Microsoft sees a silver lining in the cloud

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The clouds roar

Software King of the World Microsoft predicts a strong calendar year end with its booming cloud business, but said supply chain issues will continue to weigh on key units such as those that produce its laptops. Surface and its Xbox game consoles.

The company topped what Wall Street’s cocaine nose job expected for its first quarter ended Sept. 30, mostly thanks to cloud services generating tons of money.

Q1 revenue growth for Azure, the company’s flagship cloud computing business, was 48% in constant currency, beating analyst estimates by 47.5%.

Microsoft executive vice president and chief financial officer Amy Hood said the company also expects “extensive growth” for the unit in the second fiscal quarter.

Azure’s growth rate is the best direct measure of competition with competitors like AWS and Google Cloud, as Microsoft does not split the cloud computing unit’s revenue.

Microsoft appeared to resist the growing challenge from Google Cloud. Google Cloud said on Tuesday its revenue jumped 45% to $ 4.99 billion, but fell short of the estimate of $ 5.2 billion. Read more

Revenue from the company’s other business units that host Windows software, the Teams messaging service, and the professional social networking platform LinkedIn also exceeded analysts’ expectations.

Supply chain issues affecting much of the global tech industry have had mixed consequences for Microsoft.

Hood said Microsoft has continued to increase its cloud computing margins despite higher data center construction costs as it continues to add more profitable services to those data centers.

Hood said the company may ship more Xbox S and X game consoles than expected in the first quarter – sales of game consoles and accessories increased 166% as the company continues to see strong demand for new models after the pandemic forced millions of people to seek entertainment at home.

But Microsoft and its rivals have been unable to meet demand due to the global chip crisis, and Christmas devices are going to be as rare as hen’s teeth.

She also said sales of the company’s Surface computers, which fell 17% in the fiscal first quarter, are expected to continue to decline in the second quarter, as supply chain shortages hit high-end items in the line. .

Microsoft’s revenue from selling Windows to PC makers grew 10% year-over-year, beating the overall PC market, which grew only 3.9% over the same period due to supply constraints, according to IDC data.

Hood said the company is able to outperform the PC market because of its strength in selling Windows licenses to businesses, where it gets more revenue per license and has a better market share.

Overall, revenue rose 22% to $ 45.32 billion in the first quarter ended September 30, beating expectations by around $ 43.97 billion.

Net income reached $ 20.51 billion, or $ 2.71 per share. The company said its results included a net tax benefit of $ 3.3 billion.

On an adjusted basis, it gained $ 2.27 per share, beating analysts’ expectations of $ 2.07 per share.

For the second fiscal quarter, Microsoft predicted median revenue of $ 18.23 billion for its smart cloud business for the second fiscal quarter, above estimates of $ 17.84 billion, according to the data. by Refinitiv.

Intelligent Cloud’s first-quarter revenue jumped 31% to $ 17 billion. Analysts had expected a figure of $ 16.58 billion.

Microsoft’s forecast for its Windows-centric software applications and segments with midpoints of $ 15.83 billion and $ 16.55 billion, respectively, was also higher than Refinitiv’s estimate of $ 15.40 billion and $ 15.51 billion.


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