Microsoft FY23 Q2 earnings look promising, despite mass layoffs
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Microsoft Corp. announced its financial results for the quarter ended December 31, 2022, which showed an increase in revenue of 2% to $52.7 billion. However, operating income and net income decreased by 8% and 12% respectively, when compared to the corresponding period of the previous fiscal year. The company’s CEO, Satya Nadella, stated that the next major wave of computing is being born, as the Microsoft Cloud turns the world’s most advanced AI models into a new computing platform. The company is committed to helping its customers use its platforms and tools to do more with less today and innovate for the future in the new era of AI.
Total revenue. $52.7 billion, an increase of 2%
LinkedIn revenue. Increased 10% (up 4% in constant currency)
Total ad revenue. Increased 10% (up 5% in constant currency)
An investment into ChatGPT. Microsoft is reportedly planning to integrate OpenAI’s ChatGPT features into Bing Search in the upcoming months. This information comes from sources connected to Bing, who claim that the company is planning to add the popular ChatGPT AI question-and-answer service to Bing, Microsoft’s search engine.
Big plans for its ad business. Microsoft also announced its plans to increase its ad revenue from $10 billion annually to $20 billion. The company’s leadership did not provide a specific timeframe for reaching this goal, but if achieved, it would make Microsoft the sixth-largest digital ad seller worldwide.
Mass layoffs. Last week Microsoft CEO, Satya Nadella announced plans to cut jobs due to changing demand for digital services during the pandemic and potential recession. He cited that customers are now optimizing their digital spend to do more with less. The job cuts will affect less than 5% of the company’s total workforce, and the cuts will be completed by the end of Microsoft’s fiscal third quarter. The company will also incur a $1.2 billion charge in its second quarter related to severance costs, changes to its hardware portfolio, and lease consolidation.
Dig deeper. Read the full earnings statement from Microsoft here.
Why we care. Upon reviewing the forward-looking statements from the announcement, last quarters earnings could affect the company’s ability to generate revenue, which in turn could affect the effectiveness of advertising on its platform.
For example, if Microsoft’s revenue decreases due to intense competition, advertisers may see a decrease in their return on investment when advertising on the platform. Additionally, if Microsoft experiences issues with security vulnerabilities, misuse of personal data, or reputational harm, it could affect the trust and engagement of users on the platform, potentially decreasing the reach and impact of advertising campaigns. Regulatory challenges could also affect the way it designs and markets its products, potentially limiting the advertising opportunities for advertisers.
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About the author
Nicole Farley is an editor for Search Engine Land covering all things PPC. In addition to being a Marine Corps veteran, she has an extensive background in digital marketing, an MBA and a penchant for true crime, podcasts, travel, and snacks.
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