Cloud and productivity services boost Microsoft profit
Technology company Microsoft reported an 8.2 per cent annual jump in net profit in the third quarter of its 2022 financial year, underpinned by double-digit growth in its cloud and productivity businesses.
Net profit rose to more than $16.7 billion in the three months to March 31, about $1.3bn more than was recorded in the same period last year. However, it was 11.2 per cent down on a quarterly basis.
Revenue during the third quarter jumped 18 per cent to about $49.4bn, exceeding analysts’ expectations of $49bn. It was down 4.4 per cent compared to the December quarter.
The third quarter of the 2022 financial year marked the Redmond, Washington-based company’s 19th straight quarter of double-digit revenue growth.
“Going forward, digital technology will be the key input that powers the world’s economic output,” Microsoft chairman and chief executive Satya Nadella said. “Across the tech stack, we are expanding our opportunity and taking share as we help customers differentiate, build resilience and do more with less.”
The company’s share price, which has dropped by about 20 per cent since the start of 2022 calendar year, was at $265.38 in the extended hours of trading on Tuesday, about 2 per cent down.
Revenue in the company’s intelligent cloud business increased 26 per cent a year to $19.1bn in the third quarter.
Driven by Azure – a cloud computing service operated by Microsoft – and revenue growth in other cloud services, Microsoft’s server products and cloud services sales increased by about 29 per cent in the three-month period.
“Continued customer commitment to our cloud platform and strong sales execution drove better than expected commercial bookings growth of 28 per cent and Microsoft Cloud revenue,” executive vice president and chief financial officer Amy Hood said.
Operating income stood at $20.4bn, an increase of 19 per cent from the same period in the previous financial year, while diluted earnings per share rose by 9 per cent on an annual basis to $2.22.
The company’s productivity and business processes division, which includes its Microsoft Office business and LinkedIn, reported a 17 per cent increase in revenue to $15.8bn. LinkedIn revenue grew by about 34 per cent annually.
However, Microsoft did not provide a dollar figure for its LinkedIn revenue nor did it disclose the number of users.
The number of Microsoft 365 Consumer subscribers stood at 58.4 million at the end of reporting period, up 3.5 per cent on a quarterly basis. Microsoft 365 Consumer is a bundle of various apps.
Sales in the personal computing division rose by 11 per cent to $14.5bn in the quarter while revenue from Microsoft Surface device sales increased by 13 per cent a year.
Microsoft said PC sales increased as more people and businesses adopted hybrid work models due to the Covid-19 pandemic.
Search and news advertising revenue was up 23 per cent annually while Xbox content and services revenue jumped 4 per cent in the third quarter.
In January, Microsoft agreed to buy video game company Activision Blizzard in a $68.7bn all-cash deal.
The transaction will make Microsoft the third-largest gaming company by revenue, behind China’s Tencent and Japan’s Sony.