Microsoft announced their Q3 FY23 (Jan – Mar 23) results recently – let’s take a look at the numbers.
Overall revenue for the quarter was $52.9 billion – an increase of 7% while net income was up 9% to $18.3 billion. The latter something of a turnaround from the 12% decrease the previous quarter.
Productivity & Business Processes
Revenue = $17.5 billion…up 11%
- Office 365 Commercial up 14%
- LinkedIn up 8%
- Dynamics up 25%
A little higher than Q2 but still lower than we’ve been seeing for the last couple of years.
Intelligent Cloud
Revenue = $22.1 billion…up 16%
Azure growth was 27% again, a decent increase but continuing the ongoing shrinking of the percentage increase each quarter.
Earnings Call
Satya Nadella stated that Microsoft continue to focus on 3 priorities:
- Helping customers to get the most value out of their digital spend
- Investing in AI to increase their Total Addressable Market (TAM) and be the leader
- Aligning their cost structure with their revenue growth
We are now in the era of ChatGPT and AI – an area where Microsoft are expected to do very well in the coming months and years – and Nadella stated in the earnings call that they have over 2,500 Open AI Azure customers which is a 10x quarter on quarter increase. He also mentioned that ChatGPT runs on top of Microsoft’s CosmosDB.
Further updates include:
- Azure Arc is up to 15,000+ customers which is 150% up year on year (YoY).
- Power Platform is up to 33 million Monthly Active Users (MAU) – almost 50% up YoY.
- Teams has broken the 300 million MAU mark.
- Almost 60% of Enterprise customers are buying Teams Phone, Teams Rooms, and/or Teams Premium.
- Almost 600,000 customers have deployed at least 4 Microsoft security workloads – a 35% YoY increase.
- Amy Hood stated that, at the end of April 23, total headcount was 9% more than a year prior.
Satya mentioned Copilot several times and, in response to an analyst question, stated that:
“We do plan to monetize a separate set of meters across all of the tech stack, whether they’re consumption meters or per-user subscriptions. The copilot that’s priced, and it is there, is GitHub Copilot. That’s a good example of incrementally how we monetize the price lists out there, and others are to be priced, because we are in preview mode. But you can expect us to do what we’ve done with GitHub Copilot pretty much across the board”
Satya Nadella, Q3 FY23 earnings call
and that gives a good idea of what Copilot licensing may look like. I think my expectation of add-ons to E3 and E5 is pretty accurate.
While Microsoft’s revenue and profits are looking great, and they’re excited about all the growth ahead of them, the shine is dimmed somewhat by 2 things: the memory of the layoffs of circa 10,000 staff in January and the recent news that there are to be no pay raises across Microsoft. Give the increases in cost of living, energy, and inflation – wages staying flat can be seen as a pay cut in many ways.
You can see all the details here.
Cloudy with a chance of Licensing 