Microsoft’s cloud business has helped the tech giant post a jump in revenue – but growth is expected to slow in the next quarter.
Microsoft’s earnings for its third fiscal quarter have surpassed analysts’ expectations, but the tech giant is lowering its outlook for the next quarter as the effects of Covid-19 become clearer.
In a statement, the company said its revenues totalled $35bn for the quarter, marking growth of 15pc. Its operating income reached $13bn, which is a 25pc increase on the same time last year, while net income increased by 22pc to $10.8bn.
Revenue in its productivity and business processes segment – which includes Office 365, LinkedIn and Dynamics 365– was up by 15pc year on year to $11.bn.
Microsoft’s Intelligent Cloud segment – including Azure and Windows Server – saw revenues of $12.3bn, up 27pc.
Two years of digital transformation in two months
The personal computing side of the business saw a marginal increase of 3pc compared with this time last year, with revenue rising to $11bn. Advertising revenue through Bing saw just a 1pc increase, while revenue through Xbox content and services increased by 2pc.
Microsoft said that Covid-19 had “minimal net impact on the total company revenue”, noting an increase in demand for its cloud services as more people turn to remote working. This includes video-conferencing software Teams, as well as Microsoft Azure and Windows Virtual Desktop.
However, in the final weeks of the quarter, the company saw a slowdown in licensing among SMEs and a reduction in advertising spend on LinkedIn.
“We’ve seen two years’ worth of digital transformation in two months,” said Microsoft CEO Satya Nadella.
“We are working alongside customers every day to help them adapt and stay open for business in a world of remote everything. Our durable business model, diversified portfolio and differentiated technology stack position us well for what’s ahead.”
According to CNBC, Microsoft expects to make revenue of between $35.85bn and $36.8bn in the fourth quarter. This would imply around 7.7pc growth, which would be the slowest since the first quarter of 2017.
Microsoft’s shares increased as much as 5pc in extended trading yesterday.