Xbox and cloud help boost Microsoft’s Q1 2024 earnings

theverge.com:

By Tom Warren, a senior editor covering Microsoft, PC gaming, console, and tech. He founded WinRumors, a site dedicated to Microsoft news, before joining The Verge in 2012.

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Microsoft just posted the first quarter of its 2024 fiscal financial results. The software maker made $56.5 billion in revenue and a net income of $22.3 billion during Q1. Revenue is up 13 percent, and net income has increased by 27 percent. Devices revenue has been hit hard again this quarter, even if Windows has recovered slightly. The star of Microsoft’s earnings are cloud services and Office, though.

Windows OEM revenue, the price that PC manufacturers pay Microsoft to put Windows on laptops and PCs, is up 4 percent this quarter. It’s a surprise increase, given we’ve seen a general weakness in PC sales over the past year, with Windows OEM revenue suffering throughout Microsoft’s entire 2023 fiscal year.

While Windows is bouncing back, Microsoft’s hardware revenues aren’t. Lower shipments of laptops have impacted devices revenue once again, which includes HoloLens, PC accessories, and Surface devices. Overall devices revenue has dropped by 22 percent in Q1. Microsoft has launched its new Surface Laptop Studio 2,Surface Laptop Go 3, and even a refreshed Surface Go 4 earlier this month, but we won’t see most of the impact of these launches on devices revenue until Q2.

Microsoft is now expecting to see devices revenue decline against next quarter in the mid-teens. That’s despite Microsoft CEO Satya Nadella revealing on the company’s earnings call that “PC market unit volumes were at roughly pre-pandemic levels” this quarter.

Windows OEM revenue is