Microsoft sales rise on strength of cloud service and computer sales

Microsoft’s income for Q3 rose by 44% year-on-year to $15.5bn

Microsoft (NASDAQ:MSFT) has confirmed that it met its expected sales for the quarter while it exceeded profit forecasts.

The company, founded by Bill Gates and Paul Allen in 1975, is now one of the most valuable companies in the world, worth nearly $2trn, as its share price soared over the past year. This was thanks to it securing market share in the growing cloud computing, as well as in other areas, including its Teams collaboration service.

Such services saw raised demand during lockdowns, as Microsoft’s Azure cloud service made up ground on the market leading Amazon Web Services by growing by 50% over the last quarter.

Many people working or studying from home made the decision to buy new PCs, which caused an upturn in the Microsoft Windows operating system and video game businesses.

Net income for Q3 ended in March rose by 44% year-on-year to $15.5bn. Revenue and adjusted earnings per share were $41.7 billion and $1.95 per share, above analysts’ estimates of $41.03 billion and $1.78 per share.

Ben Barringer, equity research analyst at Quilter Cheviot commented on Microsoft’s results:

“Microsoft posted a good set of numbers, largely in line with expectations, with 16% revenue growth over the quarter primarily as a result of its cloud business, which increased revenue by over 46%. Although Microsoft’s cloud platform Azure did experience a slight reduction in growth after the 48% increase posted in the previous quarter, it is still ahead of expectations.”

“Looking forward, Microsoft has phenomenal revenue resilience with plenty of revenue streams including Teams, Azure, LinkedIn, gaming, security, business analytics, AI and many more. The business should be buoyed by increased global spending on technology, which is expected to increase from around 5% of GDP to 10%, with cloud penetration also expected to increase from 20% to 80% in the years ahead.”