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Microsoft increases revenue and net income despite declines in software and hardware for its FY23 Q3 earnings

4 min. read

Published onApril 25, 2023

published onApril 25, 2023

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Microsoft’sthird quarter earnings report for its fiscal year 2023is a mixed bag for the company as its post revenue of $52.9 billion with a net income of $18.3 billion representing a 7 and 9 percent increase year over year respectively, while also marking some noteworthy declines in Windows OEM, devices and Xbox revenue.

An ongoing slump in the PC market marksanother three months of declining revenuefor Microsoft and its OEM partners. With the PC market down around 30 percent of what it was last year, and already being down from the heights it gained during the pandemic, Microsoft’s More Personal Computing business was hit the hardest by the latest trajectory.

Microsoft reported that the More Personal Computing businesses brought in $13.3 billion in revenue which represents a 9 percent decrease year over year. Some of the main offenders in the MPC business portfolio include Windows OEM licensing being down by 28 percent year over year as well as the Devices tallying a 30 percent revenue decrease. It should be noted that Microsoft sought to bundle its HoloLens business under its Devices division last quarter and shuttered much of the development for its Mixed Reality headset subsequently.

Microsoft’s Xbox efforts also weighed on the MPC business report with its own hardware revenue decline of 30 percent, some of which the company attributes to supply constraints in 2023.

On the flipside, Microsoft reported better than expected growth in its cloud services business with Azure tracking $22.1 billion for the quarter, a 16 percent increase year over year. Azure, under the server products and cloud services label saw a 25 percent revenue increase specifically for Microsoft.

Microsoft’s Productivity and Business Processes division also raked in $17.5 billion for the quarter, an 11 percent increase for the company with Officer Commercial products leading the pack with its own 13 percent revenue increase year over year.

For more details and context, below are the investors notes:

Revenue inProductivity and Business Processeswas $17.5 billion and increased 11% (up 15% in constant currency), with the following business highlights:

Revenue inIntelligent Cloudwas $22.1 billion and increased 16% (up 19% in constant currency), with the following business highlights:

Revenue inMore Personal Computingwas $13.3 billion and decreased 9% (down 7% in constant currency), with the following business highlights:

Microsoft returned $9.7 billion to shareholders in the form of share repurchases and dividends in the third quarter of fiscal year 2023.

Microsoft also madenote of some of its product releases and other highlightsfor the quarter that include Smart Store Anlytics, Microsoft Sustainability Manager, Viva Goals and Power BI integration, Azure Virtual Desktop Insights at Scale, The Windows 365 app, Jupyter Notebooks and Python scripts in Teams Assignments, Generative AI in LinkedIn, GitHub Copilot X, Bing AI chat bot and a whole host of new features for Teams.

Microsoft will speak to investors later today on its earnings call in regards to continue shedding of jobs, upcoming CMA regulatory review conclusion, future plans for AI and more.

Kareem Anderson

Networking & Security Specialist

Kareem is a journalist from the bay area, now living in Florida. His passion for technology and content creation drives are unmatched, driving him to create well-researched articles and incredible YouTube videos.

He is always on the lookout for everything new about Microsoft, focusing on making easy-to-understand content and breaking down complex topics related to networking, Azure, cloud computing, and security.

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Kareem Anderson

Networking & Security Specialist

He is a journalist from the bay area, now living in Florida. He breaks down complex topics related to networking, Azure, cloud computing, and security