As the pandemic accelerated the cloud computing trend, Microsoft continued its string of strong financial results.
Revenue for the three months ended June reached $ 46.2 billion, up 21 percent year over year, and earnings rose 47 percent to $ 16.5 billion, which is the most profitable quarter, it said Microsoft on Tuesday with. The results exceeded analysts’ expectations.
Investors have gotten so used to it that the company beats estimates that shares of the stock are down about 2.5 percent in aftermarket trading.
“Our results show that we generate growth when we work well in large and growing markets and meet customer needs in differentiated ways,” said Satya Nadella, CEO of the company, in a statement.
As the pandemic increasingly moves people online and the economy recovers, companies have accelerated spending in key areas Microsoft has invested in, including security and cloud services. Sales of Azure, the company’s flagship cloud computing product, rose 51 percent.
According to Kyle Vikstrom, director of investor relations, nearly 250 million people use Teams, Microsoft’s tool for collaboration in the workplace, every month. It was the first time the company announced how many people are using this tool, which it launched in 2016 to compete with Slack.
Revenue in the commercial cloud business, which includes Office 365, Azure, and other offerings, grew 36 percent to $ 19.5 billion for the quarter. While some industries were harder hit by the pandemic than others, bookings for future commercial cloud business increased 30 percent, with commitments across all industries and geographic markets.
Microsoft has switched customers to subscription services for Office products such as Word, Excel and Teams. The products generate recurring revenue and provide the company’s sales force with opportunities to chat with customers about upgrades and other services. The company recently announced 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 as more people rely on their computers at work and at school. Microsoft’s personal computing business grew 9 percent to $ 14.1 billion. Revenue from new Windows installations declined slightly as chip and supply chain shortages hampered the number of new computers entering the market. While Xbox console sales rose, game content income fell 4 percent, due to customers staying at home and playing more online a year ago.