Microsoft's quarterly profit climbs 30pc amid pandemic

Microsoft posted a 30 percent increase in first quarter net profit, beating analysts’ estimates as the company benefited from a shift in the way people are working due to the Covid19 pandemic.

Net profit rose to $13.9 billion in the three months ending September 30, which was ahead of an average estimate of analysts polled by Bloomberg of $11.9bn. Revenue during the period increased 12 per cent to $37.2bn, beating analysts' average estimate of $35.8bn. The JulySeptember period marked Microsoft’s 13th straight quarter of doubledigit revenue growth.

“The next decade of economic performance for every business will be defined by the speed of their digital transformation,” Satya Nadella, chief executive of the Redmondheadquartered company, 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,” he added. The company's operating income rose 25 per cent annually to $15.9bn.

“Demand for Microsoft’s cloud offerings drove a strong start to the fiscal year with our commercial cloud revenue generating $15.2bn, up 31 per cent year over year,” Amy Hood, executive vice president and chief financial officer of the technology giant, said. “We continue to invest against the significant opportunity ahead of us to drive longterm growth,” she added.

Revenue from the company's intelligent cloud business providing server hosting grew 20 per cent yearonyear to $13bn. Its productivity and business processes arm, which includes both its Microsoft Office business and revenue from LinkedIn, increased 11 per cent to $12.3bn.

In its guidance for the second quarter, Microsoft forecast revenue in the range of $39.5bn to $40.4bn, at the lower end of $40.43bn by analysts polled by Refinitiv. Microsoft said sales in its personal computing division, which includes PCs and Xbox, increased 6 per cent to $11.8bn. In the PC market, revenue from sales of its Surface device were up 37 per cent as this segment witnessed increased demand from users to support remote work, Ms Hood said.

Revenues from Xbox content and services increased 30 per cent on the prior year. Movement restrictions due to the Covid19 pandemic has propelled user interest in gaming, industry experts said. Microsoft is expected to benefit further from this trend with the launch of the new Xbox Series X and Series S consoles on November 10.