Microsoft Search and News Advertising revenue up 10% in Q3

Microsoft has reported its strongest financial quarter to date in Q3 of 2023.

Search and news advertising revenue increased 10% year on year, excluding traffic acquisition costs that Microsoft pays to publishers. The rise in search and news advertising revenue marks a significant boost from last quarter’s 3% increase.

LinkedIn revenue was also up 8%, with overall revenue in Productivity and Business Processes up 13% to $18.6 billion.

Meanwhile, total sales during the three-month period ending 30 September 2023 generated $56.5 billion for Microsoft, which is significantly above what industry experts had forecasted, according to FactSet.

Why we care. Microsoft’s advertising growth is back in double digits and appears to be a strong indication that ad spend is finally recovering following the impact of the economic downturn. The impressive sales tied to generative AI investments also underscore the technology’s growing significance for marketers in the future.

Strong performance. Microsoft’s sales for the three months ending on September 30 reached $56.5 billion, surpassing the analysts’ expected $54.5 billion. This was a 13% increase from the same period last year and broke the previous quarter’s revenue record of $56.2 billion. After-hours trading saw Microsoft’s stock price rise by around 5% to nearly $350.

Investing in AI. Microsoft has attributed its successful quarter to it continued commitment to generative AI, namely its Intelligent Cloud unit, which hosts the tech giant’s Azure cloud-computing platform. Revenue from the Cloud unit shot up to $24.3 billion this quarter – a much stronger performance than the $23.49 billion prediction by analysts.

What Microsoft is saying. Satya Nadella, chairman and chief executive officer of Microsoft, said in a statement:

• “With copilots, we are making the age of AI real for people and businesses everywhere.”
• “We are rapidly infusing AI across every layer of the tech stack and for every role and business process to drive productivity gains for our customers.”

Earnings report. Read Microsoft’s full Q3 performance report for more information.