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Microsoft revenue rises 14% to $36.9B, profits exceed estimates, cloud rises and games fall

Microsoft posted revenue of $36.9 billion for the December quarter, up 14%, and surpassed Wall Road’s expectations with profits of $11.6 billion and earnings per share of $1.51.

The stronger-than-expected quarter was pushed partially by a 39% enhance within the firm’s Industrial Cloud revenue, which rose to $12.5 billion within the quarter. This metric, calculated aside from the corporate’s divisional outcomes, consists of merchandise resembling Workplace 365 Industrial, the Microsoft Azure cloud platform, Microsoft Dynamics enterprise purposes and LinkedIn.

Analysts expected Microsoft to put up earnings of $1.32 per share on revenue of $35.67 billion within the quarter.

Shares of Microsoft rose almost 3 p.c in after-hours buying and selling, to $172.94, pushing its market worth to greater than $1.3 trillion.

Microsoft CEO Satya Nadella, talking with analysts on a convention name after the earnings launch, famous that spending on know-how as a proportion of GDP is projected to double over the following decade. He mentioned Microsoft plans to capitalize on this development by interesting to clients with “a enterprise mannequin that’s trusted and aligned with their success on this new period.”

Nadella referenced Microsoft’s high-profile win of the Pentagon’s $10 billion JEDI cloud computing contract, noting that the Division of Protection “selected Azure to assist our males and girls in uniform at dwelling, overseas and on the tactical edge.” He didn’t handle Amazon’s protest of the contract award in his ready remarks. Amazon is asking a court to keep Microsoft’s work from continuing pending its attraction.

Microsoft revenue rises 14% to $36.9B, profits exceed estimates, cloud rises and games fall

Microsoft’s “Extra Private Computing” Division, which incorporates Home windows, Xbox, Floor and associated companies, rose within the vacation quarter to $13.2 billion in revenue, up from slightly below $13 billion a yr in the past, reclaiming the title of the corporate’s largest division, not less than for the second.

On this division, the corporate mentioned gaming revenue fell by $905 million, or 21%, which works out to a results of $3.4 billion this quarter, down from $4.3 billion beforehand. That is notable partially as a result of the vacation season is historically the height time for console gross sales. Nevertheless, the corporate unveiled its subsequent console, Xbox Sequence X, in early December 2019. Microsoft mentioned its sport enterprise additionally confronted “a excessive prior yr comparable primarily from a third-party title,” which was the blockbuster Fortnite on-line multiplayer sport.

MORE: Xbox revenue falls 21% as Microsoft gears up for Xbox Series X debut

The corporate’s Clever Cloud Division got here in with $11.9 billion in revenue, up from $9.4 billion a yr in the past. This consists of Home windows Server, SQL Server, and Microsoft Azure. Inside this division, the corporate’s server merchandise and may providers revenue was up 30 p.c, as an indication of energy within the firm’s hybrid cloud enterprise.

Microsoft’s Productiveness and Enterprise Processes Division, together with Workplace Industrial and Shopper merchandise, posted revenue of $11.8 billion, up 17 p.c.

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