Microsoft announced its fourth-quarter results Tuesday, missing Wall Street’s expectations. The company reported it had $51.9 billion in sales for the quarter that ended June 30, an increase of 12% year over year. Analysts were expecting around $52.5 billion. Net income inched up 2% to $16.74 billion. This is considered the slowest revenue growth for Microsoft since 2020.
Microsoft reduced its Q4 prediction in June to between $51.9 billion and $52.7 billion, anticipating that foreign currency exchanges would interfere with its quarterly revenue. And for the most part, the company wasn’t wrong.
Microsoft cited that foreign exchange rate movement negatively impacted revenue by $595 million and reduced earnings per share by 4 cents.
The software company continues to experience other challenges stemming from a deteriorating PC market — its largest decline in years — as well as extended production shutdowns in China and scaled-down operations in Russia.
PC shipments experienced a huge drop, and Gartner predicts worldwide PC sales could decline nearly 10% this year.
Here are other key numbers from the report:
Xbox content and services revenue saw a slight dip at 6%. Hardware revenue fell 11%.
Windows OEM (original equipment manufacturer) revenue decreased 2%.
On the bright side, Microsoft’s Intelligent Cloud segment generated $20.91 billion in revenue, up 20%. Revenue from Azure and other cloud services grew by 40%, compared with 46% last quarter.
The company also said LinkedIn continues to grow as revenue was up 26%. However, this is down from the 34% growth last quarter.
Office Commercial products and cloud services revenue increased 9% driven by Office 365 Commercial revenue growth of 15%.
Office Consumer is also up 9% year over year.
Microsoft 365 Consumer reached 59.7 million subscribers.
Microsoft’s earnings follow the announcement that it will be the ad tech partner for Netflix’s upcoming ad-supported tier.
The news also comes as the overall tech market faces a beating and companies slow down hiring and announce layoffs. In the beginning of this month, Microsoft laid off less than 1% of its 180,000-person workforce, per Bloomberg. The company also said it was slowing hiring moving forward.