Microsoft: Transition Period

From “Microsoft: The $100 Billion Club” (July 2022): “Microsoft’s success is dependent upon leveraging its aforementioned structural advantages… As the results of the past few years indicate, Microsoft is capitalizing on that opportunity. My bet is this will continue in the years to come; while I can’t quantity the TAM with much certainty, I think there’s evidence to support the belief that the size of this (massive) market will continue to grow - and Microsoft remains well positioned to command a larger share over time.”

One straightforward metric that conveys Microsoft’s ongoing success against that objective – continued share gains within a massive and expanding addressable market – is revenue growth: from a starting base just shy of $100 billion at the end of FY17, Microsoft has reported double digit constant currency revenue growth in 27 of the past 28 quarters. The latest addition to this run of impressive results was +16% YoY growth in Q1 FY25, to ~$65.6 billion (with three points of contribution from ATVI). The driving force, once again, was the Cloud business, with revenues up 22% YoY to ~$38.9 billion.