Technology firms have done incredibly well as the global pandemic wears on and while that isn’t surprising given how many firms have had to adopt digital strategies to remain active, it is still rather interesting to see just how well tech firms have done.
Case in point is Microsoft which reported its financial results for the quarter ending 31st December.
“What we have witnessed over the past year is the dawn of a second wave of digital transformation sweeping every company and every industry,” Microsoft chief executive officer, Satya Nadella said in a press statement.
“Building their own digital capability is the new currency driving every organization’s resilience and growth. Microsoft is powering this shift with the world’s largest and most comprehensive cloud platform,” Nadella added.
A broad look reveals Microsoft’s revenue increased by 17 percent to $43.1 billion compared to the same quarter in 2019.
While Microsoft’s product range is broad, Nadella spent much of his time during an earnings call talking about Azure, and rightly so. Revenue from server products and cloud services was up 26 percent compared to the same quarter in 2019. These gains were largely driven by Azure which saw a 50 percent growth in revenue.
“We’re building Azure as the world’s computer to support organizations’ growing cloud needs. We’re investing to bring our cloud services to more customers, announcing 7 new datacenter regions in Asia, Europe, and Latin America, and adding support for Top Secret classified workloads in the United States.
While we expect products such as Azure and Office 365 to be strong contributors to Microsoft’s bottom line, LinkedIn is also proving rather successful for Microsoft.
Over the last quarter LinkedIn revenue increased by 23 percent. The social network now boast over 749 million members and those members are using the website often. Session increased by 30 percent, hours spent on LinkedIn doubled and conversations on the network were up 48 percent.
LinkedIn’s advertising business now accounts for a third of the network’s revenue and more advertisers are placing ads with LinkedIn leading to a 50 percent gain in LinkedIn Marketing Solutions.
“Businesses are using the combination of LinkedIn Sales Navigator and Dynamics 365 to ensure salespeople have the context they need to sell remotely, while new tools help sales organizations use LinkedIn data to identify and size opportunities,” Nadella said of the network.
As is to be expected, gains in Microsoft 365 which include Office products were largely driven by an increased demand for solutions that ease the transition to working from home.
While Zoom has become the genericisation for videoconferencing, one can’t and shouldn’t ignore Microsoft Teams. The platform doesn’t only offer video conferencing but instant messaging, calling and integration with Office 365 applications.
This makes Office 365 products an alluring product for firms and that was the case this quarter.
Revenue from Office commercial products and cloud services was up 11 percent driven by a 21 percent growth in Office 365 Commercial revenue. On the consumer side of things, Microsoft 365 Consumer subscribers grew to 47.5 million leading to a seven percent gain in revenue.
Finally we can’t mention this quarter without mentioning one of Microsoft’s bigger launches, the Xbox Series X|S consoles.
Revenue from hardware sales increased by 86 percent thanks to the new consoles and discounted older consoles.
“Xbox content and services revenue grew 40 percent and 38 percent in constant currency, with strong growth in third-party transactions, Game Pass subscribers, and first-party titles,” said Amy Hood, Microsoft’s chief financial officer.
Game Pass, Microsoft’s game subscription service now boasts 18 million subscribers while Xbox Live now boasts 100 million subscribers. It will be interesting to see how Xbox Live figures are affected – if at all – by the recent announcement that free to play titles wouldn’t require a subscription to the service in order to play online.
There are gains across the board for Microsoft, even advertising from search increased two percent during the quarter.
The real question now is whether Microsoft can sustain this growth though with the pandemic still with us, we suspect that it can.