Earnings for the quarter were $ 1.46 per share, again beating analysts’ forecast of $ 1.34.
“The past five months have made it clear that technology intensity is the key to business resilience,” CEO Satya Nadella said in a statement. “Organizations that develop their own digital capacity will recover faster and emerge from this crisis with greater force.”
Revenue from the productivity and business processes segment increased 6% over the same period last year to $ 11.8 billion, helped by a 19% increase in Office 365 Commercial sales. Revenue in the smart cloud division increased 17% to $ 13.4 billion. And personal computing sales increased 14% to $ 12.9 billion.
Still, Microsoft shares fell more than 2.5% in after-hours trading, shortly after the results were released on Wednesday, after ending the day by 1.4%.
Investors may be concerned about slowing growth in their crucial Azure cloud business, which competes with market leader Amazon Web Services. Azure sales grew 47% in the second quarter, a slowdown from the 59% annual growth reported in the previous quarter.
Analysts also forecast potential potholes for Microsoft. In particular, the second wave of downtime in many parts of the country and the recession could cause a further reduction in business IT spending in the short term.
Microsoft said the purchase of business licenses slowed in the second quarter, especially for small and medium-sized companies suffering from the economic consequences of the pandemic. His search business was hit by a drop in advertising spending.
However, as coronavirus cases continue to rise in the United States and many companies hope to continue to rely on remote work, there is likely to be a greater incentive for companies to upgrade their digital capabilities, which should be positive for Microsoft. long-term.
But they also included apparent investments in services to help with business digital transformations, including a 19% increase in operating expenses in the smart cloud division driven by investments in Azure. Operating expenses in the productivity and business processes segment increased 10%, “driven by Teams marketing and investments in cloud engineering.”
“Right now, what I would like us to focus on, in the interest of our long-term investors, namely: How can we build this modern technology stack so that it can really … help customers transform, be resilient , and help us enter new categories and build a strong position in those categories, “Nadella said in a call with analysts on Wednesday.
He added: “My own approach to this would be not to worry so much about the short term, whether it is the growth number … nor are we trying to think of a margin target, because in a sense, the world needs to do well for it to do so. let’s do well in the long run. And I think the world will come out of this, and we will be stronger if we invest during this (time). ”
.
