Microsoft (MSFT) Q4 2024 earnings summary

Executive summary

• Annual revenue reached $245.1 billion, up 16% year-over-year; Q4 revenue was $64.7 billion, up 15% year-over-year; Microsoft Cloud revenue for Q4 was $36.8 billion, up 21%.

• Net income for Q4 was $22.0 billion, up 10%; fiscal year net income was $88.1 billion, up 22%.

• Strong commercial bookings and record performance across all major business segments, with significant growth in large Azure and Microsoft 365 contracts.

• AI and cloud investments drove accelerated share gains, product innovation, and Copilot adoption, with customer base and usage doubling quarter-over-quarter in several segments.

• Activision acquisition significantly impacted gaming, contributing to revenue growth and increased expenses.

Financial highlights

• Gross margin for the year was $171.0 billion, up from $146.1 billion last year; Q4 gross margin was $45.0 billion, up 14%.

• Operating income for the year was $109.4 billion, up 24%; Q4 operating income was $27.9 billion, up 15%.

• Free cash flow was $23.3 billion, up 18% year-over-year; cash flow from operations for the year was $118.5 billion.

• Returned $8.4 billion to shareholders in Q4 via dividends and share repurchases; over $34 billion for the full year.

• Commercial remaining performance obligation rose 20% to $269 billion; 40% to be recognized as revenue in the next 12 months.

Outlook and guidance

• FY 2025 expected to deliver double-digit revenue and operating income growth, with capital expenditures to increase driven by AI and cloud demand.

• FY 2025 operating margins expected to be down about 1 point year-over-year; effective tax rate around 19%.

• Q1 guidance: Productivity and Business Processes revenue to grow 10%-11%; Intelligent Cloud 18%-20%; More Personal Computing 9%-12%.

• Azure Q1 revenue growth expected at 28%-29% in constant currency, with acceleration in H2 as capacity increases.

• Forward-looking guidance and updates to be provided during the earnings call and webcast.