Microsoft earned a total of US$37.2 billion in revenue in the first quarter of their fiscal year, a 12% increase compared to the previous fiscal year.
The company cites the drastic increase in demand for cloud services as the main driver behind this impressive growth.
As the global workforce shifts to remote work due to the pandemic, Microsoft’s flagship cloud services arm Azure has benefited the company greatly. Revenue in Microsoft’s Intelligent Cloud unit increased by 20% year- over- year, thanks to Azure’s revenue growth of 48%.
“The next decade of economic performance for every business will be defined by the speed of their digital transformation. We are innovating across our full modern tech stack to help our customers in every industry improve time to value, increase agility, and reduce costs,” said Satya Nadella, the Chief Executive Officer of Microsoft.
Demand for Microsoft’s cloud offerings drove a strong start to their fiscal year, with their commercial cloud revenue generating US$15.2 billion, which is up 31% year-over-year.
Revenue from Microsoft Office’s commercial products and cloud services grew by 9%, thanks to a 21% revenue uptick in its signature workplace management software Office 365. Microsoft Office 365 also hit 45.3 million consumer subscribers this year.
As jobseekers flooded onto Microsoft-owned LinkedIn for employment opportunities, revenue from LinkedIn increased 16% year on year.
According to Reuters, some of Microsoft’s success comes from a change in accounting rules for Microsoft’s servers, but the better margins were also driven by sales of lucrative software such as Dynamics 365, which competes with Salesforce.
“Microsoft’s strong earnings beat shows its market share in cloud computing is expanding while its legacy software products such as Windows and Office are in great demand during the pandemic,” said Haris Anwar, senior analyst at Investing.com.
Microsoft’s innovation continues
It has been a wildly successful year for Microsoft. The company’s relentless innovation, especially during a difficult time for many, has borne fruits in 2020. In September, the company successfully trialled an underwater data center, opening up new possibilities for more sustainability in the data center industry.
Its popular gaming platform, Xbox’s new cloud gaming service launched in mid-September is also expected to contribute to a jump in Microsoft’s gaming content revenue in the next quarter.
On top of that, Microsoft will be launching a brand new space project with satellite operators including SpaceX to develop a cloud-driven networking and data sharing platform.
“We continue to invest against the significant opportunity ahead of us to drive long-term growth,” said Amy Hood, the Executive Vice President and Chief Financial Officer of Microsoft.
Image credit: Reuters