Last quarter turned out to be one of the most massive for US technology giant Microsoft as it recorded profits in the billions in the final months of the year, the company revealed in a press release.
This surge in profits comes after the ongoing pandemic forced employees to stay at home and start working remotely, ushering in the ‘new norm’ of “work-from-home”. Similarly, with schools, colleges, and universities being closed for months, students have taken to using services hosted in the cloud to learn from the comfort of their homes, at their own convenience. Fortunately, Microsoft specializes in the field thanks to its Azure cloud platform, which raked in a huge portion of its entire revenue.
The winter quarter saw Microsoft pocket a net income of $15.5 billion, a rise of 33% when compared to the same period in 2019, while revenue earned increased by 17% to $43.1 billion.
Microsoft CEO Satya Nadella said, “What we have witnessed over the past year is the dawn of the second wave of the digital transformation sweeping every company and every industry. Building their own digital capability is the new currency driving every organization’s resilience and growth. Microsoft is powering this shift with the world’s largest and most comprehensive cloud platform.”
According to chief finance minister Amy Hood, “Accelerating demand for our differentiated offerings drove commercial cloud revenue to $16.7 billion, up 34% year over year. We continue to benefit from our investments in strategic, high-growth areas.”
Immediately following the release, Microsoft’s shares price rose by 5% to around $242 per share. “These were blow-out numbers that will be another feather in the cap for the tech sector as the cloud growth party is just getting started, in our opinion led by Microsoft,” Wedbush analyst Dan Ives said in a note.
Microsoft’s “Productivity and Business Processes” segment – which includes Microsoft Teams, LinkedIn revenue, and Dynamics products and cloud services – rose by 13% to earn $13.4 billion for the quarter. Microsoft’s overall commercial cloud business reached $16.7 billion in sales for the quarter, a growth of 34% when compared to the same quarter in 2019.
The tech giant reported $14.6 billion in quarterly revenue, a rise of 23% when compared to the same quarter last year, for its “Intelligent Cloud” business, while revenue in its More Personal Computing Unit grew by 14%% to $15.1 billion. The pandemic was also responsible for record sales of video games, consoles, and accessories as people were forced to stay at home and forbidden to leave their homes. Nadella revealed that it was the first time that gaming revenue at Microsoft topped $5 billion in the winter quarter. The newest Xbox models, released in November, were the most successful in the history of the consoles for the same period. “We are gaining console share,” he said.
A rise of 86% in gaming hardware revenue resulted in an Xbox revenue increase of 40%. This came after the Xbox Series X and Xbox Series S consoles were released on November 10, 2020. Microsoft Teams has also grown in importance.
Nadella revealed that he did not expect the dependence on remote working and cloud services to leave even after the pandemic has been overcome, hoping for “hybrid” work styles that combine working remotely with visiting the workplace to gain popularity over time. “There there is no return to January of 2020. What I think is key for us is to maintain flexibility. In hybrid work, you need that sophisticated set of tools that really tracks workflow irrespective of who is where. That is what we are focused on; that is how we expect work to evolve,” he said.