Shares of Microsoft were down Wednesday morning after the company said larger economic headwinds were impacting the company’s critical cloud computing business during the fiscal first quarter.
Shares were down $16.16, or 6.4%, at $234 per share in mid-morning trading.
Despite a cautious outlook for future earnings, Microsoft's security portfolio has maintained momentum.
Chairman and CEO Satya Nadella said 860,000 organizations across every industry are now using Microsoft security products, a 33% increase from a year ago. These include companies ranging from Lumen Technologies to ING Bank and Fujifilm.
Companies are now able to save about 60% when they choose Microsoft’s security stack, Nadella said, speaking during the Q1 2023 earnings call for the period ending Sept. 30.
The number of customers with more than four workloads was up 50% year-over-year, according to Nadella. Customers are using Microsoft’s extended detection and response and cloud-native security information and event management technology to secure their digital assets.
“We are the only company with integrated, end-to-end tools spanning security, compliance, identity and device management, and privacy, across all clouds and platforms,” Nadella told analysts during his presentation.
For Microsoft, encouraging companies to continue migrating workloads to the cloud is a bid for security protection and to save organizations money.
Eric Bell, managing director at Progress Partners, said he has not yet heard any companies discuss near-term pullbacks in IT or security spending. However, companies are cutting expenses in other ways by reducing headcount or terminating leases.
“Moving to the cloud is the best way for organizations to do more with less today,” Nadella said. “It helps them align their spend with demand and mitigate risk around increasing energy risks and supply-chain constraints."
The Redmond, Washington-based firm reported earnings of $2.35 per share during the fiscal first-quarter, up 4% from year-ago figures.
Revenue rose 11% to $50.1 billion compared with a year-ago for the period ending Sept. 30.
Microsoft CFO Amy Hood warned operating margins are expected to be down a point year-over-year, citing lower original equipment manufacturer revenue for the rest of the year and more than $800 million in greater-than-expected energy costs.
The company will slow the growth of operating expenses and try to boost the productivity of significant headcount investments it made over the past year, Hood said.
