Soaring sales of PCs and gaming consoles, along with growing dependence during the pandemic on digital services delivered through the cloud, pushed Microsoft’s financial performance above expectations in the first months of this year, according to figures released Tuesday night.
However, shares of the software company fell 3% in aftermarket trading, abandoning some of this year’s big gains.
They had already jumped 20% since the start of 2021, making Microsoft the clear winner of the stock market among big tech companies and adding some $ 400 billion to its value.
Satya Nadella, chief executive, said the latest figures showed that the “digital adoption curves” seen since the start of the pandemic were not slowing down as customers shifted their operations further to the cloud. “They’re speeding up and that’s just the start.”
Microsoft’s revenue rose 19% last quarter to $ 41.7 billion, while its pro form earnings per share climbed 39% to $ 1.95. Wall Street expected sales of $ 41 billion and earnings per share of $ 1.77. Based on formal accounting principles, which provided for a one-time tax gain, earnings per share rose to $ 2.03.
Each of Microsoft’s three divisions performed better than expected, with the Intelligent Cloud business recording the strongest revenue growth at 23%. Growth of Azure, Microsoft’s cloud computing platform, slowed slightly, although at 46%, excluding the effect of currency fluctuations, it was still ahead of most expectations.
The company’s commercial cloud business – the broadest measure of demand for digital services delivered from its centralized data centers – saw revenue increase 33%, just below the rate of the previous three months .
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While new cloud companies led the growth, Microsoft’s financial performance also benefited from its traditional – and higher margin – PC software business. The number of PCs sold worldwide jumped more than 30% in the first quarter, according to research firm Gartner. As a result, Microsoft’s revenue from the sale of Windows to computer manufacturers increased by 10 percent.
Along with a 34% increase in Xbox sales following the launch of a new console, Microsoft’s More Personal Computing division posted revenue of $ 13 billion, up 19%.