Microsoft's Expectation-Beating First Quarter

Microsoft's Expectation-Beating First Quarter

almost 4 years ago2 mins

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Even amid a global outbreak of Weeknd Dance Challenge videos, Microsoft’s still as productive as ever: the world’s second-biggest public company reported higher-than-expected quarterly revenue and profit late on Wednesday, and its shares initially rose 🕺

What does this mean?

Back in February, Microsoft warned investors its personal computing division – which sells products like Windows, Surface laptops, and Xbox consoles – would miss sales targets after Chinese factories shut down in response to coronavirus 😬 But the pandemic giveth as well as taketh away: Microsoft’s cloud computing business grew revenue by a better-than-expected 27% last quarter, partly down to an increase in demand for its remote-working services. Its productivity segment – which includes Teams, rival to workplace chat app Slack – benefited from a sudden uptick in working from home too: Teams’ usage is up 775% in Italy alone.

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Why should I care?

Companies around the world have already started planning for a remote-working future post the pandemic 💻 Half the participants of a new US survey are planning to offer remote working as a permanent option for some jobs, and 40% say they’ll now accelerate automation and new ways of working. That’ll probably boost Microsoft’s cloud computing and productivity segments even more – adding to the recurring revenues that make up roughly 60% of the business – and help carry the tech giant through the upcoming recession.

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Speaking of recession, data out on Wednesday showed the US economy shrank for the first time in six years by a worse-than-expected annualized rate of 4.8% last quarter 🇺🇸 A recession is technically two consecutive quarters of shrinking economic growth, so if forecasts for this quarter’s shrinkage are anything to go by, optimists – yes, optimists – might say we’re halfway there. Pessimists, however, might say the definition is redundant given the size of the drop – and that a recession has already well and truly arrived.

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