Microsoft relies on the cloud to compensate for its difficulties in PC sales and video games

Satya Nadella, the boss of Microsoft.

© Getty — Stephen Brashear

If social networks are going through a difficult period, like Meta, which is betting everything on the metaverse to compensate for the slowdown in its growth, or Twitter, now engaged in a legal tussle with Elon Musk, other giants technologies are doing better, like Google and Microsoft. Sundar Pichai’s group reassured the markets in the second quarter despite its weakest revenue growth for two years, while the Redmond firm was once again able to count on the cloud to avoid being heavily penalized on Wall Street.

In the fourth quarter of its staggered fiscal year, Microsoft achieved a turnover of 51.9 billion dollars, up 12% year on year. This is more than the 49.4 billion dollars in revenue earned in the first three months of the year. As for net profit, it stood at $16.7 billion, a timid increase of 2% compared to the same period last year. The amount is also similar to the net profit recorded between January and March.

The cloud on top, gaming down

Unsurprisingly, it was therefore the cloud that pulled the American group up between April and June. Over this period, the company’s Intelligent Cloud branch generated revenue of $20.9 billion, up 20% year-on-year. Within this division, Azure, Microsoft’s cloud platform, saw its revenues climb 40%, after having already jumped 46% in the first three months of the year.

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The good health of the cloud helped offset PC sales, which are sluggish due to the shortage of electronic components that continues to impact supply chains. The personal computing activity of the American giant thus increased by only 2% over three months, to 14.4 billion dollars. The report is not more brilliant for its branch video games, which continues to disappoint. In the second quarter, the Xbox division (content and services), which had experienced only weak growth of 4% at the start of the year, this time saw its revenues fall by 6% over one year. Microsoft is counting in particular on the takeover of Activision Blizzard for 68.7 billion dollars and the metaverse to reverse the dynamic in a few quarters.

Netflix, a partner to take off in the advertising market

Faced with the current economic climate, the Redmond firm, like all the other American tech giants, has decided to reduce its recruitment rate for the coming months, which should impact the teams working on its Office suite and its IT system. Windows operation. But the horizon could look brighter, especially in terms of advertising.

And for good reason: if we first think of Google, Amazon and Meta in terms of online advertising, Microsoft recently struck a blow when it was chosen by Netflix to become its partner for the launch of the streaming in the advertising market. For Microsoft, which generated 10 billion dollars in advertising sales last year, the potential to be exploited is substantial since it is a portfolio of 222 million people who are reaching out to it. Another proof of the American group’s advertising ambitions is the acquisition last year of Xandr, a specialist in online advertising on a global scale. But it will take more to break the historic Google and Meta duopoly (more than 52% of global online advertising revenue in 2021, according to eMarketer).

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