Microsoft Q2 earnings: Beats estimates on revenues and profit

Revenue beats estimates: The company reported net revenue of $51.73 billion against street estimates of $50.88 billion. Compared to last year, in the same quarter the revenue was up by 20% and sequentially, the revenue was up by 22%. The cloud computing platform grew to $22.1 billion, a rise of 32%. Azure grew 46% reflecting how customers across industries are signing larger and longer deals. The company’s gaming business grew 8%, part of its personal computing segment, which grew 15% to $17.5 billion.

Increase in profits: The profits increased by 21% YoY to 21% to $18.8 billion. The increase in high profits was on the back of strong growth in its cloud services while locking up long-term customers deals.

Microsoft Q2 2021

Rich in cash: Microsoft has $125 billion in cash. It plans to spend $70 of total cash in buying the video game powerhouse Activision in a deal announced last week.

Active users - The company now has more than 1.4 billion monthly active devices running Windows 10 or Windows 11. That compares with over 1.3 billion active Windows 10 devices as of April 2021.

MS Office Price hike: The company has increased the price of Office 365 (it includes Word and Teams communication app) effective from March. The price increase will bring in $5billion in extra revenue going forward.

Guidance: Microsoft eased investor concerns on the earnings call, indicating that demand remains strong across much of the business. The company expects revenue of $48.5 billion to 49.3 billion in the fiscal third quarter, topping the $48.23 billion estimates. The company has indicated that the full-year operating margins may widen slightly.

Target Price: The 38 analysts offering 12-month price forecasts for Microsoft Corp have a median target of 371.00, with a high estimate of 425.00 and a low estimate of 294.00. Microsoft shares are currently trading at $304, up 2.5% on Nasdaq.