Microsoft (MSFT) Q4 2024 earnings summary

Executive summary

• Q4 revenue was $64.7B, up 15% year-over-year; net income reached $22.0B, up 10%; diluted EPS was $2.95, up 10%.

• Fiscal year revenue exceeded $245B, up 16%; net income was $88.1B, up 22% year-over-year.

• Microsoft Cloud quarterly revenue hit $36.8B, up 21% year-over-year; annual cloud revenue surpassed $135B, up 23%.

• Record commercial bookings and strong performance across all major business segments, with double-digit top and bottom-line growth.

• Activision acquisition significantly impacted gaming and overall segment results.

Financial highlights

• Gross margin for Q4 was $45.0B, up 14%, with gross margin percentage at 70%; operating income was $27.9B, up 15%, and operating margin at 43%.

• Fiscal year gross margin was $171.0B, up from $146.1B last year; operating income for the year was $109.4B, up 24%.

• Free cash flow was $23.3B, up 18% year-over-year; cash flow from operations for the year reached $119B.

• Returned $8.4B to shareholders in Q4 via dividends and share repurchases, totaling over $34B for the year.

• Commercial bookings increased 17%; commercial remaining performance obligation rose 20% to $269B.

Outlook and guidance

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

• FY 2025 OpEx growth expected in single digits; operating margins to be down about 1 point year-over-year.

• Q1 guidance: Microsoft Cloud gross margin ~70%, down year-over-year due to AI infrastructure scaling; capital expenditures to rise sequentially.

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

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