Microsoft posted quarterly profits of $16.5 billion Tuesday afternoon, up 47%, surpassing even the most optimistic Wall Street expectations.
The results close out Microsoft’s 2021 fiscal year with fresh evidence that its business has been strengthened by the digital acceleration brought on by the COVID-19 pandemic.
LinkedIn revenue rose 46% for the quarter, and surpassed $10 billion annually for the first time, the company said. Microsoft acquired the business social network for $26.2 billion in 2016.
Microsoft’s overall revenue of $46.2 billion for the quarter ending June 30 was an increase of 21% from the same quarter a year ago.
Its profits translated into $2.17 per share, up 49% from a year ago.
Analysts polled in advance had expected revenue of $44.1 billion, on average, up 16%, and profits of $1.90 per share, vs. $1.46 a year ago. The high estimate among analysts had been $2.03 per share, according to data tracked by Yahoo Finance.
Other products and services showing substantial growth included Office, search advertising, and server products and cloud services.
Revenue was down in the company’s Surface hardware business and Windows for PCs, which the company attributed in part to supply chain constraints that reduced hardware production. Those business units also faced a difficult prior year comparable due to extraordinary demand for PCs last year amid the pandemic.
Surface revenue fell 20% or $348 million to $1.38 billion.
Gaming revenue rose 11% or $357 million to $3.7 billion.
Related: Xbox hardware sales spike 172% as Microsoft reports $3.7B in quarterly gaming revenue
Microsoft shares are down 2.3% in after-hours trading, due to apparent concerns over the Microsoft Azure cloud growth rate when adjusted for currency fluctuations, as explained by Dina Bass of Bloomberg News.
Microsoft beat, but shares are off. So what gives? Seems to be some consternation about the Azure growth rate, which was 51% but only 45% when adjusted for currency. Previous quarter was 50% BUT 46% in constant currency: https://t.co/6SyuDlvzzA
— Dina Bass (@dinabass) July 27, 2021
Highlights from the company’s three major divisions:
Productivity and Business Processes
- Revenue rose 25% or $2.9 billion to $14.7 billion.
- Microsoft credited Office 365 Commercial and LinkedIn for driving the growth.
- Operating income increased $2.5 billion or 62% to $6.4 billion.
Intelligent Cloud
- Revenue rose 30% or $4 billion, to $17.4 billion.
- Azure was the big driver of growth, the company said.
- Operating income increased 46% or $2.4 billion, to $7.8 billion.
More Personal Computing
- Revenue rose 9% or $1.2 billion to $14.1 billion
- Search advertising drove the growth.
- Operating income increased 19% or $782 million to $4.9 billion.
