Microsoft CEO links healthy Q2 results to “digitisation”

Microsoft has released its earning for the second quarter of the 2020 financial year, highlighting significant growth in its 'Intelligent Cloud' business area.

In a transcript of the earnings call, Microsoft’s CFO Amy Hood summarised the results, saying: ”This quarter, revenue was $36.9 billion, up 14% and 15% in constant currency. Gross margin dollars increased 22% and 25% in constant currency. Operating income increased 35% and 39% in constant currency, and earnings per share was $1.51, increasing 37% and 41% in constant currency when adjusting for the net charges related to TCJA from the prior year.”

While flying high, what might be a concern for the company is the relatively poor performance of its video games division, which saw revenues down 21% and Xbox content and services revenue down 11%.

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The blow is cushioned somewhat by the fact that Microsoft is gearing up for a new console generation with the launch of its Xbox Series X console, scheduled for some time later this year. That, alongside its cloud gaming service xCloud, has the potential to restore some impetus to that side of the business.

CEO Satya Nadella linked the fortunes of Microsoft to the project of digital transformation at large, saying: “It was another strong quarter with double-digit top and bottom line growth, driven by the strength of our commercial cloud. Stepping back from the quarter and reflecting more broadly on the next decade, the defining secular trend will be the increasing rate of digitization of people, places and things. This malleable power of software will drive productivity growth across all industries, leading to more inclusive economic growth far beyond the domains of consumer tech today. Tech spend as a percentage of GDP is projected to double over the next decade.”

(Image: Microsoft)