Microsoft posts massive Q2 fueled by gaming, cloud services

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Microsoft has been on a roll practically since the start of the COVID-19 pandemic. When remote work increased demand for things like gaming and cloud services, the Big Tech firm was poised to fill the gaps.

On Tuesday, Microsoft announced its 2021 second-quarter financial results. Unsurprisingly, things are still trending upward. The company saw impressive growth in several key areas, including Xbox, Surface, and cloud services, The Verge reports. There is seemingly no end in sight for Microsoft’s hot streak.

Going Up

The fact that Microsoft is a powerhouse in multiple areas helps it excel regardless of what is happening in the world around it. However, when something like the COVID-19 pandemic sparks demand in multiple areas a company serves, there is only one possible outcome.

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In its second-quarter results, Microsoft reported $43.1 billion in revenue and a net income of $15.5 billion. Those figures reflect 17 percent and 33 percent increases respectively.

As noted, Microsoft’s strong showing was led by multiple segments, including Xbox, Surface, and cloud services. Those are the same segments that bolstered Microsoft’s earnings in the first quarter.

Another area that saw increased demand was consumer devices and PCs. As millions of people continue to adapt to remote work models and at-home education, the need for PCs has never been greater. Around the holidays, many people upgraded their devices, creating a strong finish in 2020.

Last year, the PC market saw its first notable year of growth in a decade. The Verge notes that more than 300 million devices were shipped in 2020. That was good news for Microsoft on two fronts.

For one, its lineup of Surface laptops and 2-in-1s continues to get more popular with consumers. Meanwhile, a large percentage of the 300 million devices shipped last year run on Windows. That gives Microsoft access to a huge population of users that may opt to use products like Office, OneDrive, and Edge.

Big Gaming Spark

Although most people think of Microsoft as a traditional tech company, it’s impossible to ignore Xbox. Microsoft’s flagship console and the Xbox brand are more popular than ever.

The new Xbox Series X debuted just a few months ago and is still hard to find in stores. Thanks to the next-gen console, Microsoft says that its hardware revenue jumped by 86 percent.

Of course, selling consoles isn’t the only way that Microsoft makes money with Xbox. In fact, many argue that the company is shifting its priorities in favor of digital gaming services. Xbox Game Pass is a prime example.

The game subscription service has surpassed 18 million subscribers. At a monthly price of $10 per month (or $15 with Xbox Live Gold and xCloud access), it gives Microsoft yet another strong revenue stream. In fact, the company’s gaming segment saw its revenue grow by 51 percent to top $5 billion for the first time in a single quarter.

Moving forward, the digital transition sparked by the pandemic isn’t going to end. Even as “normal” life resumes, people will still need new devices and want to spend their free time gaming. There’s no reason to believe that Microsoft won’t post another strong showing in Q3 as these trends fuel its success.

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