Surface revenue went up 2%, beating expectations, while Windows OEM took a huge hit

What you need to know

• Microsoft reported $13.33 billion in revenue for its More Personal Computing division.
• Surface and devices were up 2%, beating expectations.
• Windows OEM revenue, however, was down 15%, which was more than forecasted.
• Search, and news advertising grew 16%, which is in line with its outlook.

Microsoft is reporting its FY23 Q1 results (opens in new tab) today, netting $50.1 billion in revenue, which beat street estimates of $49.7 billion. That’s the good news.

Turning to the More Personal Computing division, Microsoft came in at $13.33 billion (Redmond had predicted between $13 and $13.4 billion). That number is effectively flat compared to year-over-year as FY22 Q1 also saw $13.37 billion in revenue for More Personal Computing.

More specifically, Surface and devices revenue (excluding Xbox consoles) was up 2%, which beat Microsoft’s expectations of a “decline in the high single digits.” Of course, these numbers came well before the launch of Surface Pro 9 and Surface Laptop 5, and it is unlikely that those will be huge draws for FY23 Q2.

Windows OEM was down a massive 15%, indicating that demand for laptops and PCs is taking a big dive. Indeed, Microsoft had only predicted a decline in the “high single digits,” making this a rare miss for the company. That 15% is offset by “5 points of positive impact from the prior year Windows 11 revenue deferral,” suggesting things may be much worse than previously believed.