Microsoft Corp reported Tuesday that Azure cloud computing services grew 50 percent. This was the second quarter of acceleration in a business that was slowly slowing as the global pandemic benefited software investing in working and learning from home.
The company’s shares rose 5 percent in expanded trading after rising 41 percent in 2020 when COVID-19 shifted computing into areas where the software maker made big bets. There was also a surprising rebound in sales on LinkedIn’s professional social network, navigating to a chip shortage that threatened to withhold his
Xbox business. The move from home due to the COVID-19 pandemic has accelerated the transition of businesses to cloud-based computing, benefiting Microsoft and competitors such as Amazon.com Inc’s cloud entity and Alphabet Inc’s Google Cloud.
Speaking on a conference call with investors, Microsoft executives said they expect revenue of $ 14.83 billion from the company’s intelligent cloud segment for the third fiscal quarter, compared to Wall Street’s expectations of $ 14.12 billion – dollars according to Refinitiv. The company’s productivity and personal computing segments are expected to generate revenue of $ 13.48 billion and $ 12.50 billion, respectively, compared to estimates of $ 12.90 billion and $ 11.60 billion, respectively Refinitive information.
According to Microsoft, GamePass, the company’s $ 10 monthly gaming subscription, has 18 million users, up from 15 million announced in September. The Xbox Live online games service has more than 100 million monthly active users. Microsoft didn’t release an update on the 115 million daily team users released in October, but said the mobile version is used by 60 million daily users. Microsoft announced that revenue in its pink Intelligent Cloud segment grew 23 percent to $ 14.6 billion, with Azure growing 50 percent.
According to consensus data from Visible Alpha, analysts had expected growth of 41.4 percent in Azure. In the previous quarter, Azure grew by 48 percent. “This was mainly due to continued customer demand, whose consumption was higher than expected as customers increasingly focused on digital transformation,” said Microsoft Chief
Finance officer Amy Hood told Reuters in an interview.
James Cordwell, analyst at Atlantic Equities, said last year, “Economic weakness and implementation delays had masked the extent to which Azure benefited from the accelerated move to the cloud caused by the pandemic. But with these results, those benefits are now evident. “LinkedIn sales growth, which declined with the closure of the pandemic, reached 23 percent, close to the pre-pandemic rate of 24 percent last year. Hood said advertising on LinkedIn drove the surge.
“We continue to see a recovery in the advertising market,” she said. Microsoft is bundling several types of software and services, such as Office and Azure, into a “commercial cloud” metric that investors closely monitor to measure the company’s progress in selling to large companies. Commercial cloud gross margins – a measure of the profitability of its sales to large corporations – were 71 percent for the quarter, down from 67 percent a year ago.
Revenue for the Personal Computing division, which includes Windows software and Xbox game consoles, rose 14 percent to $ 15.1 billion. This is due to the strong growth in Xbox content and services, beating analysts’ estimates of $ 13.5 billion, according to IBES data from Refinitiv.
Microsoft released two new Xbox consoles in November, the best-known brand for non-work and non-school. The hardware was hard to find, however, as a global semiconductor shortage contributed to inventory shortages, as was the case with many retailers. Xbox hardware sales rose 86 percent despite the shortage, and Hood said growth is likely to continue, with older models adding to sales as well.
“Demand is still outstripping supply and we expect this to continue,” said Hood. “The team has done a good job selling both the latest generation and older generation consoles which is great value for gamers.” Microsoft’s gaming business had first-quarter revenue of $ 5 billion and was powered by gaming subscriptions and sales, as well as new consoles. Xbox content and services revenue grew 40% in the quarter, according to Microsoft.
Total revenue for the software giant rose to $ 43.08 billion in the second quarter ended December 31, from $ 36.91 billion a year ago, beating analysts’ estimates of $ 40.18 billion, according to IBES data from Refinitiv -Dollar.