Microsoft posts Q2 2023 financial results; Windows OEM and devices revenue down, cloud and Office up.
Microsoft’s second quarter of 2023 fiscal financial results have been released, showing a revenue of $52.7 billion and a net income of $16.4 billion. This is a 2% increase in revenue, however net income has dropped by 12%. The results come shortly after Microsoft announced 10,000 layoffs.
The PC market has been hit hard by this, leading to a 16% drop in PC shipments in 2022, according to Canalys. Gartner reported a 29% year-over-year drop in Q4, the largest quarterly shipment decline since tracking began in the mid-1990s. This has had an effect on Microsoft’s Windows OEM revenue, which fell by 39%, and devices revenue, which also dropped by 39%. This was due to the launch of new products such as the Surface Pro 9, Surface Laptop 5, and Surface Studio 2 Plus. Microsoft is also writing down $1.2 billion in Q2 earnings related to hardware changes, severance costs, and lease consolidation.
Microsoft’s Xbox hardware revenue has decreased by 13%, and Xbox content and services revenue has fallen by 12%. This was due to the sale of fewer Xbox Series S/X consoles compared to the same period in 2022. Furthermore, Xbox Game Pass subscriptions have seen a slowdown in growth on the console side.
Microsoft’s cloud revenue has seen an increase of 18%, with Azure and other cloud services revenue up by 31%. Office commercial products and cloud services revenue has also grown by 7%, with Office 365 commercial revenue up by 11%. LinkedIn revenue has increased by 10%, and search and news advertising revenues have also seen a 10% increase.
Overall, Microsoft’s second quarter of 2023 fiscal financial results show a mixed bag of results. While cloud revenue has seen an increase, hardware and Xbox revenue have seen a decrease. Microsoft’s OpenAI partnership, worth an estimated $10 billion, and the launch of a new Microsoft 365 Basic subscription may help to improve these figures in the next quarter.