Cloud business kicks Microsoft’s quarterly revenues over $40bn

27 Jan 2021285 Views

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Strong performances from Azure and other cloud products as well as gaming helped Microsoft beat Wall Street expectations in the last quarter.

Microsoft’s quarterly revenue surpassed $40bn for the first time as demand for cloud services continues to grow.

Revenue for the final quarter of 2020 increased by 17pc year on year to $43.1bn, with profits up 33pc to $15.5bn, exceeding analysts’ expectations.

This is largely thanks to a growth in sales of the company’s Azure cloud services, its Office 365 products and Teams, its video conferencing and messaging suite. Similar to Intel’s earnings call last week, Microsoft reported a spike in PC-related business with remote working becoming the norm and PC shipments going up last year.

‘What we have witnessed over the past year is the dawn of a second wave of digital transformation’
– SATYA NADELLA

Revenue at Azure – Microsoft’s cloud computing business that competes with Amazon Web Services and Google Cloud – grew 50pc in the quarter, according to the company, but it did not provide specific revenue figures for this segment.

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Azure is housed within its Intelligent Cloud division, which includes other enterprise and cloud services and GitHub. That division reported $14.6bn in revenue for the quarter.

“What we have witnessed over the past year is the dawn of a second wave of digital transformation sweeping every company and every industry,” Satya Nadella, chief executive officer of Microsoft, said. “Building their own digital capability is the new currency driving every organisation’s resilience and growth.”

The last quarter was a vital one for Microsoft not just in terms of the growing demand for remote working tools and cloud services. The quarter saw the release of two new editions of the Xbox – Series X and Series S – in November to compete with PlayStation 5, and the company also added the new Surface Pro X and Surface Laptop Go to its Surface line of laptops.

Microsoft reported $15.12bn in revenue in More Personal Computing, the division that comprises Windows, Xbox, Surface and search engine Bing. While the company invested heavily in marketing its new games consoles, revenues for Xbox grew 40pc. Elsewhere, revenue from LinkedIn was up 23pc.

The tech giant’s strong performance in the last quarter may take the spotlight away from the SolarWinds hacking scandal – at the tail end of December, it was found that the hackers accessed some of Microsoft’s source code. Microsoft ended Tuesday (26 January) trading at an all-time high of around $232 per share.

Jonathan Keane is a freelance business and technology journalist based in Dublin

editorial@siliconrepublic.com