Microsoft had its most profitable quarter.
With the pandemic accelerating the shift to cloud computing, Microsoft has continued its streak of good financial results.
Sales in the three months ending June reached $ 46.2 billion, up 21% from the previous year, and profits rose 47% to $ 16.5 billion, realizing its most profitable quarter, Microsoft announced Tuesday. The results exceeded analysts’ expectations.
Investors got so used to the company beating estimates that stocks fell about 2.5% in aftermarket trading.
“Our results show that when we perform well and meet customer needs in a differentiated way in large and growing markets, we generate growth,” said Satya Nadella, chief executive of the company, in a statement.
With the pandemic moving people further online and the economy rebounding, businesses have ramped up spending in key areas where Microsoft has invested, including security and cloud services. Sales of Azure, the company’s flagship cloud computing product, increased 51%.
Nearly 250 million people use Teams, Microsoft’s workplace collaboration tool, every month, according to Kyle Vikstrom, director of investor relations. It was the first time the company revealed how many people were using the tool, which it introduced in 2016 to compete with Slack.
Revenue from its commercial cloud business, which includes Office 365, Azure and other offerings, increased 36% in the quarter to $ 19.5 billion. As the pandemic has hit some industries more than others, bookings for future cloud-based business activities have increased by 30%, with engagements across industries and geographies.
Microsoft has moved its customers to subscription services for Office products such as Word, Excel, and Teams. The products generate recurring revenue and opportunities for the company’s vendors to meet with customers on upgrades and other services. The company recently unveiled Windows 11, the first update to Microsoft’s flagship operating system in six years; it also follows a subscription model.
This strategy has paid off during the pandemic, with more and more people relying on their computers for work and school. Microsoft’s personal computing business revenue increased 9% to $ 14.1 billion. Sales of new Windows installations declined slightly as chip and supply chain shortages hampered the number of new computers entering the market. As Xbox console sales increased, revenue from game content fell 4%, reflecting how customers stayed at home and played more online a year ago.
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