Microsoft Corporation 30 July 2024_EN

LATEST FINANCIAL ANNOUNCEMENT

Microsoft Corporation

NASDAQ: MSFT

Q4 FY24

30 July 2024

Senior Associate: Joseph Hang Ellision

Microsoft Cloud strength drives fourth quarter results

REDMOND, Wash. — July 30, 2024 — Microsoft Corp. today announced the following results for the quarter ended June 30, 2024, as compared to the corresponding period of last fiscal year:

• Revenue was $64.7 billion and increased 15% (up 16% in constant currency)
• Operating income was $27.9 billion and increased 15% (up 16% in constant currency)
• Net income was $22.0 billion and increased 10% (up 11% in constant currency)
• Diluted earnings per share was $2.95 and increased 10% (up 11% in constant currency)

"Our strong performance this fiscal year speaks both to our innovation and to the trust customers continue to place in Microsoft," said Satya Nadella, chairman and chief executive officer of Microsoft. "As a platform company, we are focused on meeting the mission-critical needs of our customers across our at-scale platforms today, while also ensuring we lead the AI era."

"We closed out our fiscal year with a solid quarter, highlighted by record bookings and Microsoft Cloud quarterly revenue of $36.8 billion, up 21% (up 22% in constant currency) year-over-year," said Amy Hood, executive vice president and chief financial officer of Microsoft.

Business Highlights

Revenue in Productivity and Business Processes was $20.3 billion and increased 11% (up 12% in constant currency), with the following business highlights:

• Office Commercial products and cloud services revenue increased 12% (up 13% in constant currency) driven by Office 365 Commercial revenue growth of 13% (up 14% in constant currency)
• Office Consumer products and cloud services revenue increased 3% (up 4% in constant currency) and Microsoft 365 Consumer subscribers grew to 82.5 million
• LinkedIn revenue increased 10% (up 9% in constant currency)
• Dynamics products and cloud services revenue increased 16% driven by Dynamics 365 revenue growth of 19% (up 20% in constant currency)

Revenue in Intelligent Cloud was $28.5 billion and increased 19% (up 20% in constant currency), with the following business highlights:

• Server products and cloud services revenue increased 21% (up 22% in constant currency) driven by Azure and other cloud services revenue growth of 29% (up 30% in constant currency)

Revenue in More Personal Computing was $15.9 billion and increased 14% (up 15% in constant currency), with the following business highlights:

• Windows revenue increased 7% (up 8% in constant currency) with Windows OEM revenue growth of 4% and Windows Commercial products and cloud services revenue growth of 11% (up 12% in constant currency)
• Devices revenue decreased 11% (down 9% in constant currency)
• Xbox content and services revenue increased 61% driven by 58 points of net impact from the Activision acquisition
• Search and news advertising revenue excluding traffic acquisition costs increased 19%

Microsoft returned $8.4 billion to shareholders in the form of share repurchases and dividends in the fourth quarter of fiscal year 2024.

Fiscal Year 2024 Results

Microsoft Corp. today announced the following results for the fiscal year ended June 30, 2024, as compared to the corresponding period of last fiscal year:

• Revenue was $245.1 billion and increased 16% (up 15% in constant currency)
• Operating income was $109.4 billion and increased 24%, and increased 22% non-GAAP (up 21% in constant currency)
• Net income was $88.1 billion and increased 22%, and increased 20% non-GAAP
• Diluted earnings per share was $11.80 and increased 22%, and increased 20% non-GAAP

The following table reconciles our financial results for the fiscal year ended June 30, 2024, reported in accordance with generally accepted accounting principles (GAAP) to non-GAAP financial results. Additional information regarding our non-GAAP definition is provided below. All growth comparisons relate to the corresponding period in the last fiscal year.

	Twelve Months Ended June 30,
($ in millions, except per share amounts)	Revenue	Operating Income	Net Income	Diluted Earnings per Share
2023 As Reported (GAAP)	$211,915	$88,523	$72,361	$9.68
Severance, hardware-related impairment, and lease consolidation costs	-	1,171	946	0.13
2023 As Adjusted (non-GAAP)	$211,915	$89,694	$73,307	$9.81
2024 As Reported (GAAP)	$245,122	$109,433	$88,136	$11.80
Percentage Change Y/Y (GAAP)	16%	24%	22%	22%
Percentage Change Y/Y Constant Currency	15%	23%	21%	21%
Percentage Change Y/Y (non-GAAP)	16%	22%	20%	20%
Percentage Change Y/Y (non-GAAP) Constant Currency	15%	21%	20%	20%

Business Outlook

Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

Quarterly Highlights, Product Releases, and Enhancements

Every quarter Microsoft delivers hundreds of products, either as new releases, services, or enhancements to current products and services. These releases are a result of significant research and development investments, made over multiple years, designed to help customers be more productive and secure and to deliver differentiated value across the cloud and the edge.

Here are the major product releases and other highlights for the quarter, organized by product categories, to help illustrate how we are accelerating innovation across our businesses while expanding our market opportunities.

Environmental, Social, and Governance (ESG)

To learn more about Microsoft's corporate governance and our environmental and social practices, please visit our investor relations Board and ESG website and reporting at Microsoft.com/transparency.

Webcast Details

Satya Nadella, chairman and chief executive officer, Amy Hood, executive vice president and chief financial officer, Alice Jolla, chief accounting officer, Keith Dolliver, corporate secretary and deputy general counsel, and Brett Iversen, vice president of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company's performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/en-us/investor. The webcast will be available for replay through the close of business on July 30, 2025.

Non-GAAP Definition

Q2 charge. In the second quarter of fiscal year 2023, Microsoft recorded costs related to decisions announced on January 18th, 2023, including employee severance expenses, impairment charges resulting from changes to our hardware portfolio, and costs related to lease consolidation activities.

Microsoft has provided non-GAAP financial measures related to the Q2 charge to aid investors in better understanding our performance. Microsoft believes these non-GAAP measures assist investors by providing additional insight into its operational performance and help clarify trends affecting its business. For comparability of reporting, management considers non-GAAP measures in conjunction with GAAP financial results in evaluating business performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

Constant Currency

Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding our performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

Financial Performance Constant Currency Reconciliation

	Three Months Ended June 30,
($ in millions, except per share amounts)	Revenue	Operating Income	Net Income	Diluted Earnings per Share
2023 As Reported (GAAP)	$56,189	$24,254	$20,081	$2.69
2024 As Reported (GAAP)	$64,727	$27,925	$22,036	$2.95
Percentage Change Y/Y (GAAP)	15%	15%	10%	10%
Constant Currency Impact	$(345)	$(218)	$(269)	$(0.04)
Percentage Change Y/Y Constant Currency	16%	16%	11%	11%

	Twelve Months Ended June 30,
($ in millions, except per share amounts)	Revenue	Operating Income	Net Income	Diluted Earnings per Share
2023 As Reported (GAAP)	$211,915	$88,523	$72,361	$9.68
2023 As Adjusted (non-GAAP)	$211,915	$89,694	$73,307	$9.81
2024 As Reported (GAAP)	$245,122	$109,433	$88,136	$11.80
Percentage Change Y/Y (GAAP)	16%	24%	22%	22%
Percentage Change Y/Y (non-GAAP)	16%	22%	20%	20%
Constant Currency Impact	$900	$717	$312	$0.04
Percentage Change Y/Y Constant Currency	15%	23%	21%	21%
Percentage Change Y/Y (non-GAAP) Constant Currency	15%	21%	20%	20%

Segment Revenue Constant Currency Reconciliation

	Three Months Ended June 30,
($ in millions)	Productivity and Business Processes	Intelligent Cloud	More Personal Computing
2023 As Reported (GAAP)	$18,291	$23,993	$13,905
2024 As Reported (GAAP)	$20,317	$28,515	$15,895
Percentage Change Y/Y (GAAP)	11%	19%	14%
Constant Currency Impact	$(106)	$(174)	$(65)
Percentage Change Y/Y Constant Currency	12%	20%	15%

Selected Product and Service Revenue Constant Currency Reconciliation

	Three Months Ended June 30, 2024
	Percentage Change Y/Y (GAAP)	Constant Currency Impact	Percentage Change Y/Y Constant Currency
Microsoft Cloud	21%	1%	22%
Office Commercial products and cloud services	12%	1%	13%
Office 365 Commercial	13%	1%	14%
Office Consumer products and cloud services	3%	1%	4%
LinkedIn	10%	(1)%	9%
Dynamics products and cloud services	16%	0%	16%
Dynamics 365	19%	1%	20%
Server products and cloud services	21%	1%	22%
Azure and other cloud services	29%	1%	30%
Windows	7%	1%	8%
Windows OEM	4%	0%	4%
Windows Commercial products and cloud services	11%	1%	12%
Devices	(11)%	2%	(9)%
Xbox content and services	61%	0%	61%
Search and news advertising excluding traffic acquisition costs	19%	0%	19%

About Microsoft

Microsoft (Nasdaq "MSFT" @microsoft) creates platforms and tools powered by AI to deliver innovative solutions that meet the evolving needs of our customers. The technology company is committed to making AI available broadly and doing so responsibly, with a mission to empower every person and every organization on the planet to achieve more.

Forward-Looking Statements

Statements in this release that are "forward-looking statements" are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

• intense competition in all of our markets that may adversely affect our results of operations;
• focus on cloud-based and AI services presenting execution and competitive risks;
• significant investments in products and services that may not achieve expected returns;
• acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our business;
• impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;
• cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position;
• disclosure and misuse of personal data that could cause liability and harm to our reputation;
• the possibility that we may not be able to protect information stored in our products and services from use by others;
• abuse of our advertising, professional, marketplace, or gaming platforms that may harm our reputation or user engagement;
• products and services, how they are used by customers, and how third-party products and services interact with them, presenting security, privacy, and execution risks;
• issues about the use of artificial intelligence in our offerings that may result in reputational or competitive harm, or legal liability;
• excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;
• quality or supply problems;
• government enforcement under competition laws and new market regulation may limit how we design and market our products;
• potential consequences of trade and anti-corruption laws;
• potential consequences of existing and increasing legal and regulatory requirements;
• laws and regulations relating to the handling of personal data that may impede the adoption of our services or result in increased costs, legal claims, fines, or reputational damage;
• claims against us that may result in adverse outcomes in legal disputes;
• uncertainties relating to our business with government customers;
• additional tax liabilities;
• sustainability regulations and expectations that may expose us to increased costs and legal and reputational risk;
• an inability to protect and utilize our intellectual property may harm our business and operating results;
• claims that Microsoft has infringed the intellectual property rights of others;
• damage to our reputation or our brands that may harm our business and results of operations;
• adverse economic or market conditions that may harm our business;
• catastrophic events or geo-political conditions, such as the COVID-19 pandemic, that may disrupt our business;
• exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange and
• the dependence of our business on our ability to attract and retain talented employees.

https://news.microsoft.com/2024/07/30/microsoft-cloud-strength-drives-fourth-quarter-results-6/

COMPANY PROFILE

Microsoft (NASDAQ: MSFT)

Microsoft, founded in 1975, is the worldwide leader in software, services, and solutions. Its best known software products are the Microsoft Windows line of operating systems, Microsoft Office suite and Internet Explorer web browser. Its flagship hardware products are the Xbox game console and the Microsoft Surface series of tablets. Microsoft is the world's largest software maker measured by revenues. It is also one of the world's most valuable companies. Its stock is traded on NASDAQ.

Headquarters: Redmond, Washington

http://www.microsoft.com/en-us/news/inside_ms.aspx#About

COMPETITORS

Accenture (NYSE: ACN)

Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions - underpinned by the world's largest delivery network - Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. Accenture is listed on the New York Stock Exchange, under the symbol ACN, and was added to the S&P 500 index on 5 July 2011.

https://www.accenture.com/us-en/company

Adobe Systems (NASDAQ: ADBE)

Adobe, one of the largest software companies in the world, is the global leader in digital marketing and digital media solutions. Its tools and services allow users to create groundbreaking digital content, deploy it across media and devices, measure and optimize it over time.

Headquarters: San Jose, California

http://www.adobe.com/company.html

Alphabet (NASDAQ: GOOGL)

Alphabet Inc. is an American multinational conglomerate headquartered in Mountain View, California. It was created through a corporate restructuring of Google on October 2, 2015, and became the parent company of Google and several former Google subsidiaries.

https://abc.xyz/

Amazon.com (NASDAQ: AMZN)

Amazon.com, founded in 1995, strives to be the world's most customer-centric company where people can find and discover virtually anything they want to buy online. By giving customers more of what they want — low prices, vast selection, and convenience — Amazon.com continues to grow and evolve as a world-class e-commerce platform. Its stock is traded on NASDAQ.

Headquarters: Seattle, Washington

http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-mediaKit

Apple (NASDAQ: AAPL)

Apple designs, develops, and sells consumer electronics, computer software and personal computers. Its best-known hardware products are the Mac line of computers, the iPod media player, the iPhone smartphone, and the iPad tablet computer. Its consumer software includes the OS X and iOS operating systems, the iTunes media browser, the Safari web browser, and the iLife and iWork creativity and productivity suites. Its stock is traded on NASDAQ.

Headquarters: Cupertino, California

http://www.apple.com/

Autodesk (NASDAQ: ADSK)

Autodesk, Inc. is an American multinational software corporation that makes software for the architecture, engineering, construction, manufacturing, media, and entertainment industries. The company has offices worldwide, with U.S. locations in Northern California, Oregon, Colorado, Texas and in New England in New Hampshire and Massachusetts, and Canada locations in Ontario, Quebec, and Alberta. The company was founded in 1982. Its headquarters are in San Rafael, California, United States.

https://www.autodesk.com/company

BlackBerry Ltd (NYSE: BB)

BlackBerry (NYSE: BB; TSX: BB) is a trusted security software and services company that provides enterprises and governments with the technology they need to secure the Internet of Things. Based in Waterloo, Ontario, the company is unwavering in its commitment to safety, cybersecurity and data privacy, and leads in key areas such as artificial intelligence, endpoint security and management, encryption and embedded systems.

https://www.blackberry.com/us/en/company/overview

Broadcom Inc. (NASDAQ: AVGO)

Broadcom Inc. a Delaware corporation headquartered in San Jose, CA, is a leading designer, developer and global supplier of a broad range of digital and analog semiconductor connectivity solutions. Broadcom Inc.'s extensive product portfolio serves four primary end markets: wired infrastructure, wireless communications, enterprise storage and industrial & other.

Headquartered: San Jose, CA.

https://www.broadcom.com/company/about-us/

Cisco (NASDAQ: CSCO)

Cisco (NASDAQ: CSCO) is the worldwide technology leader that has been making the Internet work since 1984, headquartered in San Jose, California. By the time the company went public in 1990, when it was listed on the NASDAQ, Cisco had a market capitalization of $224 million. Cisco was the most valuable company in the world by 2000, with a more than $500 billion market capitalization. Its headquarters are in San Jose, California, United States

https://www.cisco.com/c/en/us/about.html

Citrix (NASDAQ: CTXS)

Citrix (NASDAQ: CTXS) is powering a better way to work with unified workspace, networking, and analytics solutions that help organizations unlock innovation, engage customers, and boost productivity, without sacrificing security. Citrix solutions are claimed to be in use by over 400,000 clients worldwide, including 99% of the Fortune 100, and 98% of the Fortune 500. The company was founded in Richardson, Texas in 1989. Its headquarters are in Fort Lauderdale, Florida, United States

https://www.citrix.com/about/

Cognizant Technology (NASDAQ: CTSH)

Headquartered in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry and business process expertise and a global, collaborative workforce that embodies the future of work. With over 50 delivery centers worldwide and approximately 244,300 employees as of June 30, 2016, Cognizant is a member of the NASDAQ-100, the S&P 500, the Forbes Global 2000 and the Fortune 500 and is ranked among the top performing and fastest growing companies in the world. Headquarters: Teaneck, New Jersey, United States

https://www.cognizant.com/company-overview

Dell Technologies (NYSE: DELL)

Dell Technologies (NYSE:DELL) is a unique family of businesses that helps organizations and individuals build their digital future and transform how they work and live. The company provides customers with the industry's broadest and most innovative technology and services portfolio spanning from edge to core to cloud. The Dell Technologies family includes Dell, Dell EMC, Pivotal, RSA, Secureworks, Virtustream and VMware.

https://www.delltechnologies.com/ms-my/index.htm

Fiserv (NASDAQ: FISV)

Fiserv, Inc. is a leading global provider of information management and electronic commerce systems for the financial services industry. It has more than 22,000 associates worldwide are driving quality and innovation in Payments, Processing Services, Risk & Compliance, Customer & Channel Management, and Insights & Optimization with one thing in mind: to provide integrated technology and services solutions that enable best-in-class results for the company clients. Its stock is traded on NASDAQ.

Headquarters: Brookfield, Wisconsin

https://www.fiserv.com/about.aspx?_ga=1.73583440.374102108.1485316649

HP (NYSE: HPQ)

HP has a broad technology portfolio spanning printing, personal systems, software, services and IT infrastructure, and makes these solutions available in every region of the world. HP continues to drive product innovation in its core markets, with a focus on cloud, security, and big data. Its stock is traded on NYSE.

Headquarters: Palo Alto, California

http://www8.hp.com/us/en/hp-information/index.html

IBM (NYSE: IBM)

International Business Machines Corporation (IBM), incorporated on June 16, 1911, is a technology company. The Company operates through five segments: Global Technology Services (GTS), Global Business Services (GBS), Software, Systems Hardware and Global Financing. Its stock is traded on NYSE.

Headquarters: Armonk, New York

http://www.ibm.com/ibm/us/en/

Infosys Limited (NYSE: INFY)

Infosys is a global leader in next-generation digital services and consulting. The Company enable clients in 45 countries to navigate their digital transformation. With over three decades of experience in managing the systems and workings of global enterprises, we expertly steer our clients through their digital journey.

https://www.infosys.com/about/Pages/history.aspx

Intel (NASDAQ: INTC)

Intel Corporation (commonly known as Intel and stylized as intel) is an American multinational corporation and technology company headquartered in Santa Clara. Intel Corporation was founded on July 18, 1968. The company produced embedded processors, SRAM, DRAM, flash, integrated circuits (IC), network interface controllers, and motherboard and graphics chipsets. Headquarters: Santa Clara, California, United States

https://www.intel.sg/content/www/xa/en/company-overview/company-overview.html

Intuit (NASDAQ: INTU)

Intuit Inc. is a business and financial software company that develops and sells financial, accounting, and tax preparation software and related services for small businesses, accountants, and individuals. The company is headquartered in Mountain View, California. The company has offices in eight other countries around the world: UK, Australia, France, Singapore, India, Brazil, Canada, and Israel. Intuit produces TurboTax, a consumer tax preparation application, the small business accounting program QuickBooks, professional tax solutions ProConnect Tax Online, ProSeries and Lacerte, and multiple payroll products. Headquarters: Mountain View, California, United States

https://www.intuit.com/company/

NortonLifeLock Inc. (NASDAQ: NLOK)

NortonLifeLock Inc. is a global leader in consumer Cyber Safety. The company is dedicated to helping secure the devices, identities, online privacy, and home and family needs of nearly 50 million consumers, providing them with a trusted ally in a complex digital world.

https://www.nortonlifelock.com/about/corporate-profile

Oracle Corporation (NYSE: ORCL)

Oracle is shifting the complexity from IT, moving it out of the enterprise by engineering hardware and software to work together in the cloud and in the data center, enabling its more than 420,000 customers in 145 countries to accelerate innovation and create added value for their customers. Its stock is traded on NYSE.

Headquarters: Redwood City, California

https://www.oracle.com/corporate/index.html

Pivotal (NYSE: VMW)

Pivotal delisted from the NYSE on 31 December 2019 when it became a wholly-owned subsidiary of VMware (NYSE: VMW).

https://www.vmware.com/company/news/releases/vmw-newsfeed.VMware-Completes-Acquisition-of-Pivotal.1964966.html

Rackspace

Rackspace, the #1 managed cloud company, helps businesses tap the power of cloud computing without the complexity and cost of managing it all on their own. Rackspace engineers deliver specialized expertise, easy-to-use tools, and Fanatical Support® for leading technologies including AWS, Google, Microsoft, OpenStack and VMware. The company serves customers in 150 countries, including more than half of the FORTUNE 100. Rackspace was named a leader in the 2017 Gartner Magic Quadrant for Public Cloud Infrastructure Managed Service Providers, Worldwide, and has been honored by Fortune, Forbes, and others as one of the best companies to work for.

Headquarters: Windcrest, Texas, United States

https://www.rackspace.com/about/history

Salesforce (NASDAQ: CRM)

Salesforce, the Customer Success Platform and world's #1 CRM company, empowers companies to connect with their customers in a whole new way. Salesforce has headquarters in San Francisco, with offices in Europe and Asia, and trades on the New York Stock Exchange under the ticker symbol "CRM."

Salesforce pioneered a new technology model with our cloud platform, a new pay-as-you-go business model focused on customer success, and a new integrated corporate philanthropy model, called the 1-1-1 model, by which we donate 1% of our equity, 1% of our employee time, and 1% of our product to improve communities around the world.

This vision has fueled our incredible growth, made us the global leader in CRM, defined the era of enterprise cloud computing, and inspired a new philanthropic model for all companies to follow. Today, Salesforce's Customer Success Platform provides groundbreaking cloud services for sales, service, marketing, community, analytics, apps and the Internet of Things.

Headquarters: San Francisco, California, United States

http://www.salesforce.com/company/

SAP (NYSE: SAP)

As market leader in enterprise application software, SAP (NYSE: SAP) helps companies of all sizes and industries run better. From back office to boardroom, warehouse to storefront, desktop to mobile device - SAP empowers people and organizations to work together more efficiently and use business insight more effectively to stay ahead of the competition. SAP applications and services enable more than 345,000 business and public sector customers to operate profitably, adapt continuously, and grow sustainably.

https://www.sap.com/corporate/en.html

Seagate Technology (NASDAQ: STX)

Seagate Technology PLC (commonly referred to as Seagate) is an American data storage company. It was incorporated in 1978, as Shugart Technology. Since 2010, the company is incorporated in Dublin, Ireland, with operational headquarters in Cupertino, California, United States. Headquarters: Cupertino, California, United States.

https://www.seagate.com/as/en/about-seagate/

Symantec Corporation (NASDAQ: AVGO)

Symantec delisted from the NASDAQ when it became a wholly-owned subsidiary of Broadcom Inc. (NASDAQ: AVGO).

https://investors.broadcom.com/news-releases/news-release-details/broadcom-acquire-symantec-enterprise-security-business-107

Symantec Enterprise Security business is now a division of Broadcom Inc. (NASDAQ: AVGO).

https://www.symantec.com/theme/broadcom

Symantec's consumer product lines, Norton and Lifelock, are now part of NortonLifeLock Inc. (NASDAQ: NLOK).

https://www.nortonlifelock.com/

VMware Inc. (NYSE: VMW)

VMware software powers the world's most complex digital infrastructure. The company's compute, cloud, mobility, networking and security offerings provide a dynamic and efficient digital foundation to over 500,000 customers globally, aided by an ecosystem of 75,000 partners. Headquartered in Palo Alto, California, this year VMware celebrates twenty years of breakthrough innovation benefiting business and society.

http://www.vmware.com/ap/company.html

Wipro Ltd (NYSE: WIT)

Wipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO) is a leading information technology, consulting and business process services company that delivers solutions to enable its clients do business better. Wipro delivers winning business outcomes through its deep industry experience and a 360 degree view of "Business through Technology." By combining digital strategy, customer centric design, advanced analytics and product engineering approach, Wipro helps its clients create successful and adaptive businesses. A company recognized globally for its comprehensive portfolio of services, strong commitment to sustainability and good corporate citizenship, Wipro has a dedicated workforce of over 170,000, serving clients across 6 continents.

http://www.wipro.com/about-Wipro/

THE INDUSTRY

DECEMBER 2023

IT INDUSTRY OUTLOOK 2024

Strategy and tactics. In 2024, these two main ingredients to success will feature heavily on the minds of business owners, IT pros and the tech industry at large.

CompTIA's IT Industry Outlook 2024 explores various aspects of the strategic and tactical sides of the technology industry, workplace and society today. Companies and individuals in the tech sector will have to decide for themselves which focus areas make most sense for the goals they are trying to accomplish, whether that's revenue growth potential, professional development, product innovation or more. The tools and the knowledge, however, are there for the taking. Let's look at the top 10 tech industry trends for 2024.

#1 AI Hype Fades, but Workflows Continue Evolving

Last year's report was released just weeks before the launch of ChatGPT, and the hype cycle has been intense ever since. However, the initial hype around generative AI will likely wane in 2024 for a variety of reasons. Most companies will have to take a step back to build the proper prerequisites for modern artificial intelligence operations, but that doesn't mean that exploration and pilot programs will grind to a halt. Along with new standalone products, a wide range of business applications will begin to incorporate AI as a feature.

In fact, just over 20% of technology companies surveyed are aggressively pursuing integration of AI across a wide variety of technology products and business workflows. Hesitation in adoption may stem from the challenges being encountered by early adopters. The top challenge for AI, whether that challenge comes from early experience or simply expectations around implementation, is around cost.

#2 Tech Providers Use AI to Run Better Businesses

Even those channel firms that choose not to sell AI solutions as part of their business can nonetheless boost profitability and reap positives by deploying AI functionality across their internal operations.

A net 56% of respondents say they are either experimenting with today's AI solutions in some way or they have begun researching and evaluating the tools for potential future adoption. Top use cases for AI today include customer service and e-commerce.

Automation aims have always been a part of an MSP's quest, but today's AI will only accelerate and improve those efforts. That doesn't necessarily mean massive job losses, though. Two thirds of MSP respondents said that use of AI by their company would either result in no change to their staffing levels - or a net gain.

As for the challenges? Issues with data quality and acquisition top the list. As has been copiously reported, generative AI outputs are only as good as the data the tool has at its disposal, which holds true in all uses.

#3 Governance Becomes a Focal Point for Cybersecurity and Data Operations

There is a growing demand for governance to ensure that implementation is following best practices. An emphasis on governance in the dynamic areas of cybersecurity and data will help align technology initiatives with organizational objectives.

When it comes to cybersecurity, traditionally governance doesn't rank very high as a priority among companies. In fact, governance is at the bottom of the list when it comes to current focal points for cybersecurity initiatives, with only 5% of individuals citing governance as a driving factor. This low priority reflects a view of governance being centered on regulatory compliance. That aspect of governance will be growing more important, and there is also the need for more structured processes.

In the area of data, organizations are discovering the need to establish foundational data practices, consolidating and classifying data from various silos into a comprehensive picture that can be used for advanced analytics. Structured processes are needed here as well, along with the need to measure progress.

Although 44% of companies surveyed currently have well-defined governance processes for cybersecurity and data covering a wide range of topics, that number needs to be much higher to ensure that these critical domains are following best practices.

#4 Beyond-the-Basics Cybersecurity Becomes a Channel Skills Imperative

More than half (52%) of the channel companies surveyed say they are experiencing a shortage of workers and have a challenge finding job candidates with the cybersecurity skills their organization currently needs. The competition for talent is fierce, as companies in the IT channel must also vie for cybersecurity expertise across the economy at large.

CompTIA's Cyberseek tool shows that there were over 660,000 cybersecurity-related job openings in the United States between May 2022 and April 2023, representing a 28% increase from the same time period in 2020. Meanwhile, CompTIA's State of Cybersecurity 2024 study cited internal skills gaps as the top challenge to end user organization's cybersecurity initiatives.

How channel firms plan to address their skills shortages and desire to move up the cybersecurity food chain is multipronged. Nearly half (45%) are taking a holistic approach and increasing overall spending in 2024 on all cybersecurity-related areas in the company. Others are taking the worker piece head on, with 43% providing training to existing employees to upskill them and another 38% looking outside to hire cybersecurity specialists.

#5 Cloud Architecture Accelerates Solution Complexity

Most emerging technologies, from internet of things (IoT) to blockchain to all the different variations of AI, are typically parts of a comprehensive solution instead of being individual products. With the lion's share of the focus being placed on building these intricate solutions, it can be easy to overlook the importance of the foundation - computing infrastructure.

The majority of organizations have moved past the first stage of cloud adoption. The second stage will involve more depth, as companies build best practices around multi-cloud systems, financial operations (FinOps) and resilient architecture - paving the way to craft custom applications.

Most tech companies already view cloud systems as a necessity in their digital endeavors and more than one third feel that cloud computing is more of an accelerator. There is a fine line between the two camps—in today's fast-paced environment, accelerating productivity or time to market could be its own form of necessity. Aside from enabling a corporate vision around technology, the availability of cloud systems also broadens the horizon in terms of vendor choice. The majority of companies surveyed say they are more willing to consider a variety of vendors, with 42% saying they are far more willing to explore new tech providers.

#6 IT Distributors Burnish Role as Online Marketplace for B2B

IT distributors, long the hardware fulfillment middle piece in the technology go-to-market chain, have been evolving their own business models to meet the cloud wave of computing. These companies are using their ample resources, scale and tech aggregator status to build marketplaces that serve channel firms (and vendors) in a variety of ways. Use of these digital engines is on the rise among MSPs, solution providers and others building complex multivendor cloud-based offerings.

In fact, 47% of channel firms said they are using distribution's marketplace capabilities to aggregate multivendor cloud services to build solutions for customers.

Among the benefits of these partnerships? The capacity to mix and match multivendor products, tools and software subscriptions into a unified solution for customers; the right to choose who handles management of customer billing and payments; and finally, the ability to use distribution's digital platform to white label their own e-commerce site.

#7 Marketing Has Its Moment as an IT Business Differentiator

Companies are allocating more dedicated budget and other resources to marketing activities, hiring full-time marketing professionals and generally demonstrating far more awareness about the significance of branding. Social media, influencer clout, content marketing, subscription models, decreased reliance on vendor and product as the brand and development of their own IP all factor into this awakening.

Channel spending on marketing activities is trending up with 61% of respondents planning an increase in their marketing spend in 2024.

Beyond spending increases, respondents reveal additional momentum behind marketing when asked to identify their organization's general approach to the discipline. Four in 10 describe their marketing efforts as strategic, with a well-defined game plan consisting of key metrics and dedicated staff. Another 30% said marketing as a function is more tactical, comprised of mostly ad hoc campaigns and activities with limited or no dedicated staff.

#8 Productivity is the Driver for Digital Transformation

At the end of the day, digital transformation efforts are geared toward building a more productive workforce. Along with the implementation of new technologies, there must be a matching strategy around building skills, including upskilling current workers or pursuing new hiring.

Considering that work arrangements are tightly tied with productivity, the top two workforce priorities for organizations in 2024 are centered on making their employees as productive as possible. Many technology initiatives under the umbrella of digital transformation address this goal of productivity.

From a skills perspective, enabling employees to make the best use of new technology requires a multi-pronged approach. Internal training continues to be the most popular choice for building expertise, with 59% of companies expecting to pursue training options compared to 41% expecting to explore new hiring. As a capstone to training efforts, 41% of companies expect to pursue certifications for their technical staff.

#9 Organizations Practice Skills-Based Career Transparency

When it comes to careers in technology, HR departments and hiring managers have moved toward a skills-based hiring approach, where individual skills are clearly defined for job roles and candidates are evaluated on their expertise in those skills.

Getting someone in the door is only the first step, though. Retention is also a major challenge in such a tight labor economy. As companies search for ways to keep the people they already have, extending the skills-based approach from hiring into career development is the next natural step. Adoption of skills-based career transparency requires two main components. First, there must be established guidelines for job roles and levels within roles based on the skills needed to perform the job. Second, there must be a culture of management focused on consistent and open communication.

#10 Companies Pursue Every Age Cohort for Staff, Customers

In discussions around the demographics of today's technology sector, the popular refrain goes that a majority of business owners in the space are eyeing retirement and that the information technology industry desperately needs younger entrepreneurial talent to keep the segment relevant and vibrant.

Fear not. Respondents report that the changing of the guard is well underway, alongside what they describe as an already balanced mix of early-, mid- and late-career practitioners working in the channel.

A similar trend is playing out in the broader tech industry and its efforts to target certain customers. The 50-year-old-plus cohort has money to spend and is far more tech-savvy than the stereotypes depict. Whether it's filling the need for tech talent or innovating the latest tech product, an openness to multigeneration thinking makes good business sense.

These technology industry trends will play out over the next twelve months as new chapters in the ongoing story of technology evolution. The best way to predict the future is to create it, and the firms that thrive in the coming years will be the ones leveraging technology to create new opportunities.

Methodology

This quantitative study consisted of two online surveys fielded to IT professionals and IT industry professionals during October 2023. A total of 513 professionals based in the United States participated in each survey, yielding an overall margin of sampling error at 95% confidence of +/- 4.4 percentage points. This survey was also fielded in ANZ, ASEAN, Benelux, DACH and UK/Ireland. Sampling error is larger for subgroups of the data.

As with any survey, sampling error is only one source of possible error. While non-sampling error cannot be accurately calculated, precautionary steps were taken in all phases of the survey design, collection and processing of the data to minimize its influence.

CompTIA is responsible for all content and analysis. Any questions regarding the study should be directed to CompTIA Research and Market Intelligence staff at [email protected].

CompTIA is a member of the market research industry's Insights Association and adheres to its internationally respected Code of Standards and Ethics.

Source: CompTIA

https://www.comptia.org/content/research/it-industry-trends-analysis

ACQ_REF: CS/15493/20240730/46247/USA/14/13

ACQ_AUTHOR: Senior Associate/Joseph Hang Ellision