Riding once again on its Azure Cloud business, Microsoft reported $35 billion in sales – up 15 per cent year-on-year – in its third quarter of 2020, with net income at $10.8 billion (up 22 per cent).
The company saw tremendous growth in the productivity and business processes and Intelligent Cloud segments as cloud usage increased, particularly in Microsoft 365 including Teams, as customers shifted to work and learn from home.
It, however, admitted that in the final weeks of the quarter, there was a slowdown in transactional licensing, particularly in small and medium businesses, and a reduction in advertising spend in LinkedIn.
“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 every day to help them adapt and stay open for business in a world of remote everything,” explained Microsoft CEO Satya Nadella.
Microsoft stock was up 2.5 per cent in after-hour trading late Wednesday after its Q3 results were out.
“Our durable business model, diversified portfolio, and differentiated technology stack position us well for what’s ahead,” he added.
Revenue in productivity and business processes was $11.7 billion and increased 15 per cent.
“Office Commercial products and cloud services revenue increased 13 per cent, driven by Office 365 Commercial revenue growth of 25 per cent.
Office Consumer products and cloud services revenue also increased 15 per cent, with continued growth in Office 365 Consumer subscribers to 39.6 million.
“In this dynamic environment, our sales teams and partners executed a solid third quarter, with Commercial Cloud revenue generating $13.3 billion, up 39 per cent year over year,” said Amy Hood, executive vice president and chief financial officer of Microsoft.
In its third quarter of fiscal year 2020, COVID-19 had minimal net impact on the total company revenue.
In the PC segment, Windows OEM and Surface benefited from increased demand to support remote work and learn scenarios, offset in part by supply chain constraints in China that improved late in the quarter.
Gaming benefited from increased engagement following stay-at-home guidelines. LinkedIn revenue increased 21 per cent.
“Search was negatively impacted by reductions in advertising spend, particularly in the industries most impacted by COVID-19. The effects of COVID-19 may not be fully reflected in the financial results until future periods,” said the company.
Revenue in More Personal Computing was $11 billion and increased 3 per cent. Surface revenue increased 1 per cent.
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