Microsoft shows good vitality in the third quarter

Microsoft announced its sales for the third quarter of 2020 in a press release. It is valued at $ 37.2 billion ($ 33.1 billion in Q1 2020) and net income is $ 13.9 billion ($ 10.7 in Q1 2020). The group’s average increase is measured at + 12%, and earnings per share follow the same trend. The value was $ 1.14 in the first quarter of 2020 and $ 1.82 in the third quarter.

Analysts had expected sales to increase to $ 35.7 billion, or $ 1.5 billion less than what was ultimately achieved. An excess suggests that some parts of the business have benefited from the effects of the pandemic. This is the case with teams. Now included in Microsoft Office 365, Slack has 115 million daily users, much to Slack’s chagrin. In the third quarter of 2020, the Office 365 suite gained nearly 58 million users.

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Decreasing growth

In this final quarter, Azure revenue growth is + 48%, Surface + 37%, Xbox + 30%, Dynamics + 19%, Linkedin + 16% and Office + 9%. Despite this surge, Azure’s growth is slowing:

MSFT Azure revenue growth
– 1st quarter 2018: 90%
– 2nd quarter 2018: 98%
– Q3 2018: 93%
– 4th quarter 2018: 89%
– 1st quarter 2019: 76%
– 2nd quarter 2019: 76%
– 3rd quarter 2019: 73%
– 4th quarter 2019: 64%
– 1st quarter 2020: 59%
– 2nd quarter 2020: 62%
– Q3 2020: 59%
– 4th quarter 2020: 47%
– Q1 2021: 48% https: //

– Emil Protalinski (@EPro), October 27, 2020

On the one hand, Microsoft has announced an increase in the use of cloud services and, on the other hand, a decline in their growth. Acquiring new customers and retaining old ones was therefore not as easy as it may seem during the lock-up period. If the pandemic slowed Azure growth, it will stabilize, which remains positive: “Demand for our cloud offerings got the year off to a good start. The cloud had $ 15.2 billion in revenue. Revenue grew 31% for the year, ”said Amy Hood, the group’s chief financial officer, in a statement. Azure’s exact financial results have not been released, possibly to avoid a comparison with industry leader AWS, Amazon’s solution.

The Covid-19 does not bother shareholders, but leads to the loss of 960 jobs

Linkedin did not meet the group’s expectations despite the 16% increase in sales. In fact, pre-crisis growth was around 20%: “In the last few weeks of the [troisième] During the quarter, there was a slowdown in one-time licensing, especially in small and medium-sized businesses, and a reduction in ad spend on LinkedIn, ”the company said. Given this slowdown, 960 jobs were cut on July 20, representing 6% of the LinkedIn workforce. Windows, a branch of Microsoft that sells computer hardware, declined in the first quarter and then rebounded later in the year, eventually growing.

Overall, the announcement can therefore reassure shareholders. Microsoft paid them a total of $ 9.5 billion in share buybacks and dividends. While the world is panicking over the pandemic, tech companies are doing fine overall. Satya Nadella, the CEO of Microsoft, does not mention the virus and only mentions “digital transformation,” proof that the perception of the virus is not the same for everyone and that it can act as an accelerator for the virus to digitize businesses and serve as a Leverage for companies in the industry.

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