Microsoft announced its quarterly financial results on Tuesday beating all the estimates about its financial performance, due to growth of its cloud computing business as more and more people now shifting to work from home.
Due to Coronavirus, Cloud-based computer business is flourishing, and companies providing such services have to increase their cloud units. Moreover, Microsoft is seeing an uprise in demand for the Window operating systems for different devices which results in 30% more profit than expected.
Microsoft Chief Financial Officer Amy Hood said that it was another good quarter due to continued demand for remote offerings continue to power results.
Microsoft cloud service is known as Azure and profit for Azure went up from 47% to 48% beating all estimates from analysts. The increase in profit is from long-term Azure contracts.
Microsoft now providing bundles combining different products which have an annual subscription. Their annual subscription generates continuous earings. Moreover, large businesses are helping Microsoft to make more profit through its cloud services. The gross margin from commercial cloud services jumped from 66 to 71%
There are other Microsoft products which driven sales such as Dynamics 365 for which revenue growth was 38%, far better than our expectations.
Microsoft said 93% of commercial cloud products were sold as subscriptions, compared with 94% the quarter before. The company’s remaining performance obligations – a measure of how much revenue has been booked for the future in sales contracts but not yet formally recognized as revenue – stayed flat at $107 billion in the fiscal first quarter but was up from $86 billion a year prior.
Microsoft “Intelligent Cloud” services performed well and earned $13 billion in the first quarter; almost half of the revenue was from Azure growth. Also,Microsoft revenue was increased in personal computing division to 6% and earned $11.8 billion, which includes windows software and Xbox.
The Senior analyst at Investing.com, Haris Anwar said that Microsoft strong quarterly results show that their cloud computing business is expanding and its other software products demand rises during the current pandemic.
Microsoft net income rose from $10.68 billion to $13.89 billion. After the results,Microsoft shares were down only by 0.2% in after-hours trading.