Azure, Xbox Growth Lead Way For Microsoft's Q1 Beat

Microsoft Corporation MSFT reported strong growth in its fiscal first quarter, led by its Azure and Xbox product offerings. 

What To Know: The company reported year-over-year sales growth of 12% to $37.2 billion for the first quarter. Earnings came in at $1.82 per share.

Both figures beat consensus estimates of $35.7 billion and $1.54.

Revenue grew 11% year-over-year to $12.3 billion for the Productivity and Business Processors unit. Intelligent Cloud revenue was up 20% year-over-year to $13 billion. The More Personal Computing segment saw 6% year-over-year growth to $11.8 billion.

Net income increased 30% year-over-year to $13.9 billion.

Related Link: Understanding Microsoft’s Unusual Options Activity

Why It’s Important: The Intelligent Cloud segment continued to be a winner for Microsoft. Azure related revenue in this business segment was up 48% year-over-year.

“The next decade of economic performance for every business will be defined by the speed of their digital transformation,” said Microsoft CEO Satya Nadella.

“Demand for our cloud offerings drove a strong start to the fiscal year with our commercial cloud revenue generating $15.2 billion, up 31% year-over-year,” said CFO Amy Hood.

The company sees long-term growth coming from the cloud opportunity.

In the fourth quarter, Microsoft reported year-over-year growth of 19% for the cloud business. Azure had year-over-year growth of 47% in the fourth quarter.

Xbox content and services revenue was up 30% year-over-year. The gaming segment continues to benefit from people being at home. The next console launches under the Xbox brand could boost this segment even further the rest of the fiscal year.

Microsoft will provide guidance on its earnings call.

MSFT Price Action: Shares of Microsoft closed up 1.5% to $213.25 on Tuesday.