Microsoft has released its financial results for fiscal year 2021 first-quarter, with demand for cloud products driving “a strong start to the fiscal year”.

The company’s revenue for the quarter ending 30 September 2020 was $37.2bn, an increase of 12% year on year.

Operating income was $15.9bn, an increase of 25%, and net income increased by 30% to $13.9bn.

However, this is not as big an increase as the previous quarter, where revenue increased by 15%.

According to Amy Hood, executive vice president and chief financial officer at Microsoft, this increase in revenue was driven by the company’s commercial cloud offerings, which generated $15.2bn. This includes Microsoft Azure Cloud and Microsoft 365 Commercial, with Microsoft 365 Consumer subscribers increasing to 45.3 million. Azure revenue increased by 48%.

Despite results exceeding expectations, Microsoft’s share price remained largely unchanged.

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By GlobalData

In Microsoft’s “More Personal Computing” segment, which includes Xbox, Surface and Windows products, revenue was $11.8 billion, an increase of 6%. Revenue from Xbox products rose by 30% year on year.

Search advertising revenue, excluding traffic acquisition costs, decreased by 10%.

Overall, the results indicate a growth in cloud products, personal computing and gaming as a result of the Covid-19 pandemic.

Logan Purk, senior research analyst at Edward Jones said:

“Microsoft delivered another solid quarter as the company continues to be a big beneficiary of the effects from Covid-19. Accelerated adoption of cloud services, software subscriptions and video games were all bright spots for the company. Azure continues to deliver healthy growth, but did slow in the quarter to 47%. As Microsoft continues to sign larger contracts, this business can be lumpy.

He added that Microsoft is expected to benefit from companies increasing spend on digital transformation projects. The company is also likely to see growth in its video games segment due to the release of the new Xbox next month.

Microsoft Q1 results show “durable advantage”

Tom Homer, SVP of sales and client services operations for EMEA at GTT, said:

“It makes sense that cloud-based services such as Microsoft Teams are the star performer in the company’s latest quarterly figures, with usage more than trebling since the start of the pandemic. People and organisations around the world are continuing to rely on cloud-based collaboration services to remain connected while working remotely.”

However, according to Marketwatch, Microsoft “underwhelmed” with its forecast for the fiscal second quarter of 2021, with the company forecasting revenue of $39.5bn to $40.4bn for the next quarter.

Haris Anwar, senior analyst at, said:

“Microsoft’s strong earnings beat shows its market share in cloud computing is expanding while its legacy software products such as Windows and Office are in great demand during the pandemic.

“This durable advantage will help the company achieve sustained, double-digit growth in revenue, earnings per share and free cash flow, making it a reliable tech stock to own over the long term.”

Microsoft’s share price is up nearly 33% since the start of 2020.

Read More: Ericsson reports strong third-quarter results buoyed by China 5G push.