Software maker Microsoft on Tuesday said it recorded a lower-than-expected revenue in the October to December 2022 period and also expects a similar pattern in the third quarter of the fiscal as its Azure cloud-computing business suffered a dip in growth.

The company reported a 12 percent drop in profit for the quarter ended December 2022, reflecting the economic uncertainty it said led to its decision to cut 10,000 workers. The company reported quarterly profit of $16.43 billion.

Excluding one-time items such as $800 million to pay severance to laid-off employees, the company based in Washington said it earned $2.32 a share, which topped Wall Street expectation for adjusted earnings of $2.29 a share.

Microsoft posted revenue of $52.75 billion in the October-December period, its second fiscal quarter, up 2 percent from the year ago level. This is lower compared with the average analyst projection of $52.94 billion, according to Refinitiv IBES.

In an analyst call cited by CNBC, Microsoft CEO Satya Nadella said the technology company saw a drop-off in business at the end of 2022 in core Windows and Office areas. "In our commercial business we expect business trends that we saw at the end of December to continue into Q3," Amy Hood, Microsoft’s chief financial officer, said on the conference call.

The firm expects a drop in revenue growth as it said its Azure cloud-computing business will decelerate in the current period, and warned of further slowdown in corporate software sales, fuelling concern about a steeper decline in demand for the products that have driven its momentum in recent years.

The software maker also saw less growth than expected in Microsoft 365 productivity software subscriptions, identity and security services, and business-oriented Windows products.

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Microsoft said its personal computing business, centered on its Windows software, was widely expected to continue a deterioration that began earlier last year due to economic uncertainties and crimped demand. Quarterly sales from that segment dropped 19 percent to $14.24 billion.

Market research firm Gartner reported that worldwide PC shipments in the October-December quarter declined 28.5 percent from the same period of 2021, the steepest quarterly decline since Gartner began tracking the market in the 1990s.

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Meanwhile, in order to further integrate the latest advances in artificial technology into its products, Microsoft on Monday announced a “multiyear, multibillion dollar investment” in the artificial intelligence startup OpenAI, maker of ChatGPT and other tools that can write readable text and computer code and generate new images.

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