Microsoft posts $15.5bn second-quarter profit

Ruben Fields
January 27, 2021

Microsoft's stock price was up as much as over 5% in after-hours trading immediately following the release, to around $242 per share. "Microsoft is powering this shift with the world's largest and most comprehensive cloud platform".

Microsoft returned $10 billion to shareholders in the form of share repurchases and dividends in the second quarter of fiscal year 2021, an increase of 18% compared to the second quarter of fiscal year 2020.

"We will look for both a growing bookings number and positive qualitative management guidance to indicate that the worst is behind us and customers of all sizes are now engaged deeper in digital transformation conversations", Evercore ISI analyst Kirk Materne wrote in a note.

The Xbox Live online service for game-play and content now has more than 100 million subscribers, according to Nadella. Microsoft did not give an update on the 115 million Teams daily users it disclosed in October but did say that the mobile version is used by 60 million daily users.

Intelligent Cloud-Azure, Server, and Enterprise Mobility-was Microsoft's second-biggest business, with $14.6 billion in revenues. Analysts had expected a 41.4 percent growth in Azure, according to consensus data from Visible Alpha. "But with these results that benefit is now plain to see".

Windows Home revenues were up 24 percent, but Windows Pro revenues declined by 9 percent and Windows revenues from PC makers only grew 1 percent despite all the pandemic-related buying. Hood said advertisements on LinkedIn drove the increase. A shortage of consoles ahead of the holidays could also sustain some of that growth in the months ahead because of pent-up demand, he said.

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Commercial cloud gross margins - a measure of the profitability of its sales to large businesses - were 71 percent in the quarter, compared with 67 percent a year earlier.

Revenue from Microsoft's "more personal computing" segment, which Xbox sales fall under, increased 14% year-over-year to $15.1 billion.

Microsoft in November released two new Xbox consoles, its most visible non-work and non-school brand, but the hardware proved hard to find as a global semiconductor shortage contributed to tight stocks as many retailers.

"That is what we are focused on; that is how we expect work to evolve".

Microsoft's gaming business topped $5bn in quarterly sales for the first time ever due to gaming subscriptions and sales as well as new consoles.

Xbox sales jumped 40% in the three months to 31 December while Azure services soared 50%. Microsoft reported $14.6 billion in quarterly revenue, up 23% compared to the same quarter past year, for its "Intelligent Cloud" business, which includes Azure, server products, and enterprise and cloud services.

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