Microsoft released a massively positive earnings and revenue report in late January 2021, detailing revenues far exceeding expectations, pushing Microsoft's stock even higher in the process.
The revenue boom is led by the phenomenal growth in Microsoft's Azure products and cloud services, with Xbox content and related services also helping considerably.
Microsoft Reveals Hugely Profitable Year-on-Year Growth
That Microsoft has had a very good year isn't a secret. Seeing it laid bare in Microsoft's Earning Release FY21 Q2 report is another thing.
The headline news is:
- Microsoft's revenue increased 17 percent to $43.1 billion
- Operating income increased 29 percent to $17.9 billion
- Net income increased 33 percent to $15.5 billion
The most substantial jump in revenues comes from Microsoft's Intelligent Cloud division, which saw a 23 percent increase to $14.6 billion.
Included in the Intelligent Cloud division is Microsoft's Azure cloud computer and server products, which itself saw a whopping 50 percent growth. However, as Microsoft doesn't report Azure earnings in a dollar amount, that's the only information on offer.
Interestingly, even Microsoft's Windows OEM sales increased—albeit by 1 percent—where many experts predicted a slight drop off. Windows operating system sales are included in the More Personal Computing division, which jumped 14 percent to $15.1 billion.
The More Personal Computing sector also accounts for Xbox sales, content, and services. Even with the stock restrictions, Xbox sales and services posted a 40 percent revenue increase.
On an earnings call regarding the revenue reports, Microsoft CEO Satya Nadella revealed that the Xbox Game Pass subscription service has surpassed 18 million subscribers, gaining three million new subs since the previous report in September 2020. Nadella also confirmed that the Xbox Live service now has over 100 million active users.
However, for those hoping for good news regarding Xbox Series X and Series S stock, I'm afraid you're going to have to wait a bit longer.
No surprise, Microsoft expects Xbox S/X supply to continue to be constrained through the next quarter
— Brad Sams (@bdsams) January 26, 2021
Despite the enormous surge in Xbox and Xbox services revenues, Microsoft is still struggling with stock procurement for the new console. There's no end in sight for the stock delays, which will continue to play into the hands of those using bots and scripts to swipe up any consoles that do make it to retailers.
What's Next for Microsoft?
Given the revenues and earnings report release, Satya Nadella would probably like more of the same. Growth in almost all sectors during the trials of the COVID-19 pandemic was expected, as more people turn to online services and conduct business using Microsoft's vast array of products.
The extensive growth in Xbox services is also not unexpected, even if it has outperformed expectations. With more people stuck at home than ever before, turning to video games is understandable. Launching a highly anticipated new console in the Xbox Series X was always going to cause a stir, even if getting your hands on one remains difficult.
