Amid major tech earnings reported today, Microsoft is among them as well. And the company seems to have done fairly well, considering COVID-19 and the overall grim business scenario globally.
Getting straight to numbers, Microsoft reported an impressive 15% hike in revenues when compared with last year. The company reported revenues of $35 billion for Q1’2020m up 15% from the $30 billion that it had reported same time last year. Those revenue numbers resulted in $13 billion in operating income (+25% YoY), and $10.8 billion in net income (+22% YoY).
Earnings per share or EPS stood at $1.4 per share, significantly higher than the $1.26 that Wall Street estimated, according to Yahoo Finance. All in all, these strong numbers resulted in Microsoft shares surging by as much as 4.5% at the end of the trading session, following suit for most other big tech companies.
Along expected lines, Microsoft saw an increased usage of its cloud and remote working products. “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,” said CEO Satya Nadella.
However, it isn’t that Microsoft was left unscathed by the economic impacts of COVID-19. The company witnessed a slowdown in transactional licensing, particularly in small and medium businesses, and a reduction in advertising spend in LinkedIn. The Search advertising business, though small, 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”, Microsoft said in a prepared statement.
Product wise, here’s a list of key figures from the company’s earnings call:
Revenue in Productivity and Business Processes was $11.7 billion and increased 15% (up 16% in constant currency), with the following business highlights:
- Office Commercial products and cloud services revenue increased 13% (up 15% in constant currency) driven by Office 365 Commercial revenue growth of 25% (up 27% in constant currency)
- Office Consumer products and cloud services revenue increased 15% (up 17% in constant currency) with continued growth in Office 365 Consumer subscribers to 39.6 million
- LinkedIn revenue increased 21% (up 22% in constant currency)
- Dynamics products and cloud services revenue increased 17% (up 20% in constant currency) driven by Dynamics 365 revenue growth of 47% (up 49% in constant currency)
Revenue in Intelligent Cloud was $12.3 billion and increased 27% (up 29% in constant currency), with the following business highlights:
- Server products and cloud services revenue increased 30% (up 32% in constant currency) driven by Azure revenue growth of 59% (up 61% in constant currency)
- Enterprise Services revenue increased 6% (up 7% in constant currency)
Revenue in More Personal Computing was $11.0 billion and increased 3% (up 4% in constant currency), with the following business highlights:
- Windows OEM revenue was relatively unchanged year over year
- Windows Commercial products and cloud services revenue increased 17% (up 18% in constant currency)
- Search advertising revenue excluding traffic acquisition costs increased 1%
- Xbox content and services revenue increased 2%
- Surface revenue increased 1% (up 2% in constant currency)
