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Microsoft business booms under Covid-19 lockdowns

by Mark Tyson on 23 July 2020, 13:21

Tags: Microsoft (NASDAQ:MSFT)

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Microsoft has just released its latest set of financials. Its Earnings Release FY20 Q4 covers the three months ending 31st June 2020, and they have taken investors and analysts by surprise - in a good way. These results come in the shadow of Covid-19 and the efforts of governments to reduce or eliminate the virus spread, or infect the herd (policy depending upon your region), often resulting in lockdowns, with many individuals and businesses suffering as a result.

Key figures for the most recent quarter, alongside the expected results from Yahoo Finance, are bullet pointed below.

  • Revenue: $38 billion vs. $35.5 billion expected.
  • Earnings per share: $1.46 vs. $1.36 expected.
  • Intelligent Cloud: $13.4 billion vs. $13.1 billion expected.
  • More Personal Computing: $12.9 billion vs. $11.5 billion expected.

Covid-19 business impacts

It was noted by Microsoft that overall Q4 saw previous business trends continue to play out. "In the Productivity and Business Processes and Intelligent Cloud segments, cloud usage and demand increased as customers continued to work and learn from home," the results press release says. A weak point of this segment was LinkedIn, which relies upon recruitment market spending for income.

Similarly in the More Personal Computing segment, Windows OEM, Surface, and Gaming benefited from increased demand to support work, play, and learn-from-home scenarios. A weak point of this segment was Search, due to reduced advertising spends.

Microsoft's CEO Satya Nadella thought that "the last five months have made it clear that tech intensity is the key to business resilience". He went on to assert that digital businesses stayed strong and will recover faster. Microsoft of course characterises itself as a company that can help businesses and organisations transform and reimagine how they meet customer needs.

Microsoft's EVP and CFO Amy Hood highlighted that commercial cloud surpassed $50 billion in annual revenue for the first time this year, a welcome milestone for the company.

Looking more closely at the More Personal Computing segment, which HEXUS readers usually have a greater interest in, this segment was up 14 per cent overall ($12.9 billion revenue). The breakdown, showing the performance of Windows, Surface, Xbox etc can be seen in the slide below.

The standout growth figure above is in gaming - Xbox content and services revenue grew an impressive 65 per cent in Q4, as you can see above.

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