Microsoft’s revenue from its Azure cloud platform and related services rose 30% in the quarter ended Dec. 31, including a 6 percentage point boost from its artificial intelligence technologies.
The company’s overall revenue increased 18% to $62 billion, with profits of $21.9 billion and earnings per share of $2.93, up 33% by both measures, topping Wall Street’s expectations across the board on the key metrics.
“We’ve moved from talking about AI to applying AI at scale,” said Microsoft CEO Satya Nadella, in the company’s earnings release, citing the growing adoption of Microsoft’s AI tools across different industries and technologies.
Activision Blizzard, the video game developer acquired by Microsoft for $69 billion last year, was included in Microsoft’s results for the first time, with revenue of $2.08 billion and an operating loss of $44 million for the quarter.
From a revenue perspective, at least, the Activision acquisition means that Microsoft Gaming is now a bigger business than Microsoft Windows for the first time, according to Microsoft’s detailed quarterly report filed with the SEC.
- Gaming revenue jumped 50% to $7.1 billion, which included the $2 billion in Activision revenue.
- Windows revenue rose 9.5% to $5.3 billion, helped by an 11% increase in sales of Windows PCs.
The company did not report any material revenue gain from Microsoft 365 Copilot, its AI tool for businesses, which launched Nov. 1, one month into the quarter. Those results will be included in the company’s Office Commercial product line, which posted a revenue increase of 15% for the quarter.
Other notable segment and product results:
- Microsoft Cloud revenue was $33.7 billion, up 24%. This includes Azure and other cloud services, Office 365 Commercial, the commercial portion of LinkedIn, Dynamics 365, and other commercial cloud businesses.
- Devices revenue was $1.3 billion, down more than 9%. This includes sales of the company’s Surface laptops and tablets and other hardware.
- LinkedIn revenue was up 9.5% to $4.2 billion, the highest total in any quarter since Microsoft acquired the business social network for $26 billion in 2016.
Update: On Microsoft’s earnings conference call, Nadella transitioned seamlessly from addressing the recent breach of the company’s internal systems and executive email accounts by Russian hackers to discussing its security technology business.
“The recent security attacks including the nation-state attack on our corporate systems we reported a week and a half ago have highlighted the urgent need for organizations to move even faster to protect themselves from cyber threats,” he said.
Microsoft’s blending of these two issues — security problems in its products, and the security technology business — has drawn criticism from some corners of the industry. Nadella did not disclose revenue from security products as he has before at this time of year. At last report, a year ago, the total was $20 billion annually.
