Microsoft reports rising revenue and profits, despite war and inflation
By Karen Weise
Despite inflation and uncertainty over the war in Ukraine, Microsoft earlier this week reported financial results that showed little threat to the fundamentals of its business.
Microsoft said it had $49.4 billion in sales in the first three months of the year, up 18% from a year earlier. Profit rose 8% to $16.7 billion.
Microsoft, like many tech companies, enjoyed a surge in demand from the pandemic, but unlike Netflix and others, it has seen its growth continue. Microsoft executives have said it is facilitating “durable” ways for its customers to evolve in the digital era that will only increase the use of technology — and mean more business for the company.
“Going forward, digital technology will be the key input that powers the world’s economic output,” Microsoft CEO Satya Nadella said in a statement.
Revenue for Microsoft’s cloud offerings for commercial customers, which include its flagship Azure cloud computing platform and Office 365 subscriptions, increased 32% to $23.4 billion.
Azure grew 46%. The sales were to a “broad” base of customers across industries and sizes, Brett Iversen, head of investor relations, said in an interview, adding that customers signed many large, long-term contracts.
Russia accounts for less than 1% of Microsoft’s revenue, Amy Hood, the company’s finance chief, said in March, and the ripple effect that some analysts initially feared when Russia invaded Ukraine did not appear to materialize. Bank of America, for example, recently wrote that in checking with Microsoft’s partners, it had “not noted any war-prompted spending slowdown across Europe more broadly.”
The strong dollar hurt its business, reducing revenue by about $300 million, more than the company had expected.
Microsoft’s personal computing business grew 11% to $14.5 billion, with an 11% increase in sales of its Windows operating system that comes installed on new computers, a sign that inflation has not hurt purchasing, particularly by corporate customers. Sales of Xbox gaming consoles rose 14%.
LinkedIn, which Microsoft bought in 2016, grew 34% and continued to benefit from the ways the pandemic has upended people’s relationship to their jobs. With workers looking for new roles and companies struggling to fill postings, sales of LinkedIn’s products for recruiters and the ads it shows job seekers have been strong.
For the first time, Microsoft’s results included artificial intelligence software company Nuance, which the company bought in a $16 billion deal that closed in early March. The company still expects its $70 billion deal to acquire Activision, a video game maker, to close by July 2023.