be released on Jan. 24, 2023.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. Microsoft Corp. "Earnings Release FY23 Q1."

  2. Statista. "Largest Software and Programming Companies Worldwide by Sales Revenue from 2017 to 2022."

  3. Visible Alpha. "Financial Data."

  4. Microsoft Corp. "First Quarter Fiscal Year 2023 Outlook," Slide 3.

  5. ComputerWorld. "PC Sales Fall Off a Cliff."

  6. Yahoo! Finance. "Microsoft Corporation (MSFT)."

  7. TradingView. "Price Chart: MSFT and S&P 500."

  8. MarketScreener. "Microsoft Corp. (MSFT)."

Take the Next Step to Invest
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.