Microsoft has some bad news for its commercial customers as the company predicts a continuation of the weak pace and slow growth seen in December 2022 in 2023, which resulted in a disappointing fiscal second quarter.
“In our commercial business we expect business trends that we saw at the end of December to continue into Q3,” Amy Hood, Microsoft CFO, said.
CEO Satya Nadella said that large organizations are trying to save money by optimizing their spending on cloud services, which is a key area of growth for Microsoft. As a result, the company saw a slowdown in growth in its Microsoft 365 productivity software subscriptions, identity and security services, and business-oriented Windows products. The cloud computing service Azure also saw a decrease in growth.
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However, Microsoft is trying to turn this situation around. The company has made changes to its products to help customers save money on their cloud bills. Despite these efforts, CFO Amy Hood predicts that Azure’s growth will slow down even further with a 4-5 percentage point slowdown expected in the current quarter.
Unfortunately, this slowdown will also affect Windows commercial products and cloud services, with flat revenue forecast for this category.
Despite the bad news, Microsoft is trying to keep a positive outlook. The company is making changes to help its customers save money, and it is important to remember that even with the slowdown, Microsoft Cloud still represents 51% of total sales. So, it looks like Microsoft is trying to weather the storm and come out even stronger on the other side.
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