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Margaret Moran
Margaret Moran
Articles (349) 

Microsoft Reports Another Stellar Quarter

The software giant continues to grow and snap up cloud market share

October 27, 2020 | About:

After the closing bell on Tuesday, Microsoft Corp. (NASDAQ:MSFT) reported earnings results for its first quarter of fiscal 2021, which ended on Sept. 30.

Wall Street had been expecting revenue of $35.7 billion and earnings per share of $1.54.

For the quarter, Microsoft brought in revenue of $37.2 billion, up 12% compared to the same quarter of fiscal 2020, while earnings per share jumped from $1.38 to $1.82. This follows an impressive June quarter in which the software giant posted revenue of $38 billion, up 13% from a year ago, though earnings of $1.46 per share was a decline from the prior year's $1.71.

Shares of Microsoft gained 1.51% to $213.25 throughout the day's trading on anticipation of the earnings release before jumping around in a sawtooth pattern in after-hours following the news.

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Results by segment

Executive Vice President and Chief Financial Officer Amy Hood had the following to say about the results for the quarter:

"Demand for our cloud offerings drove a strong start to the fiscal year with our commercial cloud revenue generating $15.2 billion, up 31% year over year. We continue to invest against the significant opportunity ahead of us to drive long-term growth."

In other cloud news, Intelligent Cloud revenue was up 20% year over year, led by Azure, which recorded growth of 48%.

Productivity and Business Processes revenue came in at $12.3 billion, an 11% increase, driven by Dynamics 365 revenue growth of 38% and Office 365 Commercial revenue growth of 21%.

More Personal Computing saw a more modest revenue increase of 6% overall, with a 5% decline in Windows OEM revenue and a 10% decline in advertising revenue mitigating a 13% increase in Windows Commercial products and cloud services, a 30% improvement in Xbox and a 37% jump in Surface.

Other news

In other news from the September quarter, Microsoft repurchased $9.5 billion worth of shares, a 21% increase compared to the prior-year quarter. It also issued $3.8 billion in common stock cash dividends.

Microsoft continued investing heavily to develop its offerings, but it still ended the quarter with $17.205 billion in cash and equivalents as opposed to long-term debt of $57.055 billion.

The company also released a summary of its new product releases and enhancements for the quarter. Highlights included Microsoft Whiteboard integrations in Microsoft Teams, Natural Language Search and People Answers in Outlook for iOS and Android, Visio data visualizer add-in for Excel (a new way to create data-driven Visio diagrams) and many more.

Looking forward

"The next decade of economic performance for every business will be defined by the speed of their digital transformation," CEO Satya Nadella said. "We are innovating across our full modern tech stack to help our customers in every industry improve time to value, increase agility, and reduce costs."

Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Investors should always conduct their own careful research and/or consult registered investment advisors before taking action in the stock market.

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