Microsoft Reports Higher-than-Expected Profit in Q2/2023 Thanks to Strong Cloud Business

Microsoft Corporation announced that it has reported earnings per share in the second quarter of fiscal 2023 of $2.32, above expectations of $2.29. The company attributes this success to the strength of its Azure cloud services business.

According to the company’s financial report, the Azure business posted a 38% increase in sales, above expectations of a 37% increase. These figures exclude the impact of currency fluctuations.

Despite this strong performance from the Azure business, Microsoft’s overall revenue of $52.75 billion in Q2/2023 was below expectations of $52.94 billion.

Looking ahead, Microsoft predicts that revenue in the third quarter of fiscal 2023 will grow roughly 3% to $50.5-51.5 billion, lower than the expected $52.43 billion. Additionally, the company expects the growth rate of the Azure business to slow in Q3, and warns that enterprise software sales will also slow further in the same period.

In light of these predictions, the company has expressed concern that demand for Microsoft products will slow down, despite having been a driving force of the company’s revenue for many years.

In response to these challenges, Microsoft has announced plans to cut its workforce by 5%, or about 11,000 jobs, to cope with slowing demand and a recession signaling the economy. Additionally, on Monday (Jan. 23), the company announced it would invest billions of dollars in OpenAI, the makers of ChatGPT, the cutting-edge AI chatbot program. The value of this investment is expected to reach 10 billion dollars.

As a result of these announcements, Microsoft shares were down more than 1% early this morning.

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