Microsoft Office

Microsoft released its FY20 Q4 results today, recording $38 billion in revenue, increased 13%. Microsoft reported that Office, LinkedIn and Dynamics revenue grew in the last quarter despite the COVID-19 situation around the world. Office Commercial products and cloud services revenue increased 5%, thanks to Office 365 Commercial growth. Even in the consumer space, Office revenue grew 6%. Also, Office 365 Consumer subscribers increased to 42.7 million. Even though advertisers are spending less money, LinkedIn revenue increased 10%. Finally, Dynamics products and cloud services revenue increased 13% mainly driven by Dynamics 365 revenue growth of 38%.

Revenue in Productivity and Business Processes was $11.8 billion and increased 6% (up 8% in constant currency), with the following business highlights:

Revenue increased $705 million or 6%.

  • Office Commercial products and cloud services revenue increased $394 million or 5%, on a strong prior year comparable. Office 365 Commercial revenue grew 19%, driven by Office 365 Commercial seat growth of 15% and growth in revenue per user. Office Commercial products revenue declined 34% reflecting continued customer shift to cloud offerings from multi-year on-premises agreements and a slowdown in transactional licensing, primarily in small and medium businesses.
  • Office Consumer products and cloud services revenue increased $57 million or 6%, driven by Office 365 Consumer (rebranded to Microsoft 365 Consumer) subscription revenue, offset in part by a slowdown in transactional licensing. Office 365 Consumer subscribers increased 23% to 42.7 million with increased demand from remote work and learn scenarios.
  • LinkedIn revenue increased $181 million or 10%.
  • Dynamics products and cloud services revenue increased 13%, driven by Dynamics 365 growth of 38%.

Operating income decreased $372 million or 9%.

  • Gross margin was relatively unchanged, with growth in LinkedIn and Dynamics, offset in part by a decrease in Office. Gross margin percentage decreased, driven by increased usage of Office 365 Commercial and an increased mix of cloud offerings.
  • Operating expenses increased $407 million or 10%, driven by Teams marketing and investments in cloud engineering.

Due to Microsoft’s subscription business, Microsoft seems to be relatively insulated from the downturn due to the COVID-19 crisis.

See Microsoft’s full figures here.

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