A surge in demand for new Xbox consoles as well as further growth in cloud computing has helped Microsoft deliver better-than-expected results over the Christmas quarter.
Shares climbed 4% in after-hours trading and added to big gains over the last year for the US tech giant, which is seen as one of the winners from the “stay-at-home” economy.
Revenues for the three months to 31 December were up 17% to $43.1bn (£31.3bn), beating analysts’ estimates of $40.2bn (£29.2bn), while profits climbed 33% to $15.5bn (£11.3bn).
Microsoft said Xbox hardware revenues grew by 86%, driven by the launch of its latest models in November, while demand for contents and services for them were up by 40%.
Demand for the consoles had struggled to keep pace with supply amid a global semiconductor shortage.
The growth in Xbox revenues helped drive sales at the group’s wider personal computing division, which also includes Windows software, 14% higher to $15.1bn.
Meanwhile, the company reported 50% growth in its Azure cloud computing services division, suggesting that the software maker’s investment was paying off during the pandemic.
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The shift to working from home has accelerated businesses’ shift to cloud-based computing, benefiting Microsoft as well as Amazon, a rival in the sector.
Azure’s expansion was part of overall growth of 23% to $14.6bn for Microsoft’s “Intelligent Cloud” division – which also includes its Office software.
There was also a surprise recovery in revenues on the LinkedIn professional social network, which grew by 23% – having previously dipped as the pandemic shut down businesses – and announced major job cuts.
Chief executive Satya Nadella said the past year had seen “the dawn of a second wave of digital transformation sweeping every company and every industry”.