Working From Home Trend And Gaming Did The Trick for Microsoft

On Tuesday, Microsoft Corporation MSFT succeeded in beating forecasts far above expectations due to a boom in PC sales, increased demand for gaming and cloud services. The pandemic might have put a lot of constraints to its customers, but it also led to a structural change as businesses across the globe shifted to digital operations and saw it as key to increasing their resilience. Upon the results, Microsoft's stock was up 5% in after-market trading.

Q2 2021 figures

Revenues increased 17percent as they amounted to $43.1 billion and exceeded $40.2 billion expected by Bloomberg. Earnings per share were $2.03, topping the expected $1.64.

The commercial cloud businesses which Wall Street sees as the main engine of Microsoft's future growth is reaccelerating. These businesses that include Office 365 and Azure cloud platform, generated revenue of $16.7 billion in the latest quarter, which is 34 per cent up from a year before. At the same time, the launch of a new Xbox Series S and Xbox Series X lifted the gaming business as revenue of Xbox content and services was up a whopping 40% in the quarter. Personal Computing division was also up by 14 per cent as revenues amounted to $15.1 billion.

Meanwhile, the Productivity and Business Processes division reported revenue of $13.4 billion, which is a 13 percent increase. This growth was fueled by strong demand for Office 365 which grew 20 percent when adjusted for currency, which is line with the previous quarter.

Adding more fuel

Microsoft recently announced that it was investing $2 billion to be the preferred cloud provider of the General Motors GM and Honda HMC -backed autonomous vehicle firm Cruise. Under the agreement, Microsoft will provide cloud infrastructure for Cruise to better enable autonomous vehicles to navigate highways and surface streets in the future.

A sign of confidence

Microsoft also forecast revenue for the current quarter in the range between$40.35billion and $41.25bn. Themidpoint of the rangewould represent another quarter of 17 per cent growth, beating the 11 per cent that Wall Street forecasted.

Takeaway

Its strength in the cloud and personal computing enabled Microsoft to blow away Q2 expectations. As Mr. Nadella had put it, digital transformation is sweeping every company and every industry across the globe. Microsoft is powering this second wave of transformation that is even stronger than the first one as the world is now creating a new normal that will stay long after the COVID-19 pandemic becomes history.

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