Microsoft Thrives Thanks To Azure Growth

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Software giant posts record results, as certain business segments (Azure) thrive during Coronavirus pandemic, but others struggle

Microsoft has posted a record set of financial results for its fourth quarter and year end, as Azure continues to major growth driver.

The software giant surpassed Wall Street expectations with stronger-than-expected Azure revenue growth, but supply constraints cut into Windows revenue from device makers, and there was a decline in its gaming revenue.

It has been a good quarter for Microsoft. In June the firm became only the third company in the world to be valued at $2 trillion (£1.43 trillion).

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Impressive financials

Microsoft’s financials revealed that for the fourth quarter ending 30 June, it had posted a net profit of $16.4bn, compared to $11.2bn in the same year-ago quarter.

Fourth quarterly revenues came in at $46.1bn, compared to $38bn in the same year-ago quarter.

And then for the full year Microsoft posted a net profit of $61.3bn, up dramatically from $44.3bn.

Revenues for the full year also rose to $168bn, up from $143bn.

“We are innovating across the technology stack to help organisations drive new levels of tech intensity across their business,” said CEO and (newly appointed) chairman Satya Nadella.

“Our results show that when we execute well and meet customers’ needs in differentiated ways in large and growing markets, we generate growth, as we’ve seen in our commercial cloud – and in new franchises we’ve built, including gaming, security, and LinkedIn, all of which surpassed $10 billion in annual revenue over the past three years,” said Nadella.

Microsoft shares rose as much as 1 percent in extended trading on Tuesday.

Drilling down into the financials, revenue in its Intelligent Cloud division was $17.4 billion and increased 30 percent, as server products and cloud services revenue increased 34 percent, driven by Azure revenue growth of 51 percent.

Revenue in Productivity and Business Processes was $14.7 billion and increased 25 percent; LinkedIn revenue increased 46 percent; Office commercial products and cloud services revenue increased 20 percent; and Office consumer products and cloud services revenue increased 18 percent.

However this was tempered as Windows OEM revenue decreased 3 percent; Xbox content and services revenue decreased 4 percent; and Surface revenue decreased 20 percent after component shortages made an impact.

Busy time

It has been a busy period for Microsoft.

In April the firm announced it was expanding its presence in the healthcare industry with its $19.7 billion acquisition of speech recognition pioneer Nuance Communications.

Microsoft revealed in June that Windows 11 operating system would arrive before the year end.

The arrival of the new OS marked a u-turn for Microsoft, after its pledge that Windows 10 was to be the last ever version of Windows.

Microsoft instead announced that Windows 10 would be retired in 2025.

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Author: Tom Jowitt
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