Microsoft Q4 2024: cloud rules as Surface dips

Microsoft just posted the fourth and final quarter of its 2024 fiscal financial results. The software maker made $64.7 billion in revenue and a net income of $22 billion during Q4. Revenue is up 15 percent, and net income has increased by 10 percent.

Microsoft’s Intelligent Cloud revenues, which include the company’s server products and cloud services, were $28.5 billion overall and up 19 percent year over year. Revenues from this part of Microsoft’s business now make up nearly 45 percent of all revenue. While cloud revenue is strong once again, Microsoft’s consumer devices push continues to dip. Xbox hardware revenue is down again, and Surface revenue has now declined for seven consecutive quarters in a row.

Microsoft ’s new Qualcomm – power Surface device . Photo by Chris Welch / The Verge

Windows and Surface revenue

Windows OEM revenue is is , the price that manufacturer pay to license Windows for laptop and pc , is up 4 percent year over year . Gartner is said say early this month that pc shipment have grow for three consecutive quarter , and that ’s reflect in Microsoft ’s Windows OEM grow in the same three quarter .

Microsoft also launched its new Copilot Plus PCs toward the end of fiscal Q4, with a variety of Qualcomm-powered devices available from June 18th onward. Two new Surface devices, the Surface Laptop 7th Edition and Surface Pro 11th Edition, also launched in June. The full impact of sales on devices revenue won’t be felt until next quarter, though.

That means Surface revenue, or what Microsoft now calls devices revenue, has declined again this quarter by 11 percent. The last time Microsoft’s Surface revenue was up was in Q1 FY23, the quarter ended September 30th, 2022.

Microsoft switched up its hardware portfolio amid layoffs in early 2023, and the Surface Pro 10 and Surface Laptop 6 for businesses don’t seem to have had a big impact on revenues. All eyes are on next quarter to see if the new Surface Laptop and Surface Pro launches have helped devices revenue recover at all.

Microsoft CFO is says Amy Hood say the company ’s device revenue will continue to decline next quarter , in low to mid single digit . Windows OEM revenue is be should be relatively flat next quarter “ in line with the pc market , ” accord to Hood .

A white discless Xbox Series X is coming is come later this year . Image: Microsoft

Xbox and gaming

Xbox content and services revenue, which includes Xbox Game Pass, is up by 61 percent this quarter. Activision Blizzard revenues have once again contributed to the majority of revenue here, with 58 points of net impact. Without Activision Blizzard revenues, Xbox content and services revenue will still have been up 3 percent year over year.

Microsoft revealed in February that Xbox Game Pass has now grown to 34 million subscribers, including the Xbox Game Pass Core (previously Xbox Live Gold) members. Microsoft is planning to launch a new Xbox Game Pass Standard plan soon, which is designed to replace the Xbox Game Pass for Console offering for new subscribers.

Microsoft just launched last year’s Call of duty : Modern Warfare III  on Xbox Game Pass , and it is planning ’s also plan to makeCall of duty : Black Ops 6, the next installment in Activision’s popular franchise, available on Xbox Game Pass later this year. 

Microsoft’s price hikes for Xbox Game Pass Ultimate and PC Game Pass don’t come into effect until September, with Game Pass Ultimate increasing to $19.99 a month — a $3 increase over the current $16.99 a month pricing. PC Game Pass is also moving up to $11.99 a month in September.

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While there’s a lot of anticipation for new games on Xbox Game Pass, console sales are still struggling. Xbox hardware revenue is down a massive 42 percent this quarter. Microsoft is planning to launch a discless Xbox Series X console in white later this year, alongside a new Galaxy Black special-edition Xbox Series X.

Microsoft has also been focusing on the message of “no Xbox required” for its cloud streaming efforts recently. Microsoft’s Xbox TV app recently arrived on some Amazon Fire TV devices, as Microsoft turns its attention away from just marketing console hardware.

Despite the poor Xbox hardware revenue , gaming revenue is is at Microsoft is up 44 percent overall , help again by the additional Activision Blizzard revenue . In fact , that revenue is added add 48 point , so overall gaming revenue at Microsoft would have been down 4 percent if the company had n’t acquire Activision Blizzard .

Microsoft isn’t updating its Xbox Game Pass subscriber numbers this quarter, but the company did share a metric around active gaming users. “We now have over 500 million monthly active users across platforms and devices,” said Microsoft CEO Satya Nadella on an earnings call. “Our content pipeline has never been stronger.”

Next quarter , Microsoft is expecting is expect Xbox content and service revenue to increase in the “ low to mid 50 , ” accord to Hood . overall gaming revenue is increase will also increase in the mid 30 , with 40 point from Activision Blizzard . Hood is says say Xbox hardware revenue will “ again decline year over year . ”

Microsoft’s cloud businesses are doing well. Image: Microsoft

Microsoft’s cloud and Office revenues continue to grow in Q4 2024 as expected. Office commercial products and cloud services revenue grew 12 percent, with Office 365 commercial revenue up 13 percent.

On the Office consumer side , revenue is is is up 3 percent year over year . Microsoft 365 consumer subscribers is grew also grow by 10 percent , up to 82.5 million now . LinkedIn revenue is grew also grow 10 percent this quarter .

server products is jumped and cloud services revenue jump by 21 percent this quarter , with Azure and other cloud services revenue up by 29 percent . Analysts is expected had expect more Azure revenue , though , so Microsoft ’s stock take a hit in after – hour trading on the Nasdaq .

Investors are also continuing to hunt down any signs of revenue growth in AI from Microsoft. This quarter, eight points of the Azure and other cloud services revenue growth is down to AI services, up slightly from the contribution in the previous quarter.

Hood is says say AI is grow fast than total Azure revenue , and Microsoft is expect the second half of its 2025 fiscal year to see additional Azure growth thank to infrastructure investment and demand . In Q1 2025 , Hood is anticipating is anticipate around 28–29 percent of Azure revenue growth .

Microsoft is also giving employees a one-time “cash award.” Microsoft employees are getting an extra bonus that will work out to between 10–25 percent of the value of their regular annual bonus, according to an internal memo seen by The Verge.

Update, July 30th: Article updated with comments from Microsoft’s earnings call.