Microsoft (MSFT) Q1 earnings report 2024

Microsoft shares jumped as much as 6% in extended trading Tuesday after the software maker issued fiscal first-quarter results and quarterly revenue guidance that beat Wall Street estimates. The firm also reported a surge in profit due to a slower pace of operating expense growth.

Here’s how the company did, compared with the consensus among analysts surveyed by LSEG, formerly known as Refinitiv:

• Earnings per share: $2.99 vs. $2.65 expected
• Revenue: $56.52 billion vs. $54.50 billion expected

With respect to guidance, Amy Hood, Microsoft’s finance chief, called for fiscal second-quarter revenue in the range of $60.4 billion to $61.4 billion on a conference call with analysts. That implies 15% growth. Analysts polled by Refinitiv had expected $60.9 billion in revenue.

Revenue grew almost 13% year over year in the quarter from $50.12 billion in the year-ago quarter, according to a statement. Net income, at $22.29 billion, increased 27% from $17.56 billion, or $2.35 per share, in the same quarter a year ago.

Microsoft’s Intelligent Cloud segment produced $24.26 billion in revenue, up 19% and above the $23.49 billion consensus among analysts surveyed by StreetAccount. The unit comprises the Azure public cloud, SQL Server, Windows Server, Visual Studio, Nuance, GitHub and enterprise services.

Revenue just from Azure jumped 29% during the quarter, higher than the 26% consensus among analysts that CNBC and StreetAccount polled. Microsoft doesn’t disclose Azure revenue in dollars. At constant currency, Azure revenue rose 28%, accelerating from 27% in the fiscal fourth quarter.

For the second half of the 2024 fiscal year, Hood said to expect Azure growth at constant currency to remain stable compared with the fiscal second quarter, which should come in at 26% to 27%, with an increasing contribution from artificial intelligence.

Microsoft is “still helping customers use the Microsoft Cloud to get the most value out of their digital spend, and driving operating leverage,” CEO Satya Nadella said in the earnings release. Hood said clients are still finding ways to save money on cloud spending, a trend multiple large cloud infrastructure providers have flagged in the past few quarters.

“We’ll lap some of those cycles that were fairly extreme perhaps in the second half” of the fiscal year, Nadella said.

Meanwhile, clients are flocking to new generative AI tools in the cloud that are enhanced with software from Microsoft-backed startup OpenAI. The Azure OpenAI Service now has 18,000 customers, up from 11,000 customers in July. Higher capacity for graphics processing units in Azure boosted growth, Hood said.

Around 3 percentage points of the quarter’s Azure growth was tied to AI, Hood said. Three months ago, the company had forecast 2 points of Azure growth in that area.

“Looking on a competitive basis, we feel good about our execution, we…