Microsoft reported revenue of $52.9 billion for its fiscal third quarter, a 7% increase from last year. The company beat analyst expectations of $51 billion and shares were up more than 4% in after-hours trading. Profits came in at $18.3 billion, up 9%.
The results mirror Microsoft’s financials from its second fiscal quarter: continued growth in the cloud, helping to make up for revenue declines in Windows and Devices.
The company reported strength in some of its products and services for businesses, led by a 22% increase in Microsoft Cloud revenue, to $28.5 billion. This category includes Microsoft Azure, Office 365 Commercial, the commercial portion of LinkedIn, and other cloud-related revenue.
However, the overall 7% revenue increase represents the second straight quarter of single-digit growth. Microsoft is navigating macroeconomic headwinds, including a pullback in business technology budgets and more cautious customer spending for cloud services and software licenses that drive the bulk of Microsoft’s business.
It’s a far cry from 18 months ago, when Microsoft’s year-over-year revenue growth peaked at more than 20% as the company and broader tech economy emerged from the pandemic with a head of steam.
Microsoft said Azure’s revenue growth was 27% for its fiscal third quarter. That compares to a 46% growth rate in the year-ago period.
The global PC shipment slowdown is not helping the Redmond, Wash. tech giant, which reported a 28% decrease in Windows OEM revenue (from PC manufacturers paying Microsoft to put Windows on their devices) and a 30% decrease in Devices, which includes Surface tablets and computers. Xbox hardware revenue declined 30%.
Microsoft made headlines during the quarter thanks to a steady stream of products and features integrating OpenAI’s GPT-4 and ChatGPT technologies, including Microsoft 365, Bing, Dynamics, GitHub, and security.
However, with many of those products still in testing phase, Microsoft’s larger financial payoff from those releases (and its “multibillion dollar” OpenAI investment) could still be years away.
To help curb costs, Microsoft announced 10,000 global layoffs on Jan. 18; nearly 3,000 cuts were made in Washington state, where the company is headquartered.
Microsoft said it returned $9.7 billion to shareholders in the form of share repurchases and dividends in the third fiscal quarter.
Microsoft stock is up 15% this year, and flat over the past 12 months.
Here’s a rundown of the company’s results for the three months ended March 31, the third quarter of the company’s 2023 fiscal year.
- Revenue: $52.9 billion, up 7% from the year-ago period, vs. $51 billion expectation and vs. 18% growth a year ago.
- Profits: $18.3 billion, up 9% from a year ago.
- Earnings per share: $2.45/share, up 10%, vs. $2.23/share expectation.
- Microsoft Cloud revenue: up 22%, vs. 32% growth a year ago.
- Linkedin revenue: $3.7 billion, up 8%, vs. 34% growth a year ago.
- Search and advertising revenue (excluding traffic acquisition costs): Up 10%, vs. 23% growth a year ago.
