Text size
David Ramos / Getty Images
Microsoft
stocks are trading higher after the software giant reported better-than-expected quarterly results. The company showed strength in all sectors, getting a boost in particular with the accelerated adoption of cloud computing.
In the second fiscal quarter ended December 31, Microsoft (ticker: MSFT) reported revenue of $ 43.1 billion, an increase of 17% over the previous year, with earnings of $ 2.03 per share, a increase of 34%. This easily surpassed Wall Street’s consensus forecast of $ 40.2 billion in revenue and earnings of $ 1.64 per share.
“What we witnessed last year was the start of a second wave of digital transformation that has swept across all companies and all sectors,” said CEO Satya Nadella in a statement. “Building your own digital capacity is the new currency that drives resilience and growth for all organizations.”
CFO Amy Hood added that “the accelerated demand for our differentiated offerings brought commercial cloud revenue to $ 16.7 billion, an increase of 34% year on year.”
Microsoft’s quarterly gaming revenue reached $ 5 billion for the first time, driven by an 86% growth in hardware revenue for the Xbox, reflecting the launch of a new generation of game consoles.
The company saw business accelerate from the September quarter on in all three product segments, where revenue also exceeded forecasts.
Sales in the Productivity and Business Process segment (which includes Office and LinkedIn) were $ 13.4 billion, an increase of 13% and above the guidance range of $ 12.75 billion to $ 13 billion.
For Intelligent Cloud, which includes the Azure cloud platform, sales were $ 14.6 billion, an increase of 21%, well above the projected range of $ 13.55 billion to $ 13.8 billion. Azure revenue grew 50%, compared to 48% growth in the September quarter.
Sales in the More Personal Computing segment, which includes tablets and Windows and Surface computers, were $ 15.1 billion, an increase of 14%, well above the company’s estimate of $ 13.2 billion to $ 13 , 6 billion. This includes a 40% increase in Xbox content and services.
Surface revenue decelerated in the quarter to 3% growth, from 37% in the September quarter; The company said the slowdown largely reflects the product launch period of the previous year, and that it would make sense for investors to look at Surface’s revenues over the two quarters combined.
Microsoft said it returned $ 10 billion to holders in the quarter, including $ 6.5 billion in share repurchases. The company ended the quarter with $ 132 billion in cash, cash equivalents and short-term investments, offset by $ 55 billion in long-term debt.
In an investor conference call, CFO Hood said the company expects March quarter revenue in the productivity and business process segment to range from $ 13.35 billion to $ 13.6 billion. Smart cloud revenue is expected to range from $ 14.7 billion to $ 14.95 billion. More personal computing revenue is expected to be in the range of $ 12.3 billion to $ 12.7 billion. At the top of the range for each segment, revenue for the quarter would be $ 41.25 billion, well ahead of the Street consensus at $ 38.7 billion. Hood also said the company expects double-digit gains in operating revenues and profits for the entire fiscal year ended June 2021.
In the quarter ended September 30, Microsoft posted a 12% revenue gain to $ 37.2 billion, with earnings of $ 1.82 per share.
In today’s regular session, Microsoft closed up 1.2% to $ 232.33, giving the company a market value of $ 1.77 billion, higher than any other company
Apple
(AAPL). The stock rose 41% in the last 12 months.
At the end of Tuesday’s trading session, Microsoft was up 4.8% to $ 243.50.
Write to Eric J Savitz at [email protected]