- Microsoft's core divisions are growing in revenue, and the gaming business is naturally declining ahead of the launch of next-generation consoles.
- Combined earnings and earnings are above Wall Street's forecasts.
- The cloud business is gaining momentum again as the company closes its lead on Amazon.
- Analysts are satisfied with the successful strategy of the head of Microsoft.
Microsoft announced the results of its financial activities for the second reporting quarter ended December 31. Earnings and profits beat Wall Street's expectations. This is primarily due to the increase in revenue growth of Azure cloud platforms, for the first time in eight quarters, and against the backdrop of a tense confrontation with Amazon for influence in the field of cloud technologies.
The Intelligent Cloud division, which includes Azure, reported revenue growth for the quarter by 27% to $11,9 billion, compared with the expected $11,4 billion. In the third reporting quarter, which ends in March, Microsoft forecasts revenue for this division in the region of $11,9 billion. Analysts, for comparison, still give an average more restrained forecast of $11,4 billion.
The Productivity and Business Process division, which includes Office and professional social network LinkedIn, among others, reported $11,8 billion in revenue, also well above Wall Street's previous estimate of $11,4 billion.
that Microsoft's gaming revenue declined significantly in the second quarter of fiscal 2020. The latest report from the corporation says that this figure Xbox fell by 21% year on year. This result is due to the fact that the life cycle of the Xbox One (like PS4) is coming to an end, and the entire industry is preparing to launch the next generation of gaming systems.
Revenue of division responsible for Windows made $13,2 billion against analytical estimates in $12,8 billion dollars. Throughout the past year, Windows sales have been weakened by market shortages of Intel desktop and laptop processors, but the chipmaker said last week that most of the supply issues had been overcome. Microsoft in the III reporting quarter predicts revenues of $ 10,75-11,15 billion for this division: uncertainty is high due to the spread of coronavirus in China.
Overall, Microsoft posted second-quarter revenue of $36,9 billion and earnings per share of $1,51. For comparison: on average, analysts expected results of $35,7 billion and $1,32, respectively.
Shares of the world's largest software company hit an all-time high after the close of trading, rising 4,58% to $175,74 on Wednesday. The results reflect the approach of CEO Satya Nadella, who over the course of five years refocused Microsoft on the cloud, growing the business of renting its computing power and technology to large enterprises.
Microsoft said revenue for Azure, Amazon's main cloud competitor, grew 62% in its second fiscal quarter, down from 76% revenue growth a year earlier but up from 59% in the first fiscal quarter. Microsoft Chief Financial Officer Amy Hood said that it was the growth in demand for Azure services, including offerings such as computing power to run applications and data storage services, that influenced the overall increase in corporate income.
Microsoft said revenue from its "commercial cloud" -- a combination of Azure and cloud-based versions of software like Office -- reached $12,5 billion, up from $9 billion a year earlier. Commercial cloud gross margin, a key cloud computing profitability metric that Microsoft is focused on, was 67% versus 62% a year earlier.
βThis quarter was absolutely explosive in every way, without any flaws. We believe this marks a tipping point in the deal-making process as more companies opt for the Redmond giant's cloud services," Wedbush analyst Dan Ives wrote in a note, citing Microsoft's Redmond headquarters.
Microsoft has focused on hybrid cloud computing, where companies can use combinations of their own data centers and Microsoft servers. The corporation is also focused on providing its popular software like Office through the cloud.
The move to the cloud has seen Microsoft's stock soar more than 50% in the last year alone, as the company wins back from market leader Amazon and also fends off threats to its classic software solutions from relatively new entrants like Google. According to Forrester Research, Microsoft's cloud computing infrastructure market share was 2019% in 22, compared to Amazon's 45% and Google's 5%.
"Azure's accelerating growth does not yet pose a threat to Amazon Web Services' cloud supremacy, but it provides an opportunity to further close the gap with Amazon and deepen Microsoft's lead over other cloud providers," said Nucleus Research's Andrew MacMillen.
Source: 3dnews.ru