Surface revenue went up 2%, beating expectations, while Windows OEM took a huge hit
Microsoft’s FY23 Q1 results fall primarily in line with expectations, although the PC market softened more than anticipated.
What you need to know
- Microsoft reported $13.33 billion in revenue for its More Personal Computing division.
- Surface and devices were up 2%, beating expectations.
- Windows OEM revenue, however, was down 15%, which was more than forecasted.
- Search, and news advertising grew 16%, which is in line with its outlook.
Microsoft is reporting its FY23 Q1 results today, netting $50.1 billion in revenue, which beat street estimates of $49.7 billion. That’s the good news.
Turning to the More Personal Computing division, Microsoft came in at $13.33 billion (Redmond had predicted between $13 and $13.4 billion). That number is effectively flat compared to year-over-year as FY22 Q1 also saw $13.37 billion in revenue for More Personal Computing.
More specifically, Surface and devices revenue (excluding Xbox consoles) was up 2%, which beat Microsoft’s expectations of a “decline in the high single digits.” Of course, these numbers came well before the launch of Surface Pro 9 and Surface Laptop 5, and it is unlikely that those will be huge draws for FY23 Q2.
Windows OEM was down a massive 15%, indicating that demand for laptops and PCs is taking a big dive. Indeed, Microsoft had only predicted a decline in the “high single digits,” making this a rare miss for the company. That 15% is offset by “5 points of positive impact from the prior year Windows 11 revenue deferral,” suggesting things may be much worse than previously believed.
Windows Commercial products and cloud services revenue grew 8% “driven by demand for Microsoft 365.” Likewise, search and news advertising via Bing continues to grow as revenue increases by 16%, which aligns with expectations.
Otherwise, it was an outstanding quarter for Microsoft, which mainly saw double-digit growth across Azure, LinkedIn, Office 365 Commercial, Office consumer products, and Dynamics.
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Daniel Rubino is the Editor-in-chief of Windows Central, head reviewer, podcast co-host, and analyst. He has been covering Microsoft since 2007 when this site was called WMExperts (and later Windows Phone Central). His interests include Windows, laptops, next-gen computing, and for some reason, watches. Before all this tech stuff, he worked on a Ph.D. in linguistics, watched people sleep (for medical purposes!), and ran the projectors at movie theaters because it was fun.