Since it is the first quarter of the Microsoft fiscal year, the update brings its Incomes results. Businesses are putting out their quarterly financial reports as the third quarter of 2022 comes to a close.
Like Google’s previous financial report, this one shows that revenue is going up but profits are going down. The software giant’s net income fell by 14% to $17.6 billion. Even though sales went up by 11% to $50.1 billion from the same time last year.
Trying to stop PC shipments
Despite the fact that signs earlier in the year that the PC market became slowing, Microsoft’s most recent earnings report did make it very clear that PC sales are currently going down, which is hurting the company’s Windows performance. IDC says that the number of PCs that did ship did drop by 15% from the previous quarter to this one.
Poor PC sales and a general drop in demand sometimes do link to problems in the supply chain, price hikes, and excessive tensions between countries.
Microsoft’s Windows OEM revenue fell by 15% in the first quarter compared to the same time last year. This is the money Microsoft gets when PC makers pay to include Windows. Microsoft says that the PC market is already going down steadily.
Sales at the window are likely to fall
During an earnings call, Satya Nadella, the CEO of Microsoft, said that even though PC shipments are indeed going down, Windows remains able to grow. He also said that since the pandemic did start, the number of Windows users has grown by almost 20%. But Microsoft still thinks that sales of Windows OEM will drop by up to 30% in the second quarter.
Even though PC sales are going down in general, Microsoft’s Surface devices are still doing well. Even though there are no new Surface products recently, the company’s sales grew by 2% in the first quarter. Microsoft now calls this “devices incomes,” and it includes sales of the Surface, the HoloLens, and PC accessories.
Unfortunately, the sales of Surface devices are also expected to drop by 30% in the next quarter.
The team wins with the help of their Xboxes and computers
This time, Xbox also is profitable. Sales of hardware went up by 13%, while sales of content and services went down by 3%. What was Microsoft thinking:
Declines in both first-party and third-party content, with less time spent playing and more money being made, which is mostly offset by more people signing up for Xbox Game Pass.
At least Microsoft’s gaming sales went up a little bit from the year before. It’s not a big surprise that Microsoft’s Office 365, cloud, and server products helped the company’s bottom line in a big way. The cloud division of the company did make a record $25.7 billion in sales, which is a 24% increase over 2021. The revenue for the consumer products division, which includes office supplies, went up by 7% to $16.5 billion.
LinkedIn made 17% more money, and search and news media made 16% more. Nadella says that more than 150 million people get LinkedIn’s newsletters.