By Dhirendra Tripathi
Investing.com -- Microsoft stock (NASDAQ:MSFT) traded 3% higher in premarket Wednesday after its Cloud business powered ahead in the second quarter to emerge as its biggest business and the world’s second-most valuable company held out hope of the momentum continuing.
Total revenue rose 20% year-on-year in the second quarter to near $52 billion, propelled by 26% growth in the company’s Intelligent Cloud business that topped $18 billion in sales. This is the first time quarterly revenue at the software giant has crossed $50 billion.
Microsoft forecast Intelligent Cloud revenue of $18.75 billion-$19 billion for the current quarter, driven by “strong growth" in its Azure platform as more clients shift their operations to digital and need its Cloud to aid that pivot.
CEO Satya Nadella has now placed the company’s Cloud business in a formidable second behind Amazon (NASDAQ:AMZN) while Alphabet (NASDAQ:GOOGL) plays catch-up.
Jefferies analyst Brent Thill told Reuters that the company’s guidance of a sequential rise in Azure revenue is a strong assurance.
Other businesses grew in strong double digits too, although the company’s third-quarter projections for them pointed out to growth slowing sequentially.
Productivity and business processes grew 19% to $16 billion, and the company said it will, at best, hit $15.85 billion revenue. Within the vertical, LinkedIn revenue was up 37% while Office 365 Commercial revenue rose 19%. The company closed December with over 56 million Microsoft 365 subscribers.
Windows OEM revenue rose 25% as the world’s most popular operating system rode the surge in demand for PCs and laptops. Xbox content and services revenue increased 10%. Search and news advertising revenue excluding traffic acquisition costs jumped 32%. The company is projecting third-quarter revenue in the More Personal Computing business to come in between $14.15 billion and $14.45 billion. The vertical booked $17.5 billion revenue in the second quarter.
Adjusted profit per share in the December quarter was well ahead of estimates at $2.48.