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Microsoft's revenue jumps 15% as pandemic has 'little impact' on tech giant

Microsoft has today announced its financial earnings for the quarter ended March 31 2020, with minimal business losses incurred as a result of the COVID-19 pandemic.

  • Overall revenue was US$35.0 billion, increasing 15% year-on-year from 30.5 billion in 2019.
  • Operating income increased by 25% year-on-year from $10.3 billion last year to $13 billion in 2020.
  • Net income was $10.8 billion, increasing 22% from the prior-year period, when it was $8.8 billion.
  • Diluted earnings per share was $1.40 and increased 23% year-on-year.
  • Microsoft returned $9.9 billion to shareholders in the form of share repurchases and dividends in the quarter ended 31 March, an increase of 33% compared to the prior-year period.

The Intelligent Cloud segment’s revenue saw a 27% increase from last year, standing at $12.3 billion in Q1 2020.

This is reflected in Azure’s excellent showing in the Selected Product and Service revenue measurements, where it increased 59% year-on-year (GAAP), indicating the significance of the cloud in the midst of COVID-19.

“We’ve seen two years’ worth of digital transformation in two months,” says Microsoft chief executive officer Satya Nadella.

“From remote teamwork and learning to sales and customer service, to critical cloud infrastructure and security – we are working alongside customers every day to help them adapt and stay open for business in a world of remote everything.

“Our durable business model, diversified portfolio, and differentiated technology stack position us well for what’s ahead,” says Nadella.

COVID-19's impact

According to the tech giant, the quarter ended March 31, 2020 had ‘minimal net impact on the total company revenue’, despite the pandemic striking midway through.

Cloud usage increased, particularly in Microsoft 365 including Teams, Azure, Windows Virtual Desktop, advanced security solutions, and Power Platform, as customers shifted to work and learn from home. 

However in the final weeks of the quarter, there was a slump in revenue for transactional licensing, particularly in small and medium businesses, and a reduction in advertising spend in LinkedIn as budgets dried up following economic uncertainty.

Revenue increased by 3% in the More Personal Computing segment, with Microsoft saying Windows OEM and Surface benefited from increased demand to support remote work and learn scenarios, offset in part by supply chain constraints in China that improved late in the quarter.

“In this dynamic environment, our sales teams and partners executed a solid third quarter, with Commercial Cloud revenue generating $13.3 billion, up 39% year over year," says Microsoft executive vice president and chief financial officer Amy Hood. 

“We remain committed to balancing operational discipline with continued investments in key strategic areas to drive future growth.”

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