Microsoft is touting the size and growth rate of its Salesforce rival Dynamics

Published

2 years ago

August 3, 2023

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Microsoft still isn’t disclosing the size of its Azure business, providing only the growth rate for the cloud business and leaving investors guessing how its revenue compares to Amazon and Google.

But in its much smaller Dynamics business, which includes software for salespeople, marketers and customer-service agents, Microsoft has suddenly opted for greater transparency.

In its annual report to investors last week, Microsoft disclosed Dynamics revenue in a table alongside other products for the first time.

Dynamics contributed $5.44 billion in revenue in the 2023 fiscal year, which ended on June 30, growing 16% year over year, according to the filing, or double the growth rate of Microsoft as a whole. Dynamics expanded faster than any major product or service offering other than Server Products and Cloud Services, a grouping that contains Azure. It now represents 2.5% of Microsoft’s total revenue, up from 2.2% two years ago, the filing said.

While Dynamics is dramatically smaller than Microsoft’s dominant Office or Windows franchises or the younger Azure business, CEO Satya Nadella has opted to start emphasizing it more. Nadella, who once led a unit that included Dynamics, talked about the progress during the software maker’s earnings call last week.

“Dynamics surpassed $5 billion in revenue over the past fiscal year with our customer experience, service and finance and supply chain businesses, all surpassing $1 billion in annual sales,” Nadella said.

Microsoft’s principal competitor when it comes to Dynamics is Salesforce, whose business is significantly bigger. Technology industry researcher IDC estimates that Salesforce controlled about 23.8% of the market for customer relationship management applications in 2021, more than any other provider, while Microsoft had 5.3%. Both companies had gained share since 2019, while Oracle and SAP lost share, IDC said.

Nadella highlighted the introduction of generative artificial intelligence assistants for the cloud-based Dynamics 365 services. He also noted that Microsoft Sales Copilot, a tool capable of writing business-oriented email drafts, integrates with Dynamics as well as Salesforce’s software.

Partly motivated by Microsoft’s AI capabilities, some companies are switching to Dynamics from Salesforce, said Manny Medina, CEO of sales software startup Outreach. Dynamics can cost less money, and the underlying technology has improved, Medina told CNBC in an interview, adding that the growth is likely to continue.

“I’m seeing more requests to integrate into Dynamics, and more of my customers asking me to bring some of the things I have for Salesforce to carry over into Dynamics,” Medina said. “I’ve seen a spike in the last year.” Some of the momentum Outreach is seeing could be because the company began moving upmarket last year to serve larger companies, he said.

Meanwhile, Salesforce has hit some speed bumps in the past year. Bret Taylor, who briefly served alongside Marc Benioff as co-CEO, left in a surprise move. Revenue growth slowed at the company and activist investors announced ownership stakes. Salesforce responded by widening its adjusted operating margin earlier than planned and managed to avoid a proxy fight.

“Salesforce customer satisfaction numbers are at a record high and consistently trend above industry standards,” a Salesforce spokesperson told CNBC in an email. “Industry analysts continually rank Salesforce ahead of MSFT in all categories related to Dynamics.”

The spokesperson said elements of generative AI, which creates realistic text in response to human input after being trained on large data sets, are available in the Sales Cloud and Service Cloud products, and they’re being tested in Marketing Cloud, Commerce Cloud, the Salesforce Platform and Slack.

As a brand, Dynamics predates Salesforce. It began in 1993, when North Dakota-based Great Plains Software released client-server financial management software for medium-sized businesses. Great Plains went public in 1997, and Microsoft bought the company for $1.1 billion in 2001. Doug Burgum, who was CEO of Great Plains at the time, is now North Dakota’s Republican governor and a candidate for president.

Microsoft isn’t just pushing Dynamics to investors. The company has been more aggressive in selling the product this year, said Adam Mansfield, a practice lead at consulting firm UpperEdge, which helps companies negotiate with software vendors. He said Microsoft is offering subsidies to prospective customers who are already committed to Salesforce, and Microsoft is more willing to help clients with the costs of consulting services to assist with implementation.

“Microsoft is pretty much coming in and going, ‘We’ll make it as cheap as you want,'” Mansfield said.

Microsoft declined to comment on pricing.

WATCH: Portfolio manager explains why Microsoft is his pick for the AI investment theme

Technology

Arm shares dip 8% on revenue miss

Published

2 hours ago

July 30, 2025

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The replica of the ARM is an electronic chip board during a collaborative ceremony launching a partnership between Malaysia and ARM Holdings in Kuala Lumpur, Malaysia, on March 5, 2025.

Hari Anggara | Nurphoto | Getty Images

Arm Holdings shares dipped as much as 9% in after-hours trading on the company’s first-quarter earnings results Wednesday.

Here’s how the company did, compared with estimates from analysts polled by LSEG:

Earnings per share: 35 cents vs. 35 cents expected.
Revenue: $1.05 billion vs. $1.06 billion expected.

The company said it expects second-quarter revenue in the range of $1.01 billion to $1.11 billion, which was in line with $1.05 billion expected by analysts tracked by LSEG.

ARM is a chip technology firm that sells architecture for making chips that power billions of devices, including Apple and Qualcomm‘s chips.

During the quarter, Samsung launched the Galaxy Flip 7 based on the Exynos 2500, built on Arm’s compute subsystem platform.

CEO Rene Haas said in an interview with Reuters that the company was “consciously deciding to invest more heavily,” suggesting the company is considering designing its own processors.

Qualcomm beats on earnings, highlights growth in Meta smartglasses

Published

3 hours ago

July 30, 2025

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Qualcomm beats on earnings, highlights growth in Meta smartglasses

Cristiano Amon, CEO & President, Qualcomm, on Centre Stage during day one of Web Summit 2024 at the MEO Arena in Lisbon, Portugal.

Shauna Clinton | Sportsfile | Getty Images

Qualcomm reported fiscal third-quarter earnings on Wednesday that beat Wall Street expectations and provided a stronger-than-expected guide for the current quarter. Qualcomm shares slid in extended trading.

Here’s how the chipmaker did for the quarter ending June 29 compared to LSEG consensus expectations:

Earnings per share: $2.77 adjusted versus $2.71 expected
Revenue: $10.37 billion versus $10.35 billion expected

In the current quarter, Qualcomm said it expected $2.85 per share at the midpoint of adjusted earnings on $10.7 billion in revenue at the midpoint. Analysts polled by LSEG were expecting $2.83 in adjusted earnings per share on $10.35 billion in revenue.

Net income during the quarter ending in June was $2.66 billion, or $2.43 per share, versus $2.13 billion, or $1.88 per share a year ago.

Qualcomm’s most important business is selling chips for smartphones under its Snapdragon brand, including the central processor and modem for high-end devices made by Samsung. It also provides modems to Apple. Its handset chip business reported $6.33 billion in revenue during the quarter, just shy of Wall Street expectations of $6.44 billion.

Qualcomm expects to lose Apple as a customer for its modem business in the coming years. But the company has been working to diversify its business by making chips for other devices, including Windows PCs and Meta‘s Quest virtual-reality headsets and Meta Ray-Bans smart glasses.

Meta’s Reality Labs posts $4.53 billion loss in second quarter

Published

3 hours ago

July 30, 2025

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Meta’s Reality Labs posts .53 billion loss in second quarter

Meta CEO Mark Zuckerberg presents Orion AR Glasses as he makes a keynote speech during the Meta Connect annual event at the company’s headquarters in Menlo Park, California, on Sept. 25, 2024.

Manuel Orbegozo | Reuters

Meta’s Reality Labs, the unit tasked with building the futuristic metaverse, continues bleeding money.

The social media company reported its second-quarter earnings on Wednesday and revealed that Reality Labs logged an operating loss of $4.53 billion while recording $370 million in sales during the period. Analysts were projecting that unit to post a second-quarter operating loss of $4.99 billion while generating $381 million in sales.

The Reality Labs division oversees the Quest line of virtual reality headsets in addition to the Ray-Ban Meta smart glasses, which are jointly developed with the French-Italian eyewear giant EssilorLuxottica. Meta wants Reality Labs to create cutting-edge products similar to the prototype Orion augmented reality glasses that could underpin a new, immersive computing platform.

But developing VR, AR and other new devices is an expensive endeavor, with the Reality Labs division logging nearly $70 billion in cumulative losses since late 2020. Meta in April said Reality Labs recorded an operating loss of $4.2 billion during the first quarter while bringing in $412 million in sales.

Although the Quest VR headsets haven’t become breakout hits, the Ray-Ban Meta smart glasses are showing signs of success.

EssilorLuxottica on Monday said Ray-Ban Meta smart glasses sales more than tripled year over year for the first half of 2025. The eyewear giant and Meta debuted in June the new Oakley Meta smart glasses, which is the latest product spawned from their partnership.

Meta said in April that an undisclosed number of Reality Labs employees who were part of its Oculus Studios VR and AR software unit were laid off.