Microsoft reports profit of $16.4 billion, a 12.47% decline year on year

Microsoft has released its FY 23 second quarter results that ended December 31, 2022, reporting a net income of $16.425 billion representing a 12.47% decline from the N18.765 billion reported same period in FY 22.

Revenue (GAAP)

2022/23 Q2: $52.747 billion

2021/22 Q2: $51.728 billion

Change: +1.97%

Cost of Revenue (GAAP)

2022/23 Q2: $17.488 billion

2021/22 Q2: $16.960 billion

Change: +3.11%

Gross Margin (GAAP)

2022/23 Q2: N35.259 billion

2021/22 Q2: N34.768 billion

Change: +1.41%

Operating Expenses (GAAP)

2022/23 Q2: $14.869 billion

2021/22 Q2: $12.521 billion

Change: +18.75%

Operating Income (GAAP)

2022/23 Q2: $20.399 billion

2021/22 Q2: $22.247 billion

Change:  -18.31%

Net Income (GAAP)

2022/23 Q2: $16.425 billion

2021/22 Q2: $18.765 billion

Change:  -12.47%

Diluted EPS (GAAP)

2022/23 Q2: $2.20

2021/22 Q2: $2.48

Change:  -11.29%

Net Cash from Operations (GAAP)

2022/23 Q2: $11.173 billion

2021/22 Q2: $14.480 billion

Change:  -22.84%

Bottom line: The decline in net income was due to higher operating expenses, driven by investments in cloud engineering, the Nuance acquisition, and LinkedIn.

• Another contributing factor to the decline was the fall in More Personal computing revenue, especially Windows OEM revenue. Windows OEM revenue, the price PC manufacturers pay Microsoft to put Windows on machines fell by a massive 39% in Q2.
• Microsoft previously forecast a tough quarter for Windows OEM revenue and hardware, and the results are clear on the state of the PC industry right now.
• And the PC market is not going to improve next quarter, either. Microsoft CFO Amy Hood provided guidance of mid to high 30% declines in Windows OEM revenue for Q3, alongside mid-40 % declines in devices revenue.