Microsoft cloud sales get big boost in demand from lockdown workers

Microsoft Corporation (NASDAQ:MSFT) sales and profits grew in the past quarter due to greater demand for its services as the coronavirus pandemic forces more people to stay in and work from home. Demand was strong for its Azure cloud service and cloud-based versions of Office software, the Teams collaboration and online meeting programmes and its Xbox gaming services.  This was partly offset by some problems with “supply chain issues” in China, which delayed some spending to build Azure data centres, but this improved late in the third quarter. “We’ve seen two years’ worth of digital transformation in two months,” said chief executive officer Satya Nadella. “From remote teamwork and learning, to sales and customer service, to critical cloud infrastructure.” READ: Landlords ‘stuffed’ as bank bosses expect working from home trend to stick Teams collaboration software now has 75mln users, with numbers of video calls rocketing 1,000% in the month of March, while use of the Xbox Live gaming service was at an all-time-high with 19mln active users. Revenue in the three months to end-March, the third quarter of the tech titan’s fiscal year came in at US$35.02bn, up 15% compared to this time last year and beating analysts’ forecasts of US$33.66bn. Sales in the Intelligent Cloud segment, which includes the Azure cloud suite, rose 27% to US$12.28bn, while revenue for “commercial cloud” software, combining Azure and cloud-based software such as Office, surged 39% to US$13.3bn. Net profit jumped 22% to US$10.75bn, with earnings per share of US$1.40 that beat Wall Street EPS expectations of US$1.26. Microsoft shares were up more than 2% to US$182 in premarket trading on Thursday. READ: Tesla profit beats forecasts but Musk lets rip at 'fascist' coronavirus shutdown With investors reading across to rivals, Google owner Alphabet Inc (NASDAQ:GOOG) stock was up 0.6%, while newer rivals in the video technology and home-working space, Zoom Video Communications Inc (NASDAQ:ZM) stock was down 3% and Slack Technologies Inc (NYSE:WORK) was up 2%. Noting that year-on-year growth in Azure had eased to 59% from 62% in the second quarter, analysts at Nucleus Research noted that Azure operates at around 10 times the scale of Google by annual revenues, having been more widely adopted by businesses so far.