Microsoft CEO confident in cloud outlook despite slowing revenue growth

Microsoft revenue rose 12% to $51.9 billion in its fiscal Q4 2022 (ended June 30, 2022). While its cloud business remained strong, executives noted on an earnings call a reduction in Azure consumption meant revenue growth came in slightly below expectations. Still, CEO Satya Nadella expressed confidence demand for its cloud services will hold steady despite tough macroeconomic conditions.

The company’s overall cloud revenue hit $25 billion, up 28% year on year. Sales for its Intelligent Cloud unit rose 20% to $20.9 billion. While Microsoft doesn’t provide a breakout figure for Azure revenue, it noted sales of Azure and other cloud services rose 40%. That figure was down from 51% growth in FQ4 2021.

During the call, CFO Amy Hood stated the 2022 growth rate was “about one point lower than expected, driven by a slight moderation in Azure consumption growth across customer segments.”

Nadella attributed the Azure volatility to “businesses trying to deal with the overall macroeconomic situation.” But he added “I think coming out of this macroeconomic crisis, the public cloud will be even a bigger winner because it does act as that deflationary force.”

For the current quarter (FQ1 2023), Microsoft forecast Intelligent Cloud revenue of $20.3 to $20.6 billion, with Porat stating Azure revenue growth is expected to be “sequentially lower by roughly three points on a constant currency basis.”

All told, consolidated FQ1 revenue is expected to fall between $49.25 billion and $50.25 billion.

“Overall, our outlook has the trends we saw in June continue through Q1,” Porat said. “Our differentiated market position, customer demand across our solution portfolio and consistent execution across the Microsoft Cloud should drive another strong quarter of revenue and share growth, although we expect to continue to see growth moderation in our small- and medium-sized business segment.”