Microsoft Corporation (MSFT) Q4 2023 Earnings Call Jul. 25, 2023

Here is a summary of the MSFT earnings call:

Focused on 3 key priorities:

• helping customers use the breadth and depth of Microsoft Cloud to get the most value on to their spend

• investing to lead in the new AI platform shift by infusing AI across every layer of the tech stack

• driving operating leverage

  Infrastructure

• Microsoft Cloud surpassed $110 billion in annual revenue, with Azure accounting for more than 50% of the total.

• Every customer is looking to apply next-generation AI in their operations.

• Key priorities include helping customers maximize Microsoft Cloud value, leading in the new AI platform shift, and driving operating leverage.

• Azure continues to gain share, with Azure Arc gaining momentum and Azure AI introducing new workloads.

• Azure OpenAI Service has gained momentum across industries, with more than 11,000 organizations using the service.

  Data

• Data is a key component of AI apps.
  Microsoft Fabric, which unifies compute storage and governance, was introduced this quarter.

  Developers

• Azure AI Studio is becoming the tool of choice for AI development.

• AI is being applied across low-code, no-code tool chains to help domain experts.

• Power Automate now has 10 million monthly active users.

  Business Applications

• Dynamics surpassed $5 billion in revenue over the past fiscal year.

  Industry and cross-industry clouds

• Microsoft Cloud for Sustainability is helping customers meet their environmental goals.

  Future of work

• Microsoft Teams continues to build momentum with more than 1,900 apps in Teams app store.

  Windows

• Windows 11 device count has more than doubled in the last year, with Azure Virtual Desktop and Windows 365 surpassing $1 billion in revenue for the first time.

  Security

• Over 1 million organizations now count on Microsoft's comprehensive AI-powered solutions for security.

  LinkedIn

• LinkedIn's revenue surpassed $15 billion for the first time this fiscal year.

  Search, advertising and news

• AI is helping reshape daily search and web habits with Copilot for the web.

• The ad network is growing and is now available in 187 markets.

  Gaming

• In gaming, Activision Blizzard merger agreement deadline was extended.
  Microsoft is committed to bringing more games to more players.

• A new record was set for fourth quarter highs for monthly active users and record fourth quarter engagement across Game Pass in gaming.

  Additional Financials and Data

• Microsoft Cloud surpassed $110 billion in annual revenue, a 27% increase. Azure accounted for more than 50% of this total.

• Azure continues to grow, with increasing migration and investment in new workloads. Azure Arc now has 18,000 customers, a 150% increase YoY.

• Azure OpenAI Service is used by over 11,000 organizations, including IKEA, Volvo Group, and Zurich Insurance.
  It adds nearly 100 new customers daily.

• Strategic partnerships are driving AI's next generation to more customers.
  Snowflake plans to increase its Azure spending, while KPMG has committed to Microsoft's cloud and AI services.

• Microsoft introduced Microsoft Fabric, a platform that unifies compute storage and governance. It's seen high initial interest, with over 8,000 customers signing up.

• Azure AI Studio is gaining popularity as an AI development tool. GitHub Copilot has garnered interest from over 27,000 organizations.

• Microsoft is leveraging AI in low-code, no-code tools to assist domain experts.
  Power Virtual Agents is proving popular, with over 63,000 organizations using AI-powered capabilities.

• Power Automate now has 10 million monthly active users, with new process mining capabilities in the pipeline.

• Dynamics surpassed $5 billion in revenue in the past fiscal year. Microsoft is integrating Dynamics 365 Copilots into the ERP portfolio.

• Microsoft Cloud for Sustainability is helping companies meet their environmental goals.
  The healthcare sector is also adopting Microsoft's Nuance DAX ambient intelligence solution.

• Microsoft 365 Copilot is being rolled out to 600 paid customers, with feedback suggesting it's a productivity game changer.

• Microsoft Teams has more than 1,900 apps, with over 145,000 custom line-of-business apps developed.
  Teams Phone is a market leader in cloud calling.

• Windows 11 is growing, with deployments doubling in the last year.
  Azure Virtual Desktop and Windows 365 revenue surpassed $1 billion in the past 12 months.

• Over 1 million organizations use Microsoft's AI-powered security solutions.
  New addition Security Copilot is set for release to paid early access program in the fall.

• LinkedIn's revenue exceeded $15 billion in the past fiscal year, with membership growth for eight consecutive quarters.
  AI-powered collaborative articles are a key traffic driver.

• Bing is developing new AI-powered features, including multimodal capabilities with visual search and Bing Chat.
  Bing users have engaged in over 1 billion chats.

• Gaming engagement is strong, with a record number of active users and hours played.
  Xbox Game Pass Core, which merges Xbox Live and Game Pass, has been announced.

Anne Chapman

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