Microsoft claims Covid-19 had ‘minimal net impact’ on $35bn revenues
Microsoft’s cloud business has helped see the tech giant post a significant jump in revenue, but this will likely change by Q4.
Microsoft’s earnings for its third fiscal quarter have surpassed analysts’ estimates, but the company itself is lowering its expectations as the ramifications of Covid-19 become clearer.
In a statement, the company said its revenues totalled $35bn for the quarter marking a sales growth of 15pc. Its operating income reached $13bn which is a 25pc increase on the same time last year and a net income increase of 22pc to $10.8bn.
Revenue in its productivity and business process – which includes Office 365, LinkedIn and cloud services – totalled $11.bn and a 15pc increase on the same time last year.
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 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 such as Teams, Azure and Windows Virtual Desktop. However, in the final weeks of the quarter it found 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 revenues of between $35.85bn and $36.8bn in the fourth quarter, or 7.7pc growth. This would be the slowest since the first quarter of 2017. Despite this, Microsoft’s shares increased up to 5pc in extended trading. Analysts polled by Refinitiv expected revenues of $33.66bn for the current quarter.