Wednesday, January 27, 2021

Microsoft's 2Q2021 Earnings Report - Impressive Revenue & Earnings Beat!


Future pillars of growth

  • Revenue grew 17% yoy to $43.1B. Beats wall street's estimate of $40.2B. 14th straight quarters of double-digit sales growth.
  • Net income of $15.5B which translates into earnings per share of $2.03. Beats wall street's estimate of $1.64
  • Azure cloud revenue grew 50% yoy. Gross margin for the commercial cloud business has improved 4% to 71%.
  • Licensed users of corporate version of Office 365 cloud-based software have gone up 15% yoy, resulting in revenue growth of 21%. Strong monetisation of Microsoft Teams.
  • Subscribers to the consumer version of Microsoft 365 increased 28%
  • Quarterly gaming revenue tops $5B for the very first time. Xbox content and services revenue jumped 40% yoy. Xbox hardware revenue gained 86% yoy.
  • LinkedIn revenue increased 23% yoy.

Blew Out Expectations With A Record Quarter
For the quarter ending Dec 2020, it was a broadbased-outperformance from the commercial cloud and enterprise productivity software behemoth. Microsoft achieved impressive growth across its 3 major business segments - Azure cloud services, Office 365 and Xbox gaming. It is riding on a wave of accelerated digital transformation which started last year due to the pandemic.

According to the management, corporate clients have accelerated their shift to the cloud. Gross margin for the commercial cloud business has gone up 4% as it continues to scale up. There is strong demand for software productivity tools that support remote workers. Next-gen gaming consoles, Xbox Series S and Series X have been sold out since their launch in Nov 2020. 

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