Microsoft search, LinkedIn revenue growth remains slower than a year ago
Cloud helped the company beat expectations with overall revenues of $33.1 billion in the first fiscal quarter of 2020.
Microsoft beat analyst expectations Wednesday with revenues of $33.1 billion in its fiscal first-quarter, up 14% from $29.8 billion a year ago. Its Azure cloud service continued to fuel its fastest growing segment, Intelligent Cloud, which reported revenues of $10.8 billion, up 27% year-over-year. That growth has slowed over the past year, however. Looking at the company’s digital marketing products, search advertising and LinkedIn growth also remained slower than a year ago.
Search advertising. Microsoft Advertising saw revenue growth of 11% year-over-year for the first fiscal quarter. That’s up from the 9% growth seen in the previous quarter, but down from 17% growth reported a year ago. The company again said the growth was driven by higher revenue per search.
Microsoft CFO Amy Hood said the company expects search growth next fiscal quarter — which captures the holiday season — to be in line with this past quarter.
LinkedIn. The company yet again said LinkedIn had record levels of engagement. It has repeated that refrain every quarter since the first quarter of 2018. LinkedIn sessions grew 22%, slower than the 34% growth reported a year ago. Revenue from LinkedIn grew 25%, in line with the previous quarter, but down from 33% last year.
The Marketing Solutions subset of the LinkedIn business (Talent Solutions and Premium Subscriptions are the other segments) “remains our fastest growing segment, up 44% year-over-year, as marketers leverage our community-based tools with LinkedIn, nearly 660 members,” said Hood. (LinkedIn’s website currently reports it has 645 million members.)
Other areas of interest for marketers.
- Azure. Microsoft’s Azure cloud business, which competes with Amazon, Google and Salesforce’s cloud efforts, grew 59%. Nadella said, “Azure AI now has more than 20,000 customers, and more than 85% of the Fortune 100 companies are using Azure AI in the last 12 months.”
- GitHub. The company said Github has more than 40 million developers, up more than 30% since its acquisition a year ago and that more than 2 million organizations use GitHub, including the majority of the Fortune 50.
- Workflow automation. Microsoft’s workflow cloud, called Power Platform for Microsoft 365 and Dynamics 365 is aimed at letting anyone in an organization build an app — for analytics, for example — or workflow with little to no coding. The company said Power Platform has more than 2.5 million monthly active citizen developers and 84% of the Fortune 500 have created power applications.
- Product insights. Earlier this month, the company announced the Product Insights app for Dynamics 365 to provide businesses with real-time customer data. The company cited energy technologies firm Ecolab and retailer Marks & Spencer as customers using product insights to analyze observational data to improve customer lifetime value and optimize in-store shopping experience, respectively.
Why we should care. Advertising makes up a small slice of Microsoft’s business. Search gets a mere mention on earnings calls, typically. But the company does continue to invest in these areas. It announced or rolled out several updates last quarter aimed at making the Advertising platform easier to use and more productive.
- Experiments rolled out globally in July to enable testing of ad copy, landing pages and bidding strategies and modifiers.
- Ad customizers also became available for all advertisers that month.
- It also added the new position based metrics to report impression share, but said it would be keeping average position metric that Google sunset this month.
- Product and similar audiences continue to roll out to more advertisers.
- LinkedIn Campaign Manager added brand awareness, conversion campaign options in July.