Microsoft Surpasses Q4 Expectations as Cloud and Gaming Revenue Soar
Microsoft exceeds Wall Street estimates for its fiscal fourth quarter, driven by significant growth in its cloud computing and gaming divisions. Despite the strong earnings report, the company's stock drops slightly in after-hours trading.
Microsoft reports fiscal fourth-quarter earnings that easily exceed Wall Street expectations, with total revenue reaching $38 billion against an expected $35.5 billion. The tech giant achieves $1.46 in earnings per share, surpassing the anticipated $1.36, as the ongoing pandemic continues to drive massive demand for its digital services. Despite these impressive numbers, Microsoft's stock falls nearly 3% in after-hours trading.
The company's Intelligent Cloud segment generates $13.4 billion in revenue, marking a 17% increase from the previous year and beating analyst estimates. Azure cloud platform growth remains a standout at 47%, though Microsoft does not disclose the exact revenue figure for the service alone. Additionally, the Productivity and Business Processes unit, which includes Office 365 and LinkedIn, grows 6% to reach $11.8 billion.
Work-from-home trends also significantly boost Microsoft's gaming division, with overall gaming revenue surging 64% and Xbox hardware revenue jumping 49%. This unexpected growth occurs just months before the scheduled November launch of the new Xbox Series X console. However, analysts warn that upcoming quarters present tough margin comparisons between fiscal year 2020 and fiscal year 2021.