Microsoft Corporation (NASDAQ: MSFT) stock lost over 3.8% on October 28th, 2020 (as of 10:26 am GMT-4; Source: Google finance) despite better than expected results for the first quarter of FY 21 driven by corporate demand for cloud-computing services to support customers’ remote workers and move more of their business online. The company reported the earnings of $13.89 billion for the first quarter of FY 21 compared to $10.68 billion, in last year’s first quarter. The commercial bookings growth was ahead of expectations, rose 23% and 18% in constant currency, on the back of core annuity sales motions and an increase in the number of large, long-term Azure contracts.
MSFT in the first quarter of FY 21 has reported the adjusted earnings per share of $1.82, beating the analysts’ estimates for the adjusted earnings per share of $1.54. The company had reported the adjusted revenue growth of 12 percent to $37.2 billion in the first quarter of FY 21, beating the analysts’ estimates for revenue of $35.8 billion, according to average estimate of analysts polled by Bloomberg. Gross margin dollars rose 15%. Operating income grew 25%.
Azure revenue grew 48%, compared to a 47% in the prior quarter. The analysts polled by Bloomberg on average expected sales of Azure cloud services to increase by 45%. Three years ago, Azure revenue had been almost doubling each quarter, and that growth rate has been closely watched among investors.
Commercial cloud sales grew 31% to US$15.2 billion in the period. Gross margins of this business expanded by 5% to 71%, mostly due to an accounting change. Revenue from Xbox content and services grew 30%, and sales at the LinkedIn professional-networking service gained 16 per cent. The revenue from Productivity and Business Processes grew 11% to $12.3 billion, primarily driven by LinkedIn and Office Consumer. Office Consumer revenue grew 13%, Dynamics revenue grew 19% and 18% in constant currency and LinkedIn revenue rose 16%, mainly due to a stronger advertising market that benefited the marketing solutions business.
Meanwhile, next month, Microsoft plans to launch a new version of its Xbox video-game console. The company is hoping to entice users by offering payment plans, a cheaper model that will go for US$300, and programs that give buyers a new machine and a subscription with hundreds of games for a monthly fee. Gaming, revenue increased 22% and 21% in constant currency in the first quarter of 2021.