Microsoft revenue surges 15% as Cloud business lifts sales

Microsoft has reported revenue of $35 billion (+15 percent), operating income of $13 billion (+25 percent) and net income of $10.8 billion (+22 percent) for the quarter ended March 31, 2020.
“We’ve seen two years’ worth of digital transformation in two months. From remote teamwork and learning, to sales and customer service, to critical cloud infrastructure and security – we are working alongside customers to help them adapt for business in a world of remote everything,” Microsoft CEO Satya Nadella said.

Microsoft said COVID-19 had minimal net impact on the total company revenue during the third quarter of fiscal year 2020.

Microsoft generated revenue of $11.7 billion (+15 percent) from Productivity and Business Processes with Office Commercial products and cloud services revenue increasing 13 percent  — driven by 25 percent growth in Office 365 Commercial business. Microsoft has 39.6 million Office 365 Consumer subscribers.

LinkedIn revenue increased 21 percent.

Dynamics products and cloud services revenue increased 17 percent driven by 47 percent growth in Dynamics 365.

Microsoft generated revenue of $12.3 billion (+27 percent) from Intelligent Cloud business.

Server products and cloud services revenue increased 30 percent driven by Azure revenue growth of 59 percent. Azure growth slowed to 59 percent from 62 percent in the second quarter. Enterprise Services revenue increased 6 percent.

Microsoft generated revenue of $11 billion (+3 percent) from Personal Computing business.

Windows OEM revenue was relatively unchanged year over year. Windows Commercial products and cloud services revenue increased 17 percent. Search advertising revenue excluding traffic acquisition costs increased 1 percent. Xbox content and services revenue increased 2 percent. Microsoft also cited all-time-high engagement on its Xbox Live gaming service, with 19 million active users.

Surface revenue increased 1 percent.

Microsoft benefited from strong demand for its Teams collaboration software. Microsoft has 75 million users for its Teams collaboration software and competes with Zoom Video Communications and Slack Technologies.

The demand influx strained Microsoft’s data centers, forcing it to limit new cloud customers’ usage and prioritize healthcare and government users.

For the fiscal fourth quarter, Microsoft predicted tough times for LinkedIn and some small-business software sales.

“Ultimately, Microsoft is not immune from what is going on broadly in the world in terms of GDP growth,” Nadella said on a conference call with investors.

Microsoft said revenue for its “commercial cloud,” a combination of Azure and the cloud-based versions of software such as Office, rose 39 percent to $13.3 billion.

Microsoft also said capital expenditure was $3.9 billion, up from $3.4 billion a year earlier and less than the $4.5 billion the previous quarter.

Revenue in the Intelligent Cloud segment, which includes Azure, rose 27 percent to $12.28 billion.

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