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Microsoft (MSFT.O) FY23Q4 earnings preview: AI and cybersecurity will be the highlights of performance.

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Microsoft (MSFT.O) 23Q4 earnings preview: AI and cybersecurity will become business highlights.pdf535.7K
Event
Microsoft (MSFT.O) is expected to release its 23Q4 earnings on July 25th Eastern Time.
Key Points
AI-enabled development potential brings continued growth in high-growth businesses
Microsoft's AI-enabled plans for Azure cloud products are expected to attract more users and catch up with industry leaders. As of the first quarter of 2023, Microsoft's Azure ranked second in the global cloud market with a 23% market share. Microsoft has started integrating AI into its cloud service products, and as the advantages of AI enablement gradually become apparent, revenue growth for this quarter will gradually stabilize. At the same time, Microsoft is also actively expanding high-growth businesses such as cybersecurity. Microsoft's security-related revenue exceeded $20 billion in the past 12 months, and recently launched new products in the security services edge field. According to GlobeNewswire data, the global security services edge market is expected to have a compound annual growth rate of 25.0%. With its integrated advantages, Microsoft is expected to attract more users in high-growth business areas.
Office 365 Copilot pricing exceeds expectations, Blizzard acquisition proposal advances again
Office 365 Copilot is priced at $30/month, exceeding expectations. After a trial limited to some enterprises, Microsoft officially announced on July 18th that the pricing for Office 365 Copilot is $30 per user per month, at least doubling the previous package price. Although the impact on FY23Q4 performance is not significant, it will help significantly increase office commercial revenue as the product penetration rate gradually improves. In terms of gaming business, Microsoft's acquisition proposal for Activision Blizzard has advanced again. The acquisition proposal was approved by a US court on July 12th, and Microsoft is expected to become the world's third-largest gaming group with Activision Blizzard's game IPs, enhancing its competitiveness.
The initial results of cost reduction and efficiency improvement have seen a large number of layoffs and a reduction in R&D expenses.
With the continued implementation of cost reduction and efficiency improvement by Microsoft, the marketing expense ratio has been fluctuating downward in the past three years, from a peak of 15% to around 11%. Considering the intense competition in the cloud market and the promotion demand after AI integration in Office products, we expect the marketing expense ratio in 23Q4 to continue to stay around 11%. As for R&D expenses, Microsoft has already completed a series of layoffs and salary reductions this year, and it is expected that the reduction in R&D spending in this quarter will further release the company's net profit.
Investment advice:
In conclusion, we believe that Microsoft's actual performance in Q4 of 23 will align with current expectations. Azure is expected to continue absorbing new businesses based on the new AI development platform established in Q3. Additional fees paid by some Office 365 co-pilot trial users have also brought new growth opportunities, and the company's control over R&D costs has provided more stable support for its performance. However, the financial data for this quarter still lags behind business development. What is worth paying attention to in this financial reporting season is the progress of the AI business and the company's performance guidance for the future.
Looking at the stock price, Microsoft has already risen by 44.64% since the beginning of 2023, with a relatively high valuation. However, with the continued commercialization and monetization of AI, the company will face new growth opportunities. As for options strategies, it is recommended for investors who hold the underlying stock and have a risk reduction demand to adopt the covered call strategy. For long-term optimistic investors, the sell put strategy can be adopted to earn option premiums and reduce the cost of buying.
Risk Warning
Product performance is below expectations; high operating costs; intensifying competition in the industry; obstacles in the progress of acquisition proposals; macroeconomic risks.
Event Microsoft (MSFT.O) is expected to release the 23Q4 earnings report on July 25th, Eastern Time. Key Points AI empowerment brings development potential, continuing to lay out high-growth business. Microsoft's AI empowerment plan for Azure cloud products is expected to attract more users and catch up with industry leaders. As of the first quarter of 2023, Microsoft's Azure ranks second in the global cloud market with a 23% market share. Microsoft has started integrating AI into its cloud service products, and as the advantages of AI empowerment gradually become prominent, the revenue growth rate of this quarter will gradually stabilize. At the same time, Microsoft is also actively expanding in high-growth businesses such as cybersecurity. Microsoft's security-related revenue exceeded $20 billion in the past December, and recently launched new products in the field of security services at the edge. According to GlobeNewswire data, the global security services edge market is expected to have a compound annual growth rate of 25.0%. With its integration advantages, Microsoft is expected to attract more users in high-growth business areas. Office 365 Copilot pricing exceeds expectations, advancing the Blizzard acquisition proposal once again. Office 365 Copilot is priced at $30 per month, exceeding expectations. After a partial trial for some small-scale enterprises, Microsoft officially announced on July 18th that the pricing of Office 365 Copilot is $30 per user per month, at least doubling the original package price. Despite the lower-than-expected growth in FY23Q4...
Event Microsoft (MSFT.O) is expected to release the 23Q4 earnings report on July 25th, Eastern Time. Key Points AI empowerment brings development potential, continuing to lay out high-growth business. Microsoft's AI empowerment plan for Azure cloud products is expected to attract more users and catch up with industry leaders. As of the first quarter of 2023, Microsoft's Azure ranks second in the global cloud market with a 23% market share. Microsoft has started integrating AI into its cloud service products, and as the advantages of AI empowerment gradually become prominent, the revenue growth rate of this quarter will gradually stabilize. At the same time, Microsoft is also actively expanding in high-growth businesses such as cybersecurity. Microsoft's security-related revenue exceeded $20 billion in the past December, and recently launched new products in the field of security services at the edge. According to GlobeNewswire data, the global security services edge market is expected to have a compound annual growth rate of 25.0%. With its integration advantages, Microsoft is expected to attract more users in high-growth business areas. Office 365 Copilot pricing exceeds expectations, advancing the Blizzard acquisition proposal once again. Office 365 Copilot is priced at $30 per month, exceeding expectations. After a partial trial for some small-scale enterprises, Microsoft officially announced on July 18th that the pricing of Office 365 Copilot is $30 per user per month, at least doubling the original package price. Despite the lower-than-expected growth in FY23Q4...
Event Microsoft (MSFT.O) is expected to release the 23Q4 earnings report on July 25th, Eastern Time. Key Points AI empowerment brings development potential, continuing to lay out high-growth business. Microsoft's AI empowerment plan for Azure cloud products is expected to attract more users and catch up with industry leaders. As of the first quarter of 2023, Microsoft's Azure ranks second in the global cloud market with a 23% market share. Microsoft has started integrating AI into its cloud service products, and as the advantages of AI empowerment gradually become prominent, the revenue growth rate of this quarter will gradually stabilize. At the same time, Microsoft is also actively expanding in high-growth businesses such as cybersecurity. Microsoft's security-related revenue exceeded $20 billion in the past December, and recently launched new products in the field of security services at the edge. According to GlobeNewswire data, the global security services edge market is expected to have a compound annual growth rate of 25.0%. With its integration advantages, Microsoft is expected to attract more users in high-growth business areas. Office 365 Copilot pricing exceeds expectations, advancing the Blizzard acquisition proposal once again. Office 365 Copilot is priced at $30 per month, exceeding expectations. After a partial trial for some small-scale enterprises, Microsoft officially announced on July 18th that the pricing of Office 365 Copilot is $30 per user per month, at least doubling the original package price. Despite the lower-than-expected growth in FY23Q4...
Event Microsoft (MSFT.O) is expected to release the 23Q4 earnings report on July 25th, Eastern Time. Key Points AI empowerment brings development potential, continuing to lay out high-growth business. Microsoft's AI empowerment plan for Azure cloud products is expected to attract more users and catch up with industry leaders. As of the first quarter of 2023, Microsoft's Azure ranks second in the global cloud market with a 23% market share. Microsoft has started integrating AI into its cloud service products, and as the advantages of AI empowerment gradually become prominent, the revenue growth rate of this quarter will gradually stabilize. At the same time, Microsoft is also actively expanding in high-growth businesses such as cybersecurity. Microsoft's security-related revenue exceeded $20 billion in the past December, and recently launched new products in the field of security services at the edge. According to GlobeNewswire data, the global security services edge market is expected to have a compound annual growth rate of 25.0%. With its integration advantages, Microsoft is expected to attract more users in high-growth business areas. Office 365 Copilot pricing exceeds expectations, advancing the Blizzard acquisition proposal once again. Office 365 Copilot is priced at $30 per month, exceeding expectations. After a partial trial for some small-scale enterprises, Microsoft officially announced on July 18th that the pricing of Office 365 Copilot is $30 per user per month, at least doubling the original package price. Despite the lower-than-expected growth in FY23Q4...
Event Microsoft (MSFT.O) is expected to release the 23Q4 earnings report on July 25th, Eastern Time. Key Points AI empowerment brings development potential, continuing to lay out high-growth business. Microsoft's AI empowerment plan for Azure cloud products is expected to attract more users and catch up with industry leaders. As of the first quarter of 2023, Microsoft's Azure ranks second in the global cloud market with a 23% market share. Microsoft has started integrating AI into its cloud service products, and as the advantages of AI empowerment gradually become prominent, the revenue growth rate of this quarter will gradually stabilize. At the same time, Microsoft is also actively expanding in high-growth businesses such as cybersecurity. Microsoft's security-related revenue exceeded $20 billion in the past December, and recently launched new products in the field of security services at the edge. According to GlobeNewswire data, the global security services edge market is expected to have a compound annual growth rate of 25.0%. With its integration advantages, Microsoft is expected to attract more users in high-growth business areas. Office 365 Copilot pricing exceeds expectations, advancing the Blizzard acquisition proposal once again. Office 365 Copilot is priced at $30 per month, exceeding expectations. After a partial trial for some small-scale enterprises, Microsoft officially announced on July 18th that the pricing of Office 365 Copilot is $30 per user per month, at least doubling the original package price. Despite the lower-than-expected growth in FY23Q4...
Event Microsoft (MSFT.O) is expected to release the 23Q4 earnings report on July 25th, Eastern Time. Key Points AI empowerment brings development potential, continuing to lay out high-growth business. Microsoft's AI empowerment plan for Azure cloud products is expected to attract more users and catch up with industry leaders. As of the first quarter of 2023, Microsoft's Azure ranks second in the global cloud market with a 23% market share. Microsoft has started integrating AI into its cloud service products, and as the advantages of AI empowerment gradually become prominent, the revenue growth rate of this quarter will gradually stabilize. At the same time, Microsoft is also actively expanding in high-growth businesses such as cybersecurity. Microsoft's security-related revenue exceeded $20 billion in the past December, and recently launched new products in the field of security services at the edge. According to GlobeNewswire data, the global security services edge market is expected to have a compound annual growth rate of 25.0%. With its integration advantages, Microsoft is expected to attract more users in high-growth business areas. Office 365 Copilot pricing exceeds expectations, advancing the Blizzard acquisition proposal once again. Office 365 Copilot is priced at $30 per month, exceeding expectations. After a partial trial for some small-scale enterprises, Microsoft officially announced on July 18th that the pricing of Office 365 Copilot is $30 per user per month, at least doubling the original package price. Despite the lower-than-expected growth in FY23Q4...
Event Microsoft (MSFT.O) is expected to release the 23Q4 earnings report on July 25th, Eastern Time. Key Points AI empowerment brings development potential, continuing to lay out high-growth business. Microsoft's AI empowerment plan for Azure cloud products is expected to attract more users and catch up with industry leaders. As of the first quarter of 2023, Microsoft's Azure ranks second in the global cloud market with a 23% market share. Microsoft has started integrating AI into its cloud service products, and as the advantages of AI empowerment gradually become prominent, the revenue growth rate of this quarter will gradually stabilize. At the same time, Microsoft is also actively expanding in high-growth businesses such as cybersecurity. Microsoft's security-related revenue exceeded $20 billion in the past December, and recently launched new products in the field of security services at the edge. According to GlobeNewswire data, the global security services edge market is expected to have a compound annual growth rate of 25.0%. With its integration advantages, Microsoft is expected to attract more users in high-growth business areas. Office 365 Copilot pricing exceeds expectations, advancing the Blizzard acquisition proposal once again. Office 365 Copilot is priced at $30 per month, exceeding expectations. After a partial trial for some small-scale enterprises, Microsoft officially announced on July 18th that the pricing of Office 365 Copilot is $30 per user per month, at least doubling the original package price. Despite the lower-than-expected growth in FY23Q4...
Event Microsoft (MSFT.O) is expected to release the 23Q4 earnings report on July 25th, Eastern Time. Key Points AI empowerment brings development potential, continuing to lay out high-growth business. Microsoft's AI empowerment plan for Azure cloud products is expected to attract more users and catch up with industry leaders. As of the first quarter of 2023, Microsoft's Azure ranks second in the global cloud market with a 23% market share. Microsoft has started integrating AI into its cloud service products, and as the advantages of AI empowerment gradually become prominent, the revenue growth rate of this quarter will gradually stabilize. At the same time, Microsoft is also actively expanding in high-growth businesses such as cybersecurity. Microsoft's security-related revenue exceeded $20 billion in the past December, and recently launched new products in the field of security services at the edge. According to GlobeNewswire data, the global security services edge market is expected to have a compound annual growth rate of 25.0%. With its integration advantages, Microsoft is expected to attract more users in high-growth business areas. Office 365 Copilot pricing exceeds expectations, advancing the Blizzard acquisition proposal once again. Office 365 Copilot is priced at $30 per month, exceeding expectations. After a partial trial for some small-scale enterprises, Microsoft officially announced on July 18th that the pricing of Office 365 Copilot is $30 per user per month, at least doubling the original package price. Despite the lower-than-expected growth in FY23Q4...
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Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
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