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Microsoft revenue rises as remote work boosts cloud

Written on Thursday, 30 April 2020 10:38

Microsoft reported higher results for its fiscal third quarter to end March, powered by sharp demand for its Teams chat and online meeting app and cloud computing services as the world shifted to working and playing from home because of the novel coronavirus pandemic.

Microsoft Teams now has 75 million daily active users. This comes as the coronavirus pandemic has forced businesses to operate remotely, and has boosted the demand for Microsoft's products that enable communication and collaboration.

The company said net impact was minimal and that cloud usage increased. There was a slowdown in transactional licensing, particularly among SMEs, and a reduction in advertising spends on LinkedIn.

In the More Personal Computing segment, Windows OEM and Surface benefited from increased demand for remote work and learning, but supply chain constraints in China offset that rise, though these improved late in the quarter.

Gaming benefited from people in lockdown, but Search was negatively impacted by less ad spend. Microsoft noted that the full effects of the pandemic may not be fully felt until later in the future. 

Revenue for the quarter climbed 15 percent from the year before to USD 35.0 billion, the operating profit increased 25 percent to USD 13.0 billion and the net profit rose 22 percent to USD 10.8 billion or USD 1.40 per share. Commercial Cloud helped lift results, generating USD 13.3 billion worth of revenues, up 39 percent. 

Total Intelligent Cloud revenues went up 27 percent to USD 12.3 billion, with server products and cloud services going 30 percent higher and Azure leaping 59 percent. Enterprise Services revenue increased 6 percent. 

Productivity and Business Processes was the next largest division, with revenues rising 15 percent to USD 11.7 billion. These included Office Commercial products and cloud services revenue up 13 percent, driven by Office 365 commercial revenue growth of 25 percent. Office Consumer products and cloud services revenue strengthened 15 percent, also helped Office 365, with consumer subscriber numbers growing to 39.6 million. LinkedIn revenue went up 21 percent while Dynamic products and cloud services had revenues rising 17 percent, driven by Dynamics 365 revenue growth of 47 percent. 

Microsoft said it returned USD 9.9 billion to shareholders in the quarter, in the form of share buybacks and dividends, an increase of 33 percent from the year earlier.

Published in Finance