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Microsoft cybersecurity revenue grows 32.3% year-over-year

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Canalys has announced that Microsoft saw a 32% increase in revenue with regard to its cybersecurity business. The analyst firm wasn’t actually looking at Microsoft specifically and noted that the whole worldwide cybersecurity market grew by 12.5% year-over-year in Q1 2023, outpacing the rest of the tech sector despite worsening global economic conditions.

According to Canalys, Microsoft held 2.7% of the cybersecurity market in Q1 2022 and in Q1 2023 this had risen to 3.2%. The revenue growth for this period was reported as 32.3%. Only Zscaler and Crowdstrike reported better revenue growth figures for the period.

Commenting on the results, Matthew Ball, Chief Analyst at Canalys, said:

“Customers prioritized spending on the most urgent projects and those that delivered the greatest return. Longer sales cycles, delays and downsizing of projects increased, while hardware refresh programs have been pushed to future quarters.

Results from the largest cybersecurity vendors showed enhancing cyber-resiliency remained a priority for most organizations, despite ongoing macroeconomic challenges and greater IT budget scrutiny.

But they also showed cybersecurity will not be fully immune to budget cuts in 2023. Competition between vendors will intensify, though most will grow by upselling additional subscriptions to existing accounts. Spending will continue to be heavily scrutinized throughout this year.”

In terms of cybersecurity market share, Canalys listed Microsoft in seventh place with 3.2% of the market share. In front of it were Palo Alto Networks (8.7%), Fortinet (7.0%), Cisco (6.1%), CrowdStrike (3.6%), Check Point (3.5%), and Okta (3.2%). Microsoft’s cybersecurity revenue grew faster than any of these companies, except Crowdstrike which saw revenue growth of 39.9%.

In its analysis, Canalys also touched on geography. It said that North America was the largest market for cybersecurity during the first quarter, accounting for $9.7 billion. North America did see a sharp slowdown from the previous quarter, however, due to collapses and banking sector uncertainties.

Europe and the Middle East accounted for $5.8 billion of spending, the Asia Pacific accounted for $2.5 billion, and Latin America spent $660 million.

If the wider economic outlook had a negative effect on the cybersecurity market as we saw with the banking sector, then it will be interesting to see what happens if further interest rate rises do as they could hurt the economy and cybersecurity spending as a result.

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