Windows sales slumped last quarter but cloud services helped Microsoft
Software

Windows sales slumped last quarter, but cloud services helped Microsoft boost revenue

Microsoft released Financial results for the second quarter of fiscal 2023 ended December 31, showing the company has performed well in the highly competitive cloud services market. Microsoft reported revenue of $52.7 billion last quarter, up 2% year over year; Net income reached just $16.4 billion, down 12%.

    Image source: Uzair_Ahmed/pixabay.com

Image source: Uzair_Ahmed/pixabay.com

Relatively strong financials helped allay fears among investors who feared a drop in sales as customers cut spending. In addition, the company’s cloud revenues partially offset the decline in the PC-related business segment. According to experts, forecasts of further revenue from Microsoft’s cloud business do not indicate a deterioration in the situation, but merely reflect a new economic reality.

The company’s revenue from intelligent cloud solutions was $21.5 billion (up 18%). Projects like this have garnered a lot of business attention lately, thanks in large part to the viral success of ChatGPT, an AI-powered chatbot. As you know, Microsoft has invested heavily in developer company OpenAI and intends to spend even more in the coming years. OpenAI also provides for cooperation with Azure cloud services. Microsoft is banking on the profitability of this segment. During the earnings call, Microsoft CEO Satya Nadella said it’s too early to separate earnings reports for the AI ​​segment from statistics for the cloud business as a whole.

Revenue from Azure cloud products grew 31% in the second quarter. The company has captured significant market share from competitor and market leader Amazon Web Services (AWS). According to BofA Global Research, Azure ended 2022 with a 30% share of the cloud computing market, up from 20% in 2018. During the same period, AWS’ share fell from 71% to 55%.

Microsoft’s revenue in the PC-related segment, including operating systems, devices and search, fell 19% to $14.2 billion as the PC market continued to decline during the period. Notably, OEM sales of Windows fell 39%, and device sales fell by the same amount. The company expects related revenue to fall to $11.9 billion to $12.3 billion in the current fiscal third quarter.

After the earnings release, Microsoft shares rose 4% but later fell slightly to $239.58 after the close. Over the past 12 months, the company’s share price has fallen 18%.

About the author

Robbie Elmers

Robbie Elmers is a staff writer for Tech News Space, covering software, applications and services.

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