Microsoft has presented better quarterly figures than had been expected by stock market analysts. The COVID-19 pandemic is driving the high-margin cloud business. Nevertheless, the share fell in after-hours trading. The reason should be the outlook for the current quarter – institutional investors had hoped for a little more.
The first quarter of Microsoft’s financial year 2021 ended on September 30, 2020. In the three months, Microsoft turned over 37.2 billion US dollars, which is an eighth more than in the first quarter of 2020. Operating profit rose by a quarter to 15.9 billion dollars, and net profit by as much as 30 percent to 13. $ 9 billion. This emerges from Microsoft’s quarterly figures published on Tuesday evening.Microsoft’s quarterly figures
CEO Nadella emphasized the use of Microsoft Teams: In six months the number of daily users has increased by half to 115 million. With the start of the current financial year 2021, Microsoft doubled the accounting life expectancy of its own servers from two to four years. This reduces the corresponding depreciation and thus increases operating and net profit without any real change.
All divisions are growing
The group currently reports its finances in three divisions: Productivity and Business Processes, More Personal Computing, and Intelligent Cloud. Microsoft provides online services in all three divisions. The latter division shows the strongest sales growth with 20 percent and has developed from the third largest to the largest sales generator. This includes the Azure range, whose sales have increased by almost half in one year. Intelligent Cloud grew 39 percent in operating profit to $ 5.4 billion.
The second largest revenue generator is Productivity and Business Processes (+ 1% to 12.3 billion dollars. Operating profit is almost a fifth higher (5.7 billion dollars). This includes Microsoft’s Office, LinkedIn and Dynamics.
More Personal Computer increased sales six percent ($ 11.8 billion) and net income 18 percent ($ 4.7 billion). In this division are the only areas reported by Microsoft whose sales are declining: The business with OEM licenses for Windows has shrunk by five percent, the advertising income from the search engine business by ten percent. The latter have declined significantly for the second quarter in a row. Surface and Xbox, on the other hand, grew strongly (+ 37% and + 30%, respectively).
As these figures show, Microsoft generates profit margins in the cloud that are impressive. The gross margin climbed by two percentage points to 70 percent and the pre-tax return on sales by four percentage points to 43 percent. Free cash flow has swelled 38 percent to $ 14.4 billion.
For the current second quarter of the financial year 2021, Nadella expects sales of 39.5 to 40.4 billion dollars, which would be an increase of about one twelfth year-on-year. The tax rate is expected to increase from 14 percent to 16 percent.