A triple whammy fueled by a pandemic in the last quarter of 2020 pushed Microsoft’s latest revenue and profits up well above expectations, figures released Tuesday night showed.
A boom in PC sales, growing demand for video games and increased use of its cloud services combined to produce a 17% increase in revenue, to $ 43.1 billion.
The jump came at a time when Wall Street expected the U.S. software firm’s growth rate to slow to less than 10 percent, and resulted in a 6 percent rebound in its shares in trading after -market. The surge in demand from customers working, learning and playing from home was strong enough to weather the headwinds of a weak economy.
Microsoft reported earnings per share of $ 2.03, up from $ 1.51 the previous year. Wall Street expected revenue of $ 40.2 billion and earnings per share of $ 1.64.
In a statement, Satya Nadella, CEO, announced the surge in demand since the start of the Covid-19 crisis as “the dawn of a second wave of digital transformation sweeping through every business and industry.”
Microsoft was expected to end 2020 with revenue growth slowing from 12% in the previous quarter. While PC sales have been strong – lifting Intel’s latest earnings well above expectations last week – Microsoft faced a tough comparison to the later months of 2019, when demand for Windows was. boosted by Windows 7 end of support.
However, revenue from Windows sales to computer makers defied expectations, actually increasing 1% in the quarter. At the same time, sales of new Xbox game consoles increased gaming revenue by 40%. This increased the overall revenue of the company’s More Personal Computing division by 14% to $ 15.1 billion.
The biggest jump for the quarter came from Microsoft’s Intelligent Cloud division, which includes its Azure cloud platform as well as server software. Azure’s revenue growth rate edged up to 48%, taking currency movements into account. This increased the division’s overall revenue by 23% to $ 14.6 billion.
At the same time, the Productivity and Business Processes division recorded revenue of $ 13.4 billion, up 13%, thanks to continued strong demand for Office 365, which grew 20% in taking into account currency fluctuations, as in the previous quarter.