On Tuesday, January 26, Microsoft delivered solid fiscal quarter results. The Apple Maven covered the full results and live call.
Below I listed the top three highlights from Microsoft earnings results:
3. Azure trending in the right direction
Intelligent cloud revenues came in at $14.6 billion, around 7% above guidance. Azure up 50% (48% in constant currency) on improved customer spending. Not extraordinary, but certainly not bad whatsoever.
Check out the graph below. It shows the quarter-to-quarter acceleration or deceleration in the year-over-year growth rate, all in constant currency. The numbers represent percentage points.
I would say that Azure growth is trending in the right direction, after a disappointing first calendar quarter of 2020 that was disrupted by the very early stages of the COVID-19 crisis.
In Intelligent Cloud, what excites me is the gain of scale leading to even larger operating income. This is expected of a capex-heavy business like cloud (i.e. lots of large fixed costs that get better "diluted" with the rapid increase in revenues). Cloud segment revenues were up 23%, but operating income was up 43%
2. Gaming... a success
Gaming has surpassed $5 billion in revenues for the first time ever. New XBox is the most successful launch ever. Microsoft reports console share gain (e.g. over PlayStation). Revenues grew 51%.
This is a huge improvement over the previous quarter's 22%. XBox hardware sales alone were up 86%.
1. PC was the big story
As the Apple Maven had anticipated, PC was a crucial driver of revenue upside to estimates and guidance. It was probably the most important segment during a quarter of strong PC sales across the whole industry and the long- awaited XBox refresh.
Personal computing revenues landed at $15.1 billion, which was about 13% above guidance.
It was a killer quarter for this segment, stronger across all sub-businesses. Continued demand for Microsoft 365 and security. Surface looked fine as well, given the device's growth limitations.
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