7 ms·

Microsoft Announces Q3 Earnings

74 points by samspenc 4y ago

crop_rotation 4y ago
Seems like Azure and GCP are growing at the same rate of 27% despite the size difference. Looks good for Azure.
- onlyrealcuzzo 4y ago
  Azure is mostly Office 365 & Cloud is mostly gSuite - so I'd caution against saying "GCP" and pretending like these are good comparisons to AWS. Azure & Cloud probably are decent comparisons to each other, though.
  - bloodyplonker22 4y ago
    I have never met a person who called GCP "Cloud" like it was the authoritative cloud.
    - pesfandiar 4y ago
      I suppose they're referring to line items in each company's earnings report.
  - mfer 4y ago
    Azure and Office numbers are separate in the announcement.
  - phillipcarter 4y ago
    I doubt someone who works in accounting would confirm on this site, but the O365 stuff is categorized differently than Azure. So I don't think it's an office suite underneath a compute platform's trenchcoat.
    - SvenL 4y ago
      It depends, if you buy an Office365/Microsoft365 subscription with SharePoint and the other stuff you also get an Azure AD for authentication, including an Azure Subscription. So you’re also an Azure user…
- ArchOversight 4y ago
  As a user of AWS/GCP/Azure, Azure is the one where we have the most issues, the most services that somewhat work but never right and where it is the biggest pain to actually get up and running successfully. We've also run into a lot of random limitations that are massive pain points in building automation against Azure where there's a mixture now of terraform, Powershell, and Azure Resource Manager templates to try and enforce state. We have also found that we are spending almost 25% more in Azure for similar compute capabilities as we've had to launch more servers to meet expected baseline performance (or pricier systems). The lack of proper AZ's in certain locations is also a huge bummer, on top of that, we've found that in certain regions you will have certain instance types that are available in one AZ but not the other. So you end up having to find somewhat equivalents and rewrite infrastructure as code to deal with that mess. Last but not least is the fact that GCP and Azure both don't have great support for IPv6. AWS may have been late to the game, but it's easy to deploy, and it just works. Whereas in GCP you have to be in certain regions, and in Azure I still am not sure what they were smoking with giving such a tiny public IPv6 prefix: https://learn.microsoft.com/en-us/azure/virtual-network/ip-services/public-ip-address-prefix https://learn.microsoft.com/en-us/azure/virtual-network/ip-s...
  - gxt 4y ago
    Doing any but pure ARM or blueprint/arm on Azure is shooting yourself in the throat.
    - ArchOversight 4y ago
      That's great and all, but I need it to integrate with terraform because then I can easily connect it up to our other cloud providers, and setup DNS and stuff like that automatically across the clouds. Azure's terraform provider is also not the greatest, unfortunately.
  - victor106 4y ago
    I agree with this. Been using AWS and Azure for a long time and only recently started using GCP. I was surprised how fast GCP services and resources startup. On AWS/Azure it takes more than a few for VM to spin up but on GCP it feels like a few seconds.
prepend 4y ago
So Microsoft made more in quarterly earnings than Google. Is that new?
- pb7 4y ago
  MSFT is worth about $700B more so should be expected.
- adventured 4y ago
  Microsoft has historically had superior margins to Google. Google overtook Microsoft in sales five or so years ago. So for example in fiscal 2019 Microsoft had $42b in operating income, and Google had $35b in operating income in fiscal 2019 - that's despite Google doing $36b more in sales that year (not quite 30% more). For the last four quarters (excluding today's results) Microsoft has a ~41% operating income margin. Google by contrast has a 26% operating income margin (how much operating income are they generating from revenue). On Google's $282 billion in sales the last four quarters, their cost of revenue is equal to ~45% of revenue. By contrast, Microsoft's figure is ~32%. Microsoft has the far superior business imo. To say nothing of the risk that Google's core search business is about to get murdered by an AI inflection point that Alphabet screwed up (got lazy and extractive focused) and severely botched the transition on. For years Google has been too oriented toward financializing what they already had and they've been unwilling to try to kill off their own product by creating the future (the next search paradigm). It's pretty classic, the lazy monopoly gets capsized while resting on its laurels.
  - dougb5 4y ago
    I agree with your assessment about Google's predicament and their laurel-resting-on, but I think it's a little early to say they're about to "get murdered". I don't see evidence from these earnings that ChatGPT has meaningfully hurt their search traffic, and it's been two quarters. If the murder is in progress then it doesn't show, and if the murder is yet to come then I think they still have plenty of time to react -- thoughtfully and carefully, I hope.
    - 4y ago
janvdberg 4y ago
How come MS announces their Q3 earnings (2022) at the same time Google announces their Q1 (2023) earnings. That's a six month difference, how does that work?
- newsclues 4y ago
  Not everyone goes public at the same time, and have different financial reporting periods.
- crop_rotation 4y ago
  They are the same quarters, as per the article -> "Microsoft Corp. today announced the following results for the quarter ended March 31, 2023," Microsoft is just using a different year definition.
- deleted 4y ago
  [deleted]
- thund 4y ago
  Some companies start counting from January, others from July
  - jedberg 4y ago
    And then there is Apple, that starts from September 25th. :)
    - Kimitri 4y ago
      It takes courage.
    - Jtsummers 4y ago
      And their next one will start on 1 October. Their FY runs to the last Saturday of September. This year, that means 30 September and last year was 24 September. They have either a 52-week or 53-week fiscal year.
  - foobiekr 4y ago
jrpt 4y ago
If you want to ask an AI questions about it, I uploaded their entire quarterly earnings report to Docalysis: https://docalysis.com/files/9062960515 https://docalysis.com/files/9062960515
- knbknb 4y ago
  interesting AI service . I had three free questions then it responded: "Because we're committed to providing you with high-quality chat responses, which are computationally expensive, we require users to sign in or create a free account to continue chatting with Docalysis. Thank you for understanding!"
npilk 4y ago
Not too surprising that Nadella's comments are focused on AI, even as the growth is all coming from legacy products (and not yet Bing Search or AI-powered products). I wonder how much Microsoft is benefiting in cloud sales from the 'halo effect' of Bing/OpenAI/recent AI product announcements.
- Someone1234 4y ago
  LLMs could really be a big deal for particularly their Bing market share though. They've managed to put themselves right in the path of a huge industry shift, and it is fantastic for Microsoft's future. Google by contrast is looking at a sinking market share because they've missed the boat so hard and managed to continuously embarrass themselves by rushing out half-baked presentations and products.
  - npilk 4y ago
    Absolutely - they're in the catbird seat, and it makes sense that they would focus on AI/LLMs in earnings commentary to highlight potential future growth. But for now, Bing is still tiny compared to Azure, O365, Teams, etc., which is what drove their growth this quarter. However, I'm guessing those 'legacy' products are also benefiting from some positive brand association based on the last 3-6 months or so. Basically, even if they haven't yet realized meaningful revenue directly from Bing Chat/LLMs/AI-enabled products, they may already be capturing some meaningful indirect benefits through their other products.
  - jameshart 4y ago
    LLMs (and other generative and interpretative AI) are going to be massive in the office/exchange/teams space. For the first time since ‘copy/paste’ there’s something in the productivity tools space that could significantly alter how people use their computers. And Microsoft have positioned themselves to be the first to take advantage.
bob1029 4y ago
Microsoft is in a really special place for me right now from the perspective of both technology owner and investor. Azure growth was inevitable based upon my (positive) experience over the last 3 months splitting an org into multiple tenants. Enterprise applications + app proxies are an amazing way to get your employees off legacy VPN crap and working with a simple org-wide SAML/MFA/SSO flow. And, this stuff actually works. It doesn't require invoking a bunch of arcane APIs to get the job done. I haven't seen anything short of a few Cloudflare offerings that gets anywhere close. My most recent shit-test for Azure was building a FreePBX instance (i.e. non-windows) from install. It took me less than 1 hour to go from downloaded ISO to booting VM in Azure. The reason I made it from scratch is because I wasted an entire day trying to get AWS to export the old EC2 copy. I got something out but it definitely wasn't planning to boot up for me. I am at a point where an "all-in" Microsoft stack is a super compelling idea. Today, when I go and look at Azure Active Directory, I have a level of confidence that simply does not exist anywhere else. Everything can be made to suffer our policies and procedures from top-down. Even other clouds. I've got AWS running as a sidecar to our AAD using SAML & SCIM to sync+auth identities. The only things keeping us from chopping AWS completely are Route53 (just domain registration) and S3 (because we are too lazy to learn something new at the moment). We currently have no direct exposure to Google products or services. I would like to add one extra "FU" that I perceived throughout the Azure vs AWS experience: Microsoft has a browser plugin that will automatically run through the AWS control panel on your behalf in order to configure certain SAML/SCIM integrations. Clearly, at some point someone at Microsoft thought "this AWS UX is way too confusing for our customers" and actually cared about it enough to do something. None of this even touches on Office, .NET, GitHub, Visual Studio, Xbox, etc. Each of these on their own would be a compelling reason to invest.
- Dalewyn 4y ago
  Going on a tangent and maybe it's just coincidence, but the lack of Windows in your list of compelling reasons is kind of telling.
  - bob1029 4y ago
    I omitted windows with intent. There are things to like (i.e. centralization & control for business cases), but also many, many things to dislike. If I had a chance to make one argument to the board of Microsoft, I would plead with them to create a separate "hacker" edition of windows that is true price and ships with absolutely zero crapware. Some argue with me that Windows Server is effectively this, but brand image won't improve much with that narrative. Adjusted for inflation, Windows 95 cost over $400 on launch day. I don't mind paying big bucks for an OS if it's done properly. This is precisely the same issue we run into with TVs. You'll find HN complaining about it approximately every 30 days or so. Price gets subsidized into a shitty experience every time. At least in the case of physical goods you have some realistic arguments for not differentiating the product line, but when it's a goddamn piece of software that already has a bunch of editions I don't see why not.
woeirua 4y ago
Stellar result from MSFT. MSFT may be the company to beat now. Their revenue streams are much more solid than Google's and they're actually growing their core business. Pressure is going to ramp pretty quickly here for Sundar to step aside if Alphabet can't start showing more growth.
- jimbob45 4y ago
  How is the company to beat not Amazon? AWS is a money machine and they're the worldwide leader by a huge amount, no?
  - anthonypasq 4y ago
    Microsoft is literally twice the size of Amazon
  - aiappreciator 4y ago
    Amazon only has AWS, their retail business isn't worth that much (maybe $200 bil max, given low margins). Online2Offline has mostly a disappointment, as the margins of tech just could not be replicated in offline businesses. Microsoft has O365 (Dominant business tool), Github/Vscode (Dominant coding tools, also perfect datasource for AI coding), Gaming (Windows is still overwhelmingly dominant in gaming, and also Xbox exists), AI (They own 50% of OpenAI), and finally Azure. Alphabet has the consumer google suite (Youtube/gmail/google) that just prints out extremely high margin cash. They also have android/chrome as defensive moats for the core suite. Hence Amazon only beats out Meta in stock valuation
    - adventured 4y ago
      And classic Windows is still a money printing machine after all these years. It's making more in profit than Azure, gaming, search and Github/Vsc combined. Other than Apple slowly carving out additional PC market share there is no serious threat on the horizon for classic Windows.
      - 4y ago
TheObviousOne 4y ago
Why no ones talk about a potential anti-trust of MSFT? (regarding acquisition of OPENAI)??
- abosley 4y ago
  MSFT has a partnership agreement with OpenAI. We didn't acquire them. Microsoft employee. Thoughts are my own.
  - TheObviousOne 3y ago
    This doesn't matter. MSFT got exclusivity of using their services that no other firm on earth got (which basically the same as aquirement..). This is not fair-play and someone should at least raise it up to level of awareness.
paulpauper 4y ago
Damn...up another 5% in after hours. Getting close to new highs again , way outperforming other stocks. Keeps going up and up. It shows how even 50 years later MSFT is a dominant as ever, with no signs of slowing. This calls into question the assumption by pundits and academics alike that dominant businesses must succumb to market forces or competition. Same for the dominance of Apple. Alphabet is also very strong too.

74 points by samspenc 4y ago

crop_rotation 4y ago

Seems like Azure and GCP are growing at the same rate of 27% despite the size difference. Looks good for Azure.

onlyrealcuzzo 4y ago
Azure is mostly Office 365 & Cloud is mostly gSuite - so I'd caution against saying "GCP" and pretending like these are good comparisons to AWS. Azure & Cloud probably are decent comparisons to each other, though.
- bloodyplonker22 4y ago
  I have never met a person who called GCP "Cloud" like it was the authoritative cloud.
  - pesfandiar 4y ago
    I suppose they're referring to line items in each company's earnings report.
- mfer 4y ago
  Azure and Office numbers are separate in the announcement.
- phillipcarter 4y ago
  I doubt someone who works in accounting would confirm on this site, but the O365 stuff is categorized differently than Azure. So I don't think it's an office suite underneath a compute platform's trenchcoat.
  - SvenL 4y ago
    It depends, if you buy an Office365/Microsoft365 subscription with SharePoint and the other stuff you also get an Azure AD for authentication, including an Azure Subscription. So you’re also an Azure user…
ArchOversight 4y ago
As a user of AWS/GCP/Azure, Azure is the one where we have the most issues, the most services that somewhat work but never right and where it is the biggest pain to actually get up and running successfully. We've also run into a lot of random limitations that are massive pain points in building automation against Azure where there's a mixture now of terraform, Powershell, and Azure Resource Manager templates to try and enforce state. We have also found that we are spending almost 25% more in Azure for similar compute capabilities as we've had to launch more servers to meet expected baseline performance (or pricier systems). The lack of proper AZ's in certain locations is also a huge bummer, on top of that, we've found that in certain regions you will have certain instance types that are available in one AZ but not the other. So you end up having to find somewhat equivalents and rewrite infrastructure as code to deal with that mess. Last but not least is the fact that GCP and Azure both don't have great support for IPv6. AWS may have been late to the game, but it's easy to deploy, and it just works. Whereas in GCP you have to be in certain regions, and in Azure I still am not sure what they were smoking with giving such a tiny public IPv6 prefix: https://learn.microsoft.com/en-us/azure/virtual-network/ip-services/public-ip-address-prefix https://learn.microsoft.com/en-us/azure/virtual-network/ip-s...
- gxt 4y ago
  Doing any but pure ARM or blueprint/arm on Azure is shooting yourself in the throat.
  - ArchOversight 4y ago
    That's great and all, but I need it to integrate with terraform because then I can easily connect it up to our other cloud providers, and setup DNS and stuff like that automatically across the clouds. Azure's terraform provider is also not the greatest, unfortunately.
- victor106 4y ago
  I agree with this. Been using AWS and Azure for a long time and only recently started using GCP. I was surprised how fast GCP services and resources startup. On AWS/Azure it takes more than a few for VM to spin up but on GCP it feels like a few seconds.

prepend 4y ago

So Microsoft made more in quarterly earnings than Google. Is that new?

pb7 4y ago
MSFT is worth about $700B more so should be expected.
adventured 4y ago
Microsoft has historically had superior margins to Google. Google overtook Microsoft in sales five or so years ago. So for example in fiscal 2019 Microsoft had $42b in operating income, and Google had $35b in operating income in fiscal 2019 - that's despite Google doing $36b more in sales that year (not quite 30% more). For the last four quarters (excluding today's results) Microsoft has a ~41% operating income margin. Google by contrast has a 26% operating income margin (how much operating income are they generating from revenue). On Google's $282 billion in sales the last four quarters, their cost of revenue is equal to ~45% of revenue. By contrast, Microsoft's figure is ~32%. Microsoft has the far superior business imo. To say nothing of the risk that Google's core search business is about to get murdered by an AI inflection point that Alphabet screwed up (got lazy and extractive focused) and severely botched the transition on. For years Google has been too oriented toward financializing what they already had and they've been unwilling to try to kill off their own product by creating the future (the next search paradigm). It's pretty classic, the lazy monopoly gets capsized while resting on its laurels.
- dougb5 4y ago
  I agree with your assessment about Google's predicament and their laurel-resting-on, but I think it's a little early to say they're about to "get murdered". I don't see evidence from these earnings that ChatGPT has meaningfully hurt their search traffic, and it's been two quarters. If the murder is in progress then it doesn't show, and if the murder is yet to come then I think they still have plenty of time to react -- thoughtfully and carefully, I hope.
  - 4y ago

janvdberg 4y ago

How come MS announces their Q3 earnings (2022) at the same time Google announces their Q1 (2023) earnings. That's a six month difference, how does that work?

newsclues 4y ago
Not everyone goes public at the same time, and have different financial reporting periods.
crop_rotation 4y ago
They are the same quarters, as per the article -> "Microsoft Corp. today announced the following results for the quarter ended March 31, 2023," Microsoft is just using a different year definition.
deleted 4y ago
[deleted]
thund 4y ago
Some companies start counting from January, others from July
- jedberg 4y ago
  And then there is Apple, that starts from September 25th. :)
  - Kimitri 4y ago
    It takes courage.
  - Jtsummers 4y ago
    And their next one will start on 1 October. Their FY runs to the last Saturday of September. This year, that means 30 September and last year was 24 September. They have either a 52-week or 53-week fiscal year.
- foobiekr 4y ago

jrpt 4y ago

If you want to ask an AI questions about it, I uploaded their entire quarterly earnings report to Docalysis: https://docalysis.com/files/9062960515 https://docalysis.com/files/9062960515

knbknb 4y ago
interesting AI service . I had three free questions then it responded: "Because we're committed to providing you with high-quality chat responses, which are computationally expensive, we require users to sign in or create a free account to continue chatting with Docalysis. Thank you for understanding!"

npilk 4y ago

Not too surprising that Nadella's comments are focused on AI, even as the growth is all coming from legacy products (and not yet Bing Search or AI-powered products). I wonder how much Microsoft is benefiting in cloud sales from the 'halo effect' of Bing/OpenAI/recent AI product announcements.

Someone1234 4y ago
LLMs could really be a big deal for particularly their Bing market share though. They've managed to put themselves right in the path of a huge industry shift, and it is fantastic for Microsoft's future. Google by contrast is looking at a sinking market share because they've missed the boat so hard and managed to continuously embarrass themselves by rushing out half-baked presentations and products.
- npilk 4y ago
  Absolutely - they're in the catbird seat, and it makes sense that they would focus on AI/LLMs in earnings commentary to highlight potential future growth. But for now, Bing is still tiny compared to Azure, O365, Teams, etc., which is what drove their growth this quarter. However, I'm guessing those 'legacy' products are also benefiting from some positive brand association based on the last 3-6 months or so. Basically, even if they haven't yet realized meaningful revenue directly from Bing Chat/LLMs/AI-enabled products, they may already be capturing some meaningful indirect benefits through their other products.
- jameshart 4y ago
  LLMs (and other generative and interpretative AI) are going to be massive in the office/exchange/teams space. For the first time since ‘copy/paste’ there’s something in the productivity tools space that could significantly alter how people use their computers. And Microsoft have positioned themselves to be the first to take advantage.

bob1029 4y ago

Microsoft is in a really special place for me right now from the perspective of both technology owner and investor. Azure growth was inevitable based upon my (positive) experience over the last 3 months splitting an org into multiple tenants. Enterprise applications + app proxies are an amazing way to get your employees off legacy VPN crap and working with a simple org-wide SAML/MFA/SSO flow. And, this stuff actually works. It doesn't require invoking a bunch of arcane APIs to get the job done. I haven't seen anything short of a few Cloudflare offerings that gets anywhere close. My most recent shit-test for Azure was building a FreePBX instance (i.e. non-windows) from install. It took me less than 1 hour to go from downloaded ISO to booting VM in Azure. The reason I made it from scratch is because I wasted an entire day trying to get AWS to export the old EC2 copy. I got something out but it definitely wasn't planning to boot up for me. I am at a point where an "all-in" Microsoft stack is a super compelling idea. Today, when I go and look at Azure Active Directory, I have a level of confidence that simply does not exist anywhere else. Everything can be made to suffer our policies and procedures from top-down. Even other clouds. I've got AWS running as a sidecar to our AAD using SAML & SCIM to sync+auth identities. The only things keeping us from chopping AWS completely are Route53 (just domain registration) and S3 (because we are too lazy to learn something new at the moment). We currently have no direct exposure to Google products or services. I would like to add one extra "FU" that I perceived throughout the Azure vs AWS experience: Microsoft has a browser plugin that will automatically run through the AWS control panel on your behalf in order to configure certain SAML/SCIM integrations. Clearly, at some point someone at Microsoft thought "this AWS UX is way too confusing for our customers" and actually cared about it enough to do something. None of this even touches on Office, .NET, GitHub, Visual Studio, Xbox, etc. Each of these on their own would be a compelling reason to invest.

Dalewyn 4y ago
Going on a tangent and maybe it's just coincidence, but the lack of Windows in your list of compelling reasons is kind of telling.
- bob1029 4y ago
  I omitted windows with intent. There are things to like (i.e. centralization & control for business cases), but also many, many things to dislike. If I had a chance to make one argument to the board of Microsoft, I would plead with them to create a separate "hacker" edition of windows that is true price and ships with absolutely zero crapware. Some argue with me that Windows Server is effectively this, but brand image won't improve much with that narrative. Adjusted for inflation, Windows 95 cost over $400 on launch day. I don't mind paying big bucks for an OS if it's done properly. This is precisely the same issue we run into with TVs. You'll find HN complaining about it approximately every 30 days or so. Price gets subsidized into a shitty experience every time. At least in the case of physical goods you have some realistic arguments for not differentiating the product line, but when it's a goddamn piece of software that already has a bunch of editions I don't see why not.

woeirua 4y ago

Stellar result from MSFT. MSFT may be the company to beat now. Their revenue streams are much more solid than Google's and they're actually growing their core business. Pressure is going to ramp pretty quickly here for Sundar to step aside if Alphabet can't start showing more growth.

jimbob45 4y ago
How is the company to beat not Amazon? AWS is a money machine and they're the worldwide leader by a huge amount, no?
- anthonypasq 4y ago
  Microsoft is literally twice the size of Amazon
- aiappreciator 4y ago
  Amazon only has AWS, their retail business isn't worth that much (maybe $200 bil max, given low margins). Online2Offline has mostly a disappointment, as the margins of tech just could not be replicated in offline businesses. Microsoft has O365 (Dominant business tool), Github/Vscode (Dominant coding tools, also perfect datasource for AI coding), Gaming (Windows is still overwhelmingly dominant in gaming, and also Xbox exists), AI (They own 50% of OpenAI), and finally Azure. Alphabet has the consumer google suite (Youtube/gmail/google) that just prints out extremely high margin cash. They also have android/chrome as defensive moats for the core suite. Hence Amazon only beats out Meta in stock valuation
  - adventured 4y ago
    And classic Windows is still a money printing machine after all these years. It's making more in profit than Azure, gaming, search and Github/Vsc combined. Other than Apple slowly carving out additional PC market share there is no serious threat on the horizon for classic Windows.
    - 4y ago

TheObviousOne 4y ago

Why no ones talk about a potential anti-trust of MSFT? (regarding acquisition of OPENAI)??

abosley 4y ago
MSFT has a partnership agreement with OpenAI. We didn't acquire them. Microsoft employee. Thoughts are my own.
- TheObviousOne 3y ago
  This doesn't matter. MSFT got exclusivity of using their services that no other firm on earth got (which basically the same as aquirement..). This is not fair-play and someone should at least raise it up to level of awareness.

paulpauper 4y ago

Damn...up another 5% in after hours. Getting close to new highs again , way outperforming other stocks. Keeps going up and up. It shows how even 50 years later MSFT is a dominant as ever, with no signs of slowing. This calls into question the assumption by pundits and academics alike that dominant businesses must succumb to market forces or competition. Same for the dominance of Apple. Alphabet is also very strong too.