Microsoft reported revenue of $37.2 billion (+12 percent) and net income of $13.9 billion (+30 percent) in its fiscal first quarter.
Revenue in Intelligent Cloud reached $13 billion and increased 20 percent. Azure Cloud business surged 48 percent.
Microsoft said 93 percent of commercial cloud products were sold as subscriptions, compared with 94 percent the quarter before. Microsoft’s commercial cloud gross margins – a measure of the profitability of its sales to large businesses – was 71 percent, compared with 66 percent a year earlier.
The revenue in Productivity and Business Processes increased 11 percent to $12.3 billion.
“The next decade of economic performance for every business will be defined by the speed of their digital transformation,” Microsoft CEO Satya Nadella said.
The Microsoft Office Commercial products and cloud services revenue increased 9 percent, driven by Office 365 Commercial revenue growth of 21 percent.
The Office Consumer products and cloud services revenue increased 13 percent and Microsoft 365 Consumer subscribers increased to 45.3 million.
“Demand for our cloud offerings drove a strong start to the fiscal year with our commercial cloud revenue generating $15.2 billion, up 31 percent,” Microsoft CFO Amy Hood said.
LinkedIn revenue increased 16 percent. Microsoft Dynamics products and cloud services revenue increased 19 percent.
The revenue in the More Personal Computing segment increased 6 percent to $11.8 billion.
Xbox content and services revenue increased 30 percent.
Surface laptop revenue increased 37 percent.
Search advertising revenue excluding traffic acquisition costs decreased 10 percent.
COVID-19 has speeded up a move toward cloud-based computing, helping companies such as Microsoft, Amazon.com cloud unit and Alphabet’s Google Cloud. For Microsoft, it has also boosted demand for its Windows operating systems for laptops and its Xbox gaming services as families work, learn and play from home, leading to profit that was about 30 percent above expectations.
Daily users of its Teams messaging and collaboration software have risen to 115 million from 75 million in April.
“Microsoft’s strong earnings beat shows its market share in cloud computing is expanding while its legacy software products such as Windows and Office are in great demand during the pandemic,” said Haris Anwar, senior analyst at Investing.com.