Microsoft, Google and Twitter all saw double-digit revenue growth in the third quarter as the use of technology widens across industries and geographies.
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At Microsoft, revenue went up 22% from a year earlier, reaching $45.3 billion in the quarter ending in September. Profit rose 48%, to $20.5 billion. Commercial cloud services have been the biggest drivers: Microsoft Cloud sales grew 36% to $20.7 billion, nearly half the tech giant’s total revenue for the quarter. According to analysts, companies are signing bigger and longer contracts. In October, Microsoft surpassed Apple to become the world’s most valuable company with a market value of $2.46 trillion.
Like many other trends, the increased use of technology was fast-tracked by the pandemic. This is especially true of cloud services, as Microsoft’s earnings indicate. Many companies were already planning to move more to the cloud, as the New York Times notes. However, “Covid forced their hand for certain things to move faster. The success they have had with that has emboldened execs who are pro-cloud to be more aggressive,” said Brad Reback, an analyst at investment bank Stifel.
Google parent company Alphabet was also a winner, despite a downturn in online advertising. Google’s search engine is as popular as ever, with ad revenue rising 43%, to more than $53 billion. Demand for YouTube advertising has also held strong, contributing to Alphabet’s stellar overall performance in the third quarter: Net profit increased 68%, to $18.9 billion, and revenue went up 41%, to more than $65 billion. Like Microsoft, Alphabet saw continued growth in its cloud computing business.
Online advertising been impacted by a policy change from Apple this year, namely the release of its App Tracking Transparency framework, which allows users to opt out of having their information tracked. While Google appears unscathed, social media giant Facebook said it saw slower than expected revenue growth – though it grew 35% in the third quarter. Snap, parent company of social media app Snapchat, said the impact was more severe than it had expected, according to the New York Times.
Yet another tech giant, Twitter, was on the upswing in the third quarter. Its revenue rose 37% to $1.2 billion. The company said that it largely avoided negative impacts from Apple’s policy change, which has mainly affected online advertising on mobile devices. Twitter said that its advertisers generally use it for brand awareness, which relies less on tracking, adding that it is “still too early for Twitter to assess the long-term impact of Apple’s privacy-related iOS changes”. Its number of daily active users who saw ads grew 13% in the third quarter, the New York Times reports.
