March 27, 2023

Microsoft’s Cloud Drives 24% Profit Growth

Microsoft reported a 24% increase in quarterly profit on Friday, driven by growth from its cloud-computing business. The company said it earned $4.6 billion, or 60 cents per share, in the quarter ended March 31. That’s up from $3.8 billion 52 cents per share for the same period last year.

Revenue rose 21% to $20.5 billion from a year earlier, beating analyst estimates of $20.05 billion.

The company’s cloud business, which includes Microsoft Azure and the Office 365 service, grew sales by 58%. Last quarter Microsoft passed Google parent Alphabet as the world’s largest cloud-computing services provider by revenue.

Microsoft also passed Apple to become the world’s most valuable company, by market cap, last month.

The company said it expects adjusted earnings of 62 cents per share for the next quarter. That’s higher than analyst expectations of 59 cents per share and represents a 10% bump year-on-year.

The company’s stock rose 1% in after-hours trading.

Earlier this month, Microsoft confirmed it would acquire LinkedIn for $26.2 billion, its biggest deal ever. Analysts expect the acquisition to boost Microsoft’s cloud business by integrating tasks like recruiting and marketing into Office 365.

Revenue from LinkedIn will likely flow through the company’s productivity and business processes segment, which brought in $8.4 billion last quarter. The deal is expected to close this year.

Microsoft plans to invest heavily in entertainment content, following a string of high profile deals for games like Minecraft and Gears of War maker “We are going to focus on a few key areas that we think will define our current generation of products, and grow into the next generation of computing, said chief executive Satya Nadella in an earnings call. ”

We’ve partnered with Universal Studios to bring content based on the blockbuster franchise ‘Fast & Furious’ to our Mixer live-streaming service , he said, referring to Microsoft’s rival service to Amazon-owned Twitch.

Microsoft also announced a content deal with Netflix earlier this month, giving members of the Xbox Game Pass streaming service access to some original series.

The company has faced criticism for its inability to attract large gaming studios that are gravitating toward Sony PlayStation and Nintendo platforms, but Nadella insisted Microsoft’s Xbox console is the best place to play games.

“We remain committed to being one of the top console gaming device providers, he said.

Microsoft acquired Finnish smartphone maker Nokia in 2014, but has struggled against Apple and Google in mobile devices.