Microsoft's Fiscal Year 2024 Q4 Financial Report: Cloud Services Drive Revenue Growth, Despite Decline in Surface Series Turnover

Microsoft's financial results for the fourth quarter of fiscal year 2024 have been disclosed. The company saw a 15% increase in revenue compared to the previous year, primarily driven by the success of its cloud services like Azure. However, the turnover from hardware products such as the Surface series experienced a decline.

During the last quarter, Microsoft reported a total turnover of $64.7 billion and a net profit of $22 billion, marking a 15% and 10% increase respectively from the same quarter in 2023. The company attributes these gains to its cloud business, with the Intelligent Cloud division recording a 19% growth in revenue compared to the previous year. This sector now contributes 44% of Microsoft's total revenue.

In contrast, Microsoft's consumer devices and Xbox hardware sales saw a decrease in turnover last quarter. The Devices division, which includes the Surface series, reported an 11% decrease in quarterly revenue compared to the previous year. This trend has been ongoing for nearly two years. Microsoft recently unveiled new Surface devices powered by Qualcomm Snapdragon chips.

On the other hand, Microsoft saw an increase in revenue from Windows operating system sales to OEMs and Office services for both business and individual users. Business users saw a 12% increase while private individuals experienced a 3% rise in revenue. The company reported having 82.5 million Microsoft 365 subscribers.

Xbox revenue boosted by Activision Blizzard acquisition despite declining console sales

Microsoft's Xbox content and services revenue surged by 61% in the last quarter, largely attributed to the acquisition of Activision Blizzard. Without this acquisition, sales would have only increased by 3%. The company also noted having "500 million monthly active users" on its Xbox platforms.

Meanwhile, Xbox console sales witnessed a significant decrease, with a reported 42% drop in hardware sales. Microsoft has shifted its focus away from Xbox as a physical platform, opting to release games on Windows and other competitors' platforms. The company is heavily promoting Xbox Game Pass, offering cloud gaming on multiple devices with premium subscriptions. A new Xbox Series X variant without a disc drive is set to be launched later this year.