Microsoft’s cloud computing strength pushes earnings

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Microsoft Corp on Tuesday reported its Azure cloud computing services grew 50%, as the global pandemic benefited the software maker’s investment on working and learning from home.

The company’s shares rose 6% in extended trading after gaining about 41% in 2020 as COVID-19 shifted computing to areas where the software maker has bet big.

Microsoft and rivals such as Amazon and Google have benefitted from the shift to work from home due to the COVID-19 pandemic that has accelerated enterprises’ switch to cloud-based computing.

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. The previous quarter Azure grew 48%.

The company bundles several sets of software and services such as Office and Azure into a “commercial cloud” metric that investors watch closely to gauge the company’s progress in selling to large businesses.

Commercial cloud gross margins – a measure of the profitability of its sales to large businesses – were 71% in the quarter, compared with 67% a year earlier.

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.

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