Cloud services push Microsoft’s Q3 profits higher

Cloud computing and the Teams suit of services helped drive earnings higher for Microsoft during the third quarter.

The Wall Street Journal’s Aaron Tilley reported:

Microsoft Corp. MSFT 1.51% expects the pandemic-era surge in demand for cloud-computing services, videogaming and computers that delivered a solid quarter to persist at least through the rest of the year.

The software company on Tuesday said sales rose 12% to $37.2 billion, generating a net profit of $13.9 billion in the first quarter of its fiscal year. The results surpassed Wall Street expectations on revenue and profit for the quarter ending in September.

Stephen Nellis and Akanksha Rana from Reuters wrote:

COVID-19 has speeded up a move toward cloud-based computing, helping companies such as Microsoft, Amazon.com Inc’s AMZN.O cloud unit and Alphabet Inc’s GOOGL.O Google Cloud. For Microsoft, it has also boosted demand for its Windows operating systems for laptops and its Xbox gaming services as families work, learn and play from home, leading to profit that was about 30% above expectations.

CNBC’s Jordan Novet and Jennifer Elias noted:

Microsoft is forecasting a continued slowdown in its search ad revenue, which could spell bad news for Google parent-company Alphabet, which reports its earnings on Thursday. 

Microsoft’s latest results beat across the board, but the company saw a 10% year-over-year drop in search advertising revenue, and reported continued decrease for its guidance for the next quarter, according to its first fiscal quarter earnings it released Tuesday.