Microsoft today reported earnings for its first fiscal quarter of 2021, including revenue up 12% to $37.2 billion, net income of $13.9 billion, and earnings per share of $1.82 (compared to revenue of $33.1 billion, net income of $10.7 billion, and earnings per share of $1.14 in Q1 2020). All three of the company’s operating groups saw year-over-year growth.
Analysts had expected Microsoft to earn $35.7 billion in revenue and report earnings per share of $1.54. The company thus easily beat expectations, suggesting some (but not all) units are benefiting from the effects of the pandemic. The company’s stock was up 1.5% in regular trading and down 1% in after-hours trading. Microsoft returned $9.5 billion to shareholders in the form of share repurchases and dividends during the quarter.
COVID-19 impact on the quarter
Microsoft is the first of the tech giants to report results for a second full quarter during the coronavirus pandemic. In the past two quarters, Microsoft said COVID-19 had minimal net impact on the total company revenue. This time, Microsoft merely said its “focus remains on ensuring the safety of our employees, striving to protect the health and well-being of the communities in which we operate, and providing technology and resources to our customers and partners to help them do their best work while remote.” Microsoft CEO Satya Nadella was eager to talk about “digital transformation” rather than the virus.
“The next decade of economic performance for every business will be defined by the speed of their digital transformation,” Nadella said in a statement. “We are innovating across our full modern tech stack to help our customers in every industry improve time to value, increase agility, and reduce costs.”
A 48% revenue increase for Azure is good news for the company. Azure growth has been falling steadily over the past two years: 76% in Q2 2019, 73% in Q3 2019, 64% in Q4 2019, and 59% in Q1 2020. It rebounded slightly to 62% in Q2 2020 but returned to 59% in Q3 2020 and then 47% in Q4 2020. Slowing growth is normal at Azure size, and while the pandemic accelerated the trend, it appears to have settled there.
More to follow
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