Vole has done well out of the COVID-19 pandemic, as companies rely on cloud computing from Azure and cloud-software offerings like Teams to keep employees connected while they work from home. Sales in the cloud and personal computer segments led the way in Tuesday’s report, easily beating expectations as demand for PCs and remote computing power continued through the end of 2020.
In the holiday quarter, Microsoft reported earnings of $15.46 billion on sales of $43.1 billion, strong growth from the same quarter a year ago,. Analysts on average expected Microsoft to report fiscal second-quarter earnings of $1.64 a share on revenue of $40.23 billion.
The company said that Azure grew 50 percent in the second quarter and that sales in its “intelligent cloud” segment grew to $14.6 billion from $11.87 billion a year ago. Analysts on average expected cloud revenue of $13.77 billion, according to FactSet.
Even those bullish on Microsoft were not expecting Azure to grow by 50 percent. Azure growth had been slowing steadily, and Microsoft reported growth of 48 percent and 47 percent in the two previous quarters. Ives said expectations were closer to 44 percent to 45 percent.
Microsoft is “firing on all cylinders and these numbers start to drive the stock to a $2 trillion market cap”, Ives said.
As personal computer sales spiked due to work from home needs and Microsoft began selling new Xbox consoles in the holiday season, sales in Microsoft’s “more personal computing” segment grew to $15.12 billion from $13.21 billion in the same quarter a year ago. Analysts on average expected segment sales of $13.47 billion. Microsoft said that revenue from Xbox grew 40 percent in the quarter, while sales of its Surface lines of PCs increased by three percent.
Microsoft’s “productivity and business services” division, which includes cloud software assets such as its Office suite as well as LinkedIn and other properties, reported revenue of $13.35 billion, up from $11.83 billion a year ago. Analysts on average expected sales of $12.89 billion.
For the fiscal third quarter, Microsoft projected sales topping $40 billion yet again, with guidance for $40.35 billion to $41.25 billion. Analysts on average were projecting revenue of $38.74 billion ahead of the report.
