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Microsoft results get a pandemic jab

Covid-19 has stimulated businesses to digitise more, and this is reflected in Microsoft’s latest results

Microsoft has reported a 19% boost in revenue to $41.7bn for the quarter ending 31 March 2021.

The company’s intelligent cloud business posted revenue of $15.1bn, ahead of expectations, an increase of 23% from the 2020 figure.

It also reported that Microsoft 365 consumer subscriptions grew to $50.2m, up 27% year on year. Dynamics revenue grew by 26%, driven by Dynamics 365 revenue growth and the company’s Power Apps for finance and operations.

Revenue of its Office 365 Commercial SaaS product grew by 22%, but Office Commercial licensing declined by 25%.

Revenue in the company’s More Personal Computing was $13.0bn, an increase of 19%. Looking at the Windows PC market, Microsoft said it had experienced “strong revenue growth of 10%”, driven by continued customer demand. 

Satya Nadella, chief executive officer of Microsoft, said the Covid-19 pandemic had not slowed the adoption of technology.

In a transcript of the earnings call posted on the Seeking Alpha financial blogging site, Nadella said: “Digital technology will be the foundation for resilience and growth over the next decade. We are innovating and building the cloud stack to accelerate the digital capability of every organisation on the planet.”

Asked about the company’s $19bn Nuance acquisition, he said: “When I look at the industry cloud opportunities, we think of healthcare as a very critical opportunity for us and a huge and expansive addressable market. If you think about it as a percentage of GDP [gross domestic product], obviously healthcare is significant.

“And fundamentally, when I think about the provider market in particular, digital tech is going to play a huge role for every provider to do the things that they care the most about, which is improve patient outcomes and reduce cost and reduce the burden on physicians.”

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Nadella said the approach with Nuance is to build out a platform ecosystem. “With Nuance, they’ve done a fantastic job of taking what is perhaps the most defining technology of our times, which is AI [artificial intelligence], and applying it to healthcare, which is the most important application space,” he added.

Asked about the role of Dynamics in traditional ERP (enterprise resource planning) and CRM (customer relationship management) deployments, Nadella described the product as a way to bridge data silos between existing enterprise systems, rather than replace such systems.

“We do see this as a huge opportunity as the world modernises and puts in a complete next-generation, more proactive versus reactive business systems,” he said. “And that’s what Dynamics has been architected for.”

Nadella said he believed the tech sector would grow at twice the rate of GDP over the next 10 years, and developer software as a service offered a huge opportunity for Microsoft. “I believe the next 10 years are going to be about developers and the digital capability in every enterprise, and we are the leaders there,” he said.

Visual Studio, GitHub, Microsoft 365 and Dynamics are among the products in Microsoft’s portfolio that are targeting developers.

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