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Microsoft Posts Big Q2 Revenue Surprise, Shares Rise 6%

By Anders Bylund - Jan 26, 2021 at 5:50PM

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The Xbox Series X launch was supported by strong demand for Redmond's cloud computing and consumer-grade productivity products.

Software giant Microsoft (MSFT 0.15%) published its results for the second quarter of 2021 on Tuesday evening. The report beat Wall Street's expectations across the board, with a particularly impressive surprise on top-line revenues. The stock rose as much as 6% in after-hours trading.

Microsoft's results

Microsoft's second-quarter sales rose 17% year over year to $43.1 billion. Earnings increased by 34% to $2.03 per diluted share. Your average analyst would have settled for earnings of roughly $1.64 per share on revenue near $40.2 billion. Adjusted free cash flows rose 41% to $10.1 billion.

The strong revenue growth sprung from the expected sources. Xbox content and services sales rose 40% year over year, limited by manufacturing capacity for the new Xbox consoles. Gaming revenue as a whole jumped 51% higher.

A yellow charting arrow smashes upward through a wall of blue bricks.

Image source: Getty Images.

The Azure cloud-computing platform posted 50% growth thanks to strong demand for hybrid cloud solutions and premium computing packages. Productivity software was driven by a 39% sales jump for the Dynamics 365 business planning and resource management suite. The addition of 2.2 million net new subscribers for the Microsoft 365 Personal office suite boosted the total user count to 47.5 million.

CEO Satya Nadella stated that the business world is undergoing "the dawn of a second wave of digital transformation" accelerated by the ongoing pandemic. "Building their own digital capability is the new currency driving every organization's resilience and growth," Nadella added.

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