Microsoft reported its strongest financial quarter to date after becoming a $3 trillion company.
Search and news advertising revenue increased 8% year on year, excluding traffic acquisition costs that Microsoft pays to publishers. However, despite the rise in search and news advertising revenue marks a slowdown in growth in comparison to the previous quarter’s 10% increase.
LinkedIn revenue was also up 9%, with overall revenue in Productivity and Business Processes up 13% to $19.2 billion.
Meanwhile, total sales during the three-month period ending December 31, 2023, generated $62 billion for Microsoft, a year-on-year increase of 18%, with net income up 33% at $21.9 billion.
Success drivers. Microsoft’s success was driven by Office and cloud revenue which account for almost 60% of the company’s overall revenue. Additionally, the tech giant’s revenue from Xbox games and services wasw up 61% compared to last year, mainly because Xbox acquired Activision Blizzard, increasing the total revenue from gaming by 49%.
Why we care. Even though Microsoft did well overall, the money the tech giant make from search and news advertising didn’t increase as much in the recent quarter. LinkedIn revenue, on the other hand, remained steady, which could indicate that LinkedIn is delivering stronger results than other Microsoft platforms.
What Microsoft is saying. Satya Nadella, chairman and chief executive officer of Microsoft, said in a statement:
“We’ve moved from talking about AI to applying AI at scale.”
“By infusing AI across every layer of our tech stack, we’re winning new customers and helping drive new benefits and productivity gains across every sector.”
Earnings report. Read Microsoft’s full Q2 performance report for more information.
