Microsoft cloud success helps push revenue, offsets Windows and PC drops
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Microsoft has announced (opens in new tab) strong Q1 2023 financial results largely due to the success of its cloud services despite losses in its flagship Windows PC vector.
The company’s Microsoft Cloud division had revenue of $25.7 billion in the quarter, up 24% from the same period last year.
The company now accounts for more than half of the company’s total revenue and helped offset losses incurred in the Windows OEM division — where the operating system is installed on third-party machines — which are down 15%. decreased.
Global Concerns
Microsoft CEO Satya Nadella blamed the general center of the PC market, saying in an earnings call that the company was paying less attention to its traditional operating system model and focusing instead on cloud computing.
Nadella added that the company wanted to help customers “do more with less” and that it will be “managing” [its] disciplined cost structure”.
Microsoft also revealed that total revenue was up 11% from last year, to $50.1 billion, ahead of the expected $49.7 billion. Earnings were 14% lower than in the first quarter of last year, although it included a $3.3 billion tax benefit from a transfer of intangible assets – including non-physical items such as patents, processes and technical data – of the Puerto Rican subsidiary.
Elsewhere, Azure and Linkedin, other Microsoft properties, also saw revenues rise 35% and 17%, respectively. In the Productivity and Business Processes division – which also includes the popular productivity suite Office – sales increased by 9%.
Looking ahead, Microsoft CFO Amy Hood said the downward trend was expected to continue on several fronts due to global economic conditions, stating that higher utility bills will cost the company an additional $250 million each quarter for this fiscal year.
On a more positive note to the company, Nadella noted the developer service GitHub, which was: bought by Microsoft in 2017is now worth $1 billion, an increase of $200 million since the acquisition.
The platform has also seen growth in the user base of its various services: Xbox Cloud Gaming has reached 20 million users, doubling from 10 million at the start of the year, and users of Microsoft security services grew 33% year-over-year, representing one of the biggest growth areas for the company.