Sun. Nov 28th, 2021

Microsoft: higher revenue than expected, cloud growth steamed

Microsoft’s fourth-quarter revenue increased, beating analysts’ expectations. The software company increased revenue 13 percent year over year to $38 billion. Analysts had amed about 36.5 billion dollars. Microsoft has thus in the 17. We are confident that we will exceed expectations in the second quarter in succession.

Although much of the revenue reported in Microsoft’s annual report is due to its cloud business, the growth of Microsoft’s Azure cloud platform slowed from 59 percent to 47 percent in three months. As a result, the share price fell by more than two percent at times in after-hours trading on Wednesday. On Thursday morning, it naited at 181.22 euros. Apparently, investors had expected higher increases given the increased use of cloud services triggered by increased home offices during the Corona pandemic, and have now been disappointed by the results.

Profits and losses

In the Office segment, Microsoft was able to increase its revenues year-on-year. There, sales of commercial products and cloud services rose by 5 percent, while sales of consumer products increased by 6 percent. In the consumer sector, Microsoft was able to increase the number of Office 365 users to 42.7 million subscribers. Likewise, the career network LinkedIn contributed positively to the overall revenue with an increase of 10 percent.

Due to the Corona crisis and notebook purchases for the home office the PC market picked up. Microsoft profited from this in its Windows operating system sales. Windows OEM sales up 7 percent, Windows as a commercial product up 9 percent compared to the same quarter last year. Sales of Microsoft’s in-house Surface hardware up 28 percent. Xbox game console, matching games and services also saw a significant 65 percent increase in sales. Apparently more console play during the Corona pandemic lockdown.

On the other hand, revenues from the advertising business of the Bing search engine declined!. Revenue here plummeted by about 18 percent.

Overall, Microsoft increased revenue by 14 percent to $12.9 billion in this entire Office, Surface, XBox and Ads business unit. Analysts had only expected revenues of about 11.5 billion dollars.

However, the pandemic did not only have a positive effect on Microsoft’s business: For example, the company had to close many of its in-house stores, which burdened the balance sheet with 450 million dollars. While overall quarterly profit fell 15 percent year over year to $11.2 billion, the balance sheet for the comparable quarter included a tax credit that artificially inflated earnings.

Positive business year

Microsoft’s overall results for the fiscal year ending in June were positive, with revenue up 14 percent to $143 billion. That left $44.3 billion in bottom-line profit.

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