Microsoft reported its slowest quarterly revenue growth in five years.
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Microsoft posted on Tuesday its first-quarter revenue of $50.1 billion for the fiscal first quarter.
It was Microsoft’s slowest quarterly revenue growth in five years.
CFO Amy Hood warned of an additional $800 million in energy costs this fiscal year.
The global energy crisis is expected to impact even big tech, with Microsoft saying on Tuesday that escalating energy prices are expected to eat into its profits.
The tech giant is expecting to incur over $800 million in additional energy costs this year, which is likely to bring its operating margins down, Amy Hood, the CFO of Microsoft, said on the company’s fiscal first-quarter earnings call, according to a transcript.
Microsoft on Tuesday posted first-quarter revenues of $50.1 billion — an 11% increase from a year ago, which beat analysts’ expectations of $49. billion — also, the company’s slowest growth rate in five years.
While some of the additional energy costs have already been incurred in the company’s first quarter which ended on September 30, most of the cost is expected to be incurred through the rest of the fiscal year, said Hood.
“A lot of it is in Europe,” Hood said, referring to where the expenditure is expected to be incurred, per Bloomberg. “And it’s not just for the winter.”
Energy costs have been on the up since end-2020, as demand rebounded on the easing of pandemic restrictions. The prices rose even more after Russia invaded Ukraine on February 24, due to fears of supply disruption and sanctions, as Russia is a major energy exporter.
Europe is particularly impacted by the developments, because it is reliant on Russia, which has halted natural-gas deliveries to the continent, via the key Nord Stream 1 pipeline.
Benchmark US crude oil futures are about 13% higher this year so far, while international benchmark Brent crude oil futures are up about 20% in the period. Meanwhile, benchmark European natural-gas futures have gained over 50% year-to-date.
Microsoft shares fell 6.7% to $234 apiece in after-hours trade on Tuesday.