Revenue was up at Microsoft in its second quarter, with the pandemic accelerating the company’s switch to cloud-based computing.
Microsoft beat Wall Street estimates for revenue growth from Azure, it’s cloud computing service, as the software giant continued to benefit from a global shift to working and learning from home.
The company’s shares, which gained about 41 per cent in 2020 as one of the “stay-at-home” winners, rose 4 per cent in extended trading.
The shift to work from home due to the Covid-19 pandemic has accelerated the switch to cloud-based computing, benefiting Microsoft and rivals such as Amazon and Alphabet’s cloud software.
Microsoft said revenue in its “Intelligent Cloud” segment rose 23 per cent to $14.6bn, with 50 per cent growth in Azure. Analysts had expected a 41.4 per cent growth in Azure, according to consensus data from Visible Alpha.
Revenue from its personal computing division, which includes Windows software and Xbox gaming consoles, rose 14 per cent to $15.1bn, driven by strong Xbox content and services growth, beating analysts’ estimates of $13.5bn, according to IBES data from Refinitiv.
Microsoft in November released two new Xbox consoles, its most visible non-work and non-school brand, but the hardware proved difficult to find as a global semiconductor shortage contributed to tight stocks as many retailers.
Revenue at the software giant was up in the second quarter of its financial year to $43.1bn, an increase of 17 per cent when compared with the same period last year.
Operating income stood at $17.9bn, an increase of 29 per cent, and net income was $15.5bn, an increase of a third.
“What we have witnessed over the past year is the dawn of a second wave of digital transformation sweeping every company and every industry,” said Satya Nadella, chief executive officer of Microsoft.
“Building their own digital capability is the new currency driving every organization’s resilience and growth. Microsoft is powering this shift with the world’s largest and most comprehensive cloud platform.”
“Accelerating demand for our differentiated offerings drove commercial cloud revenue to $16.7bn, up 34 per cent year over year,” said Amy Hood, executive vice president and chief financial officer of Microsoft. “We continue to benefit from our investments in strategic, high-growth areas.”