Microsoft Corporation recently reported its 4th quarter and full fiscal year 2023 financial results, ending June 30, 2023. The tech giant posted strong overall performance across its business segments, but the gaming sector showed mixed results. While gaming revenue contracted in Q4, Microsoft is making strategic investments in acquiring gaming studios and building a robust content pipeline for Xbox Game Pass.
Some Key Points Fiscal Year 2023 Results:
For the fiscal year ended June 30, 2023, Microsoft reported the following results:
- Revenue was $211.9 billion, reflecting a 7% increase (11% increase in constant currency).
- GAAP operating income totaled $88.5 billion, representing a 6% increase. Non-GAAP operating income was $89.7 billion, an 8% increase (14% increase in constant currency).
- Net Income: GAAP net income was $72.4 billion, with a slight decrease. Non-GAAP net income totaled $73.3 billion, a 6% increase (11% increase in constant currency).
- Diluted Earnings Per Share: GAAP diluted earnings per share were $9.68, with a slight increase. Non-GAAP diluted earnings per share were $9.81, reflecting a 7% increase (12% increase in constant currency).
For the fourth quarter, Xbox revenues remained relatively flat with a 1% increase year-over-year. Despite lower hardware revenue, Xbox content and services revenue grew 5% driven by third-party content sales and Xbox Game Pass subscriptions. Microsoft reported record engagement for the quarter, with all-time highs in monthly active users on Xbox and record usage for Xbox Game Pass with hours played increasing 22%. While hardware sales were soft, the growth in services and engagement points to the health of the overall Xbox ecosystem.
Sectors that Goes Up ⬆️
Revenue in Productivity and Business Processes was $18.3 billion, an increase of 10% (12% in constant currency). The business highlights in this sector include:
- Office Commercial products and cloud services revenue increased 12% (14% in constant currency), driven by Office 365 Commercial revenue growth of 15% (17% in constant currency).
- Office Consumer products and cloud services revenue increased 3% (6% in constant currency), and Microsoft 365 Consumer subscribers grew to 67.0 million.
- LinkedIn revenue increased 5% (7% in constant currency).
- Dynamics products and cloud services revenue increased 19% (21% in constant currency), driven by Dynamics 365 revenue growth of 26% (28% in constant currency).
Sectors that Goes Down ⬇️
Its not all good news though on the same Q4 2023 Financial Report here’s a list of sectors that drags the growth of their total revenue. There were a few areas where decreases were observed. This article will focus on these areas, providing a detailed analysis of the factors that contributed to the decline.
More Personal Computing
The More Personal Computing segment, which includes Windows, Devices, Gaming, Search, and Advertising, reported a revenue of $13.9 billion, marking a decrease of 4% (3% in constant currency) compared to the corresponding period of the last fiscal year. Here are the specific areas that saw a decline:
- Windows OEM Revenue revenue from Windows Original Equipment Manufacturer (OEM) decreased by 12%.
- Devices Revenue revenue, which includes Surface and PC accessories, decreased by 20% (18% in constant currency).
- Xbox hardware revenue: fell by 13% year-on-year during the three-month period.
The slight decrease in GAAP Net Income for the fiscal year is primarily due to the Q2 charge. Without this one-time charge, the company’s non-GAAP Net Income actually increased by 6% (11% in constant currency).
Potive Report in the Gaming Sector
Looking forward, Microsoft CEO Satya Nadella expects gaming revenue growth in mid-single digits, with mid-to-high single digit growth for content and services. Despite the decrease in hardware sales, the growth in Xbox content and services revenue, particularly from Game Pass, indicates a positive trajectory for Microsoft’s gaming sector.
