Executive Summary
Microsoft Corporation reported robust financial results for Q4 2024, with total revenue reaching $64.7 billion, marking a 15% increase year-over-year. The company notably emphasized its growing strength in the cloud segment, which generated $36.8 billion in revenue, a 21% growth from the previous year, underscoring the ongoing migration to cloud-based solutions and AI-driven efficiencies. CEO Satya Nadella highlighted that cloud and AI investments are expected to drive sustained growth, with strategic long-term infrastructure expenditures set to optimize service delivery across global markets. The overall strong demand for product offerings, particularly within Azure and Microsoft 365, reflects Microsoft’s effective alignment with customer needs and technological advancements in AI.
Key Performance Indicators
Key Insights
1. **Revenue Growth**: Total revenue for Q4 2024 was $64.7 billion, up 15% year-over-year and 4.64% quarter-over-quarter. Cloud revenue marked $36.8 billion, showing a growth of 21%.
2. **Profitability**: Operating income for the quarter was $27.9 billion, equating to an operating margin of 43%, showcasing strong cost management. Net income grew to $22.0 billion, with an EPS of $2.95.
3. **Cost Management**: Gross profit reached $45.0 billion, resulting in a gross margin of 69.5%, slightly lower...
Financial Highlights
1. Revenue Growth: Total revenue for Q4 2024 was $64.7 billion, up 15% year-over-year and 4.64% quarter-over-quarter. Cloud revenue marked $36.8 billion, showing a growth of 21%.
2. Profitability: Operating income for the quarter was $27.9 billion, equating to an operating margin of 43%, showcasing strong cost management. Net income grew to $22.0 billion, with an EPS of $2.95.
3. Cost Management: Gross profit reached $45.0 billion, resulting in a gross margin of 69.5%, slightly lower due to a shift in sales mix.
4. Cash Flow: Cash flow from operations was $37.2 billion, a notable 29% growth, driving free cash flow up to $23.3 billion, which effectively supports ongoing capital expenditures for infrastructure.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
64.73B |
15.20% |
4.64% |
| Gross Profit |
45.04B |
14.34% |
3.90% |
| Operating Income |
27.93B |
15.14% |
1.25% |
| Net Income |
22.04B |
9.74% |
0.44% |
| EPS |
2.96 |
9.63% |
0.34% |
Key Financial Ratios
operatingProfitMargin
43.1%
operatingCashFlowPerShare
$5
freeCashFlowPerShare
$3.14
dividendPayoutRatio
25.3%
Management Commentary
1. AI Investments Focus: Satya Nadella stated, "We are focused on two fundamental things: driving innovation across our product portfolio while continuing to scale our cloud business."
2. Cloud Revenue Highlights: CFO Amy Hood remarked, "Commercial bookings were significantly ahead of expectations and increased 17%, indicating solid demand stability for our cloud offerings."
3. Operational Efficiency: "We expect FY2025 operating margins to be down only about one point year-over-year," indicating effective cost discipline despite increased spending on AI and cloud infrastructure.
"Microsoft Cloud revenue surpassed $135 billion, up 23%." - Satya Nadella
— Satya Nadella
"Commercial bookings increased 17% and 19% in constant currency, indicating strong demand signals for our cloud offerings." - Amy Hood
— Amy Hood
Forward Guidance
Management provided a positive outlook for FY2025, projecting continued double-digit revenue and operating income growth. The firm expects significant capital expenditures to support AI and cloud development and maintains confidence that operational leverage will improve margins over the long term, driven by advancements in Microsoft’s AI infrastructure and a commitment to managing expenses carefully as demand scales. The anticipated effective tax rate is projected to be around 19%.