Google profit

Microsoft’s earnings continue to climb.

Microsoft reported record profits and sales on Tuesday despite investor fears that the pandemic-fueled tech boom may be over.

First of the biggest tech companies to report earnings for the three months ending December, Microsoft said it posted revenue of $51.7 billion, up 20% from a year earlier, and profit up 21% to $18.8 billion. The company has seen particularly strong growth in its cloud services while securing long-term customer contracts.

Although it beat Wall Street expectations, the company’s shares were down nearly 5% in secondary market trading but rebounded later in the day. The decline was likely caused by a jittery stock market and some results that were insufficient for bullish investors.

On a call with investors, executives shared an upbeat outlook for the next quarter, pushing Microsoft’s stock price higher. Satya Nadella, chief executive of Microsoft, said demand for the services was still strong.

“Coming out of the pandemic, we actually see a lot of constraints in the economy, and the only resources that can help boost productivity while reducing costs are digital technology,” he said.

Microsoft had $125 billion in cash, including nearly $70 billion it hopes to spend to buy video game powerhouse Activision in a deal announced this month. Bank of America analysts called the purchase a “wise move” and a “strategic and financial positive, which can accelerate Microsoft’s gaming business across many platforms.”

Sales of Microsoft’s cloud offerings to business customers, which include Office 365 subscriptions and Azure, its cloud computing platform, rose 32% to $22.1 billion. Revenue is expected to grow further as price increases for Office 365, which includes Word and the Teams communication app, will go live in March. The price increases could generate $5 billion in additional revenue this year, according to Wedbush Securities.

Azure is the second largest cloud platform, after Amazon Web Services. It’s part of a fundamental shift in the way companies are moving their business more online. Azure grew 46%, reflecting how customers across all industries are signing larger and longer contracts.

Brett Iversen, head of investor relations at Microsoft, said that despite the turmoil in the stock market, the company is focusing on long-term opportunities so it can reduce “short-term external noise that we don’t control. not that much”. ”

Iversen said Microsoft’s Windows business was particularly strong, with sales up 25% as enterprise customers purchased new computers for their employees.

Despite chip shortages that limited supply of the new Xbox console over the holiday season, the company’s gaming business grew 8%, part of its personal computing segment, which grew 15% to reach $17.5 billion.

The so-called big worker quit also helped LinkedIn, the professional social network, which saw its revenue increase by 37%.