Microsoft beats expectations with Q1 earnings driven by cloud

The tech giant on Wednesday reported $65.6 billion in revenue, up 16% from this time last year, beating analyst predictions of $64.57 billion. Meanwhile, net profits were $24.67 billion, up 11% from the $22.29 billion from the year-ago quarter.

That translated into an earnings per share of $3.30, exceeding the $3.10 that analysts had expected.

The better-than-expected results helped to lift Microsoft’s stock by 1.3% in after-hours trading to $438.28.

Microsoft CEO Satya Nadella attributed the growth partly to artificial intelligence and its impact in quickly transforming workplaces. 

“We are expanding our opportunity and winning new customers as we help them apply our AI platforms and tools to drive new growth and operating leverage,” Nadella said in a statement. 

Microsoft reported $38.9 billion in revenue from cloud services, up 22% from the same period a year earlier. Cloud services is a closely-watched metric because corporations often use cloud providers to power their AI data crunching. In the latest fiscal year, it accounted for nearly 43% of Microsoft’s annual revenue. 

Microsoft’s intelligent cloud revenue was $24.1 billion, up 20% from last year. Meanwhile, Azure server products and cloud services revenue grew 23%, while other cloud services revenue grew 33%.

Sales in Microsoft’s productivity and business processes unit, which includes Microsoft 365 products and LinkedIn, was $28.3 billion, up 12%. 

Nadella and CFO Amy Hood will share more details on the company’s earnings call at 5:30 p.m. ET

This is a developing story, check back for updates.