Microsoft Rides the Cloud to Strong Earnings for Q1

Joanna Estrada
October 28, 2020

Today after the bell, Microsoft reported its calendar Q3 2020 earnings, the period of that time corresponds to its Q1 fiscal 2021 period. Microsoft reported that Office, LinkedIn and Dynamics revenue grew in the last quarter despite the COVID-19 situation around the world.

The company's revenue rose 12 per cent to $37.2 billion in the quarter ended September 30, beating analysts' estimates of $35.72 billion.

Overall, it was a very healthy quarter for Microsoft who posted better than expected results with strong growth in several key segments including Office with 45.3 million commercial subscribers, Surface had revenues of $1.5 billion, an increase of 37% year over year, and server products and cloud services revenue increased 22%.

Microsoft has shifted to selling many of its products via recurring subscriptions, which investors like because it generates stable revenue flows.

Revenue growth for Azure, the company's flagship cloud computing business, was 48 per cent, up from 47 per cent in the previous quarter and ahead of Wall Street estimates of 43.45 per cent, according to consensus data from Visible Alpha. Even though advertisers are spending less money, LinkedIn revenue increased 16%.

Analysts had anticipated the company to report $1.54 in earnings per share, generated from $35.72 billion in revenue.

Xbox content and services revenue increased by 30%.

Interestingly enough, despite more people working from home and PC manufacturers in the USA seeing their first increase in shipments in close to a decade, Microsoft's More Personal Computing business seemed to be the albatross on the company's back this quarter.

Consumer PC demand - seen in PC sales numbers - boosted non-Pro Windows OEM revenues by 31% compared to the year-ago quarter, though Pro-focused Windows OEM top line fell 22%.

Other reports by Click Lancashire

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