Microsoft Beats Quarterly Revenue Estimates

Microsoft Corporation exceeded Wall Street profit and sales projections, owing to increased demand for the software giant’s cloud-based services as a result of the pandemic-caused move to hybrid working practices. 

After-hours trading saw shares rise by less than 1 percent.

Individuals and businesses used Microsoft’s numerous products, like Outlook and Teams, to interact during the transition to working and learning from home, making the corporation a pandemic winner.

Now as economies reopen, businesses are increasingly shifting to a hybrid model of allowing staff to alternatively work from office and home. That’s also helping drive up revenue of Windows products, said Brett Iversen, general manager of investor relations. Iversen said in a statement that strength in the commercial PC market drove Windows OEM revenue up 11 percent. The hybrid work trend is resulting in a continued strength for Microsoft’s cloud services, including its flagship cloud offering Azure.

The third-quarter Azure annual growth rate of 46.0 percent was consistent with the previous quarter and in line with Visible Alpha’s projection of 45.6 percent growth. Nonetheless, Azure growth has been steadily declining since fiscal 2020, when it was in the 60 percent range.

According to Iversen, Azure Microsoft had higher-than-expected growth in long-term Azure contracts, however he could not disclose exact figures.

“These numbers show that customers continue to turn to Microsoft as they accelerate their shift to cloud computing and the current unsettling economic environment has not yet impacted the company’s main growth driver,” said Haris Anwar, senior analyst at Investing.com.

In the third quarter, the company recorded revenue of $49.36 billion, up from $41.7 billion the previous year. According to Refinitiv IBES data, analysts predicted revenue of $49.05 billion on average.

Net income increased to $16.73 billion, or $2.22 per share, in the March 31 quarter from $15.46 billion, or $2.03 per share, the previous year. This surpassed analyst expectations of $2.19.