Microsoft announced fiscal third-third quarter earnings as well as quarterly revenue guidance that surpassed expectations. The tech giant’s operating margin narrowed somewhat as the cloud became a larger part of its business.
The Redmond-based company posted 19% annualized revenue growth for the quarter, which ended March 31. That result represents the biggest quarterly increase since 2018, thanks in part to gains in PC sales resulting from coronavirus-driven shortages in 2020.
Its Azure public cloud, which competes with market leader Amazon Web Services grew 50%, faster than 46% growth analysts expected. The company does not disclose Azure revenue in dollars.
In regards to guidance, the company is expecting $43.6 billion to $44.5 billion in revenue in the fiscal fourth quarter.
The company’s Intelligent Cloud segment delivered $15.12 billion in revenue in the fiscal third quarter. Its Intelligent Cloud segment contains Azure, Windows Server, SQL Server, Visual Studio, GitHub, and Enterprise Services.
Microsoft and LinkedIn
In 2016, Microsoft paid more than $26 billion for LinkedIn, and it turned out, the company made a great decision. The Productivity and Business Processes segment that includes Office, Dynamics, as well as LinkedIn, contributed $13.55 billion in revenue.
LinkedIn’s ads business brought in more than $3 billion in revenue during the year ended March 31. LinkedIn outperformed competitors like Snap and Pinterest.
The tech giant does not regularly report revenue from LinkedIn’s ads business called LinkedIn Marketing Solutions. According to Microsoft, the growth is accelerating. The unit’s revenue rose more than 60% year over year.
LinkedIn’s competitor Snap generated roughly $2.8 billion in revenue over the same period of time. Another competitor Pinterest also reported quarterly earnings on April 27 and has seen revenue of $1.9 billion.
LinkedIn’s ads business offers sponsored content that appears in the feed as well as sponsored messages. It also offers other ads that might drive LinkedIn users to registers for an event or set up a demo. LinkedIn works with world-famous companies such as American Express, Adobe as well as Chase.
It is trying to position itself as a better place for business-related ads than competitors. LinkedIn also likely got a boost in 2020 when many advertisers paused their placements on Facebook and tried out other channels.
LinkedIn reached great results in 2020, but its advertising business still represents a tiny portion of Microsoft’s total revenue. The tech giant generated $41.7 billion in the quarter ended March 31, alone.
