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Microsoft reports $65.6 billion in quarterly sales
Microsoft on Wednesday reported an 11% increase in profit for the July-September quarter compared to the same time last year as investors looked for signs that the company’s huge spending on artificial intelligence is paying off.
The company reported quarterly net income of $24.7 billion, or $3.30 per share, which beat Wall Street expectations.
The Redmond, Washington-based software maker posted revenue of $65.6 billion in the quarter, up 16% from last year.
Analysts polled by FactSet Research were expecting Microsoft to earn $3.10 per share on revenue of $64.6 billion.
Microsoft doesn’t report revenue specifically from AI products but says it has infused the technology and its AI assistant, called Copilot, into all of its business segments, particularly its Azure cloud computing contracts.
Leading in sales for the quarter was Microsoft’s productivity business segment, which includes its Office suite of email and other workplace products, growing 12% to $28.3 billion.
Microsoft’s cloud-focused business segment grew 20% from the same time last year to $24.1 billion for the three months ending Sept. 30.
Its personal computing business, led by its Windows division, grew 17% to $13.2 billion. Microsoft and the computer makers that run its Windows operating system this year unveiled a new class of AI-imbued laptops as the company confronts heightened competition from Big Tech rivals in pitching generative AI technology that can compose documents, make images and serve as a lifelike personal assistant at work or home.
Building and operating AI systems is costly and Microsoft reported spending $20 billion over the quarter, mostly for its cloud computing and AI needs.
Microsoft CEO Satya Nadella in a statement Wednesday emphasized the company’s push to get customers applying AI platforms in their workplaces as AI transforms jobs and work tasks.
Nadella, now in his tenth year as CEO, saw his annual compensation increase 63% this year to $79 million, according to a statement filed ahead of Microsoft’s upcoming annual shareholder meeting in December. That’s despite Nadella offering to have his cash incentive reduced to reflect his personal accountability for handling cybersecurity threats.
Earlier this year, a scathing report by a federal review board found “a cascade of security failures” by Microsoft let Chinese state-backed hackers break into email accounts of senior U.S. officials.
Meta’s third-quarter profit surges 35% reflecting strong ad revenue
Meta Platforms Inc. posted stronger-than-expected third-quarter results on Wednesday fueled by its advertising revenue growth and its push to incorporate artificial intelligence.
But the Instagram and Facebook parent company warned that it expects a “significant acceleration” in infrastructure spending next year as it continues to pour money into developing AI.
For the three months ended on Sept. 30, the Menlo Park, California-based company earned $15.69 billion, or $6.03 per share, up 35% from $11.58 billion, or $4.39 per share, in the same period a year earlier.
Revenue rose 19% to $40.59 billion from $34.15 billion.
Analysts, on average, were expecting earnings of $5.22 per share on revenue of $40.21 billion, according to FactSet Research.
“We had a good quarter driven by AI progress across our apps and business,” CEO Mark Zuckerberg said in a statement. “We also have strong momentum with Meta AI, Llama adoption, and AI-powered glasses.”
For the current quarter, Meta is forecasting revenue of $45 billion to $48 billion. Analysts are expecting $46.18 billion.
“Meta’s solid quarter adds further evidence to the view that digital advertisers are choosing to spend their budget on the so-called market leaders, such as Facebook and Instagram, at the expense of the smaller social media networks, like Snap,” said Investing.com analyst Jesse Cohen.
Cohen added that while AI is “clearly driving growth” at Meta, “investors appear to be disappointed over the company’s forward guidance and rising costs needed to develop AI features.”
Meta said it expects 2024 operating losses at its Reality Labs segment — which includes its virtual- and augmented-reality glasses — will “increase meaningfully” due to product development costs and other investments. Last Month, Meta teased a prototype for Orion, the holographic augmented reality glasses it’s been working on for a decade. But Orion doesn’t have a release date yet, in large part because it is currently so expensive to make. Zuckerberg called it a “glimpse of the future.”
Meta’s shares slipped about 2% in after-market trading following the earnings report.
Reddit’s explosive user growth help it soar to its first-ever profit
NEW YORK | For the first time in its nearly 20-year history, Reddit is turning a profit.
The social platform claimed a profit of $29.9 million, or 16 cents per share, for the period ending in September, and reported sales of $348.4 million, an amount surpassing the $312.8 million analysts had projected. Reddit also grew its number of daily users to 97.2 million, a 47% increase from the same time last year, according to a company statement.
In a letter to shareholders, Reddit CEO Steve Huffman said its new AI translation feature — which allows readers to convert posts between English, French, Spanish, Portuguese, Italian and German — was a primary driver of user growth, especially internationally in countries like France, India and the Philippines. Huffman wrote that Reddit plans to expand this feature to over 30 countries going into 2025.
“In 2024 so far, ‘Reddit’ was the sixth most Googled word in the U.S., underscoring that when people are looking for answers, advice, or community, they’re turning to Reddit,” Huffman wrote. “We saw this play out in real-time when the White House came to Reddit to share critical information during recent hurricanes, reaching people in the affected areas with timely updates.”
While the company’s advertising remains its main source of revenue, Reddit’s earnings summary notes its recent data licensing agreements are beginning to pay off financially. Both Google and OpenAI have signed deals with Reddit to train their artificial intelligence models on its content.
San Francisco-based Reddit Inc., whose investors include OpenAI CEO Sam Altman, went public in March at $34 a share. The stock has since tripled, surging 42% to close Wednesday at $116.05.
—From AP reports
