Microsoft beats estimates for Azure revenue growth as shares rise

Microsoft's shares, which gained about 41% in 2020 as one of the “stay-at-home” winners, rose 4% in extended trading.

Microsoft beat Wall Street estimates for Azure revenue growth on Tuesday, as the software giant continued to benefit from a global shift to working and learning from home.

The company’s shares, which gained about 41% in 2020 as one of the “stay-at-home” winners, rose 4% in extended trading.

The shift to work from home due to the Covid-19 pandemic has accelerated enterprises’ switch to cloud-based computing, benefiting Microsoft and rivals such as Amazon.com Inc’s cloud unit and Alphabet Inc’s Google Cloud.

Microsoft said revenue in its “Intelligent Cloud” segment rose 23% to $14.6 billion, with 50% growth in Azure. Analysts had expected a 41.4% growth in Azure, according to consensus data from Visible Alpha.

Revenue from its personal computing division, which includes Windows software and Xbox gaming consoles, rose 14% to $15.1 billion, driven by strong Xbox content and services growth, beating analysts’ estimates of $13.5 billion, according to IBES data from Refinitiv.

Microsoft in November released two new Xbox consoles, its most visible non-work and non-school brand, but the hardware proved difficult to find as a global semiconductor shortage contributed to tight stocks as many retailers.

'Stay-at-home' winner

Microsoft is one of the big global winners of the mega-tech firms during the Covid-19 crisis. 

Ahead of Tuesday night's earnings report, the shares had climbed 42% from a year earlier, valuing the software maker at $1.7tn (€1.4tn) and placing it among the world's most valuable firms behind Apple.

However, like the other US tech giants, Microsoft is facing increased scrutiny in the EU and US over its market dominance.

It employs around 2,000 people in Ireland.

Meanwhile, Starbucks reported a bigger-than-expected fall in quarterly comparable sales as the rising number of coronavirus cases in the US kept customers at home, sending its shares 2% lower in extended trading.

The world’s largest coffee chain’s global same-store sales fell 5% in the first quarter, more than analysts’ estimates of a 3.4% decline, according to Refinitiv IBES data.

Reuters and Irish Examiner