Dive Brief:
- Microsoft Cloud quarterly revenue surpassed $25 billion for the first time, up 28% year-over-year, the company said in fiscal Q4 earnings, which ended June 30, released Tuesday. “In a dynamic environment we saw strong demand, took share, and increased customer commitment to our cloud platform,” said Microsoft CFO and EVP Amy Hood.
- Despite healthy gains across the board and optimistic projections for the second half of 2022, revenue fell short of most projections, due in part to unfavorable foreign exchange rates, production shutdowns in China and scaled back of operations in Russia, according to a company report.
- Microsoft reported quarterly revenue of $51.9 billion, an increase of 12% over the same period last year.
Dive Insight:
If slim margins amount to a win, then Microsoft and its investors should be pleased with the company’s Q4 financials. Revenue and growth failed to meet rosier expectations, but were strong nonetheless, with net income at $16.7 billion, up 2% over last year.
“We're not immune to what's happening in the macro broadly,” CEO Satya Nadella said during the earnings call. But the current economic situation represents growth opportunities for Microsoft, especially in its cloud division.
"We are seeing larger and longer-term commitments and won a record number of $100 million-plus and $1 billion-plus deals this quarter,” Nadella said. "We have more data center regions than any other provider, and we will launch 10 regions over the next year.”
The company sees macroeconomic conditions as a plus for public cloud, as businesses try to do more with less. "IT spend is going to increase because every business is trying to fortify itself with digital tech to, in some sense, navigate this macro environment," he said.
With more investment in cloud, the company is also working to help customers optimize their bills to ensure the total cost comes down.
“Coming out of this macroeconomic crisis, the public cloud will be even a bigger winner because it does act as that deflationary force,” Nadella said.
The market reacted well to Microsoft’s announcement. Shares were up nearly 7% at Wednesday’s close.
