Microsoft earnings exceeded expectations with the help of video game sales

Microsoft earnings exceeded expectations with the help of video game sales

The company on Tuesday reported $ 37.2 billion Revenue for the three months ended September was well above Wall Street analysts’ forecast of $ 35.8 billion.
Revenue in Microsoft (MSF) The smart cloud segment reached $ 13 billion, up 20% from a year earlier, including a 48% year-over-year increase in Azure revenue. PC revenue rose 6% to $ 11.85 billion, thanks to increased sales of Xbox and Microsoft Surface devices.

Earnings for the quarter were $ 1.82 per share, up from $ 1.55 per share analysts had forecast.

“The next decade of financial performance for any business will be determined by the speed of their digital transformation,” Nadella said in a phone call with analysts on Tuesday.

Analysts say the company’s cloud business growth remains in its infancy.

“This cloud shift and WFH dynamic seems to remain here and the company appears to be the biggest beneficiary of this trend,” Wedbush analyst Dan Ives said in a note to investors on Tuesday.

Investors may have some concerns about Azure’s growth rate, however, despite strong gains. Shares of Microsoft fell almost 2% after trading hours on Tuesday night. Azure revenue growth of 48% in the quarter fell from 59% in the same period last year.

Some analysts, however, argue that this slowdown in growth is expected given the large size of the business. Nadella said Tuesday she expects technology spending to double over the next 10 years.

Gaming also presents a significant growth opportunity for Microsoft.

“Gaming is one of the largest and fastest growing forms of entertainment in the world. We expect more than $ 200 billion in revenue in this industry by 2021,” Kyle Vikstrom, Microsoft’s director of investment relations, told CNN Business

Microsoft is at the center of the release of the next-generation video game console, the Xbox Series X, and the more budget-friendly Xbox Series S next week. How consoles sell could affect the tech personal computer company next quarter. The two consoles will be compete with Sony’s PlayStation 5 and a less expensive version of this device.

“We’re seeing a very good early response to the console coming out next quarter,” Vikstrom said.

In the last quarter, Microsoft too announced that it had acquired ZeniMax, the parent company of Bethesda video game publishers. The acquisition gives Microsoft ownership of popular video games, such as the “Fallout” series, “Elder Scrolls V: Skyrim” and the “Doom” franchise. These games could help Microsoft move forward in console wars.

Correction: Kyle Vikstrom, Microsoft’s director of investment relations, said the company expects more than $ 200 billion in gaming revenue in 2021. An earlier version of this story said it was expected in 2020.

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