Microsoft(US:MSFT) First Shanghai Securities·2024-08-23 08:53Investment Rating - The report maintains a "Hold" rating for Microsoft (MSFT) with a target price of $450, indicating a potential upside of 7.7% from the current price [2][39]. Core Insights - The company's revenue for the quarter was $64.7 billion, representing a year-over-year growth of 15.2%, which exceeded Bloomberg's consensus estimate of $64.5 billion [2][11]. - Product revenue decreased by 22% to $13.2 billion, while service and other revenue increased by 31% to $51.5 billion [2][11]. - The gross margin was 69.6%, down 50 basis points year-over-year, but above the expected 69.4% [2][11]. - Operating profit margin was 43.1%, a slight decline of 10 basis points year-over-year [2][11]. - GAAP net profit was $22 billion, a 10% increase year-over-year, aligning with consensus expectations [2][11]. Revenue Breakdown - Azure revenue grew by 29% year-over-year to $20.3 billion, with AI contributing approximately 8 percentage points to this growth, although it fell short of the expected 30% growth [2][11]. - M365 commercial revenue increased by 13% to $12.1 billion, with a 7% year-over-year growth in paid commercial seats [2][11]. - The average revenue per user (ARPU) grew by 5%, primarily driven by an increase in E5 users and Copilot subscriptions, although the growth rate declined by 1% quarter-over-quarter [2][11]. Capital Expenditure and Profitability - The report indicates that capital expenditures for FY25 are expected to exceed those of FY24, with capital expenditures related to property, plant, and equipment (PP&E) approaching $70 billion [2][11]. - The company anticipates a 1 percentage point decline in operating profit margin for FY25, but effective cost control in marketing and administrative expenses may mitigate the impact of increased depreciation from higher capital expenditures [2][11]. Future Guidance - Microsoft expects FY2025 Q1 revenue to be in the range of $63.8 billion to $64.8 billion, representing a year-over-year growth of 12.9% to 14.7%, with the midpoint below Bloomberg's consensus estimate of $65.3 billion [2][11]. - The company projects a compound annual growth rate (CAGR) of 13.4% for revenue from FY2025 to FY2027, with GAAP net profit expected to reach $100.3 billion by FY2027 [21].