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Microsoft results show demand for automation and AI

Microsoft’s Dynamics business has benefited from enterprises automating business processes and the connectivity with Teams

Microsoft has reported a 21% boost in profits for its fourth quarter of 2021, with revenue of $46bn.

Revenue in its commercial cloud business grew by 36% to $19.5bn, while Azure posted revenue growth of 51%.

Revenue in More Personal Computing was $14.1bn, an increase of 9% from the same quarter last year. Within the More Personal Computing business, Windows OEM revenue decreased by 3% while Windows Commercial products and cloud services revenue increased by 20%.

Office 365 Commercial revenue grew by 25%, driven by what the company described as “installed base expansion across all workloads and customer segments”, according to a transcript of the earnings call posted on the Seeking Alpha financial site.

The Microsoft Intelligent Cloud business posted revenue of $17.4bn, an increase of 30%, while its Windows Commercial products and cloud services business saw growth in demand for Microsoft 365 drive a 20% jump in revenue.

The company’s Dynamics products and cloud services arm posted growth of 33%, while Dynamics 365 grew by 49%.

In the transcript of the earnings call, CFO Amy Hood described how Microsoft had seen “strong momentum in Power Apps and Power Automate”, which “reflected growing demand for our modern solutions to build apps and automate workflows”. Dynamics 365 now accounts for over 70% of total Dynamics revenue, she said.

Satya Nadella, chairman and chief executive officer of Microsoft, said: “We are innovating across the technology stack to help organisations drive new levels of tech intensity across their business. Our results show that when we execute well and meet customers’ needs in differentiated ways in large and growing markets, we generate growth, as we’ve seen in our commercial cloud – and in new franchises we’ve built, including gaming, security and LinkedIn, all of which surpassed $10bn in annual revenue over the past three years.”

Asked during the earnings call about what is driving growth in Microsoft’s Dynamics portfolio, Nadella said: “It’s probably one of the most exciting things we are seeing coming out of this pandemic. There is an absolute new chapter for a complete new suite all the way from whether it’s sales, to customer service, to marketing, to supply chain, or digital manufacturing, that’s all going to be re-implemented.

“So, there’s going to be a complete new cycle of business process automation that is going to be AI-first and collaboration-first. And the second part is where that intersection between Teams and Business Process or Dynamics comes through, because you do not want to have a system of record for anything, whether it is a customer or a part or a forecast that you don’t want to collaborate on. And by the way, the communications and the collaboration artifacts are part of the record.”

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