Microsoft CEO Satya Nadella has heralded the arrival of a “second wave” of digital transformation throughout industry as his company flags a 34 per cent year-on-year increase in commercial cloud revenue during its second quarter.
Microsoft’s fiscal second quarter saw gains across the board, according to the vendor’s latest financials, with various business segments including Office 365 commercial, Dynamics 365, Azure and Server products and services all enjoying comfortable increases.
“Accelerating demand for our differentiated offerings drove commercial cloud revenue to US$16.7 billion, up 34 per cent year over year,” said Amy Hood, Microsoft's executive vice president and chief financial officer. “We continue to benefit from our investments in strategic, high-growth areas.”
Broadly, revenue in Microsoft’s Productivity and Business Processes segment was US$13.4 billion in the quarter, an increase of 13 per cent, year on year.
Revenue in Intelligent Cloud was US$14.6 billion, an increased 23 per cent, while revenue in More Personal Computing was US$15.1 billion, up 14 per cent.
Overall, for the quarter ended 31 December 2020, Microsoft enjoyed a 17 per cent boost in revenue, to US$43.1 billion, year-on-year; a 29 per cent surge in operating income, to US$17.9 billion; and a 33 per cent increase in net income, coming in at US$15.5 billion.
“What we have witnessed over the past year is the dawn of a second wave of digital transformation sweeping every company and every industry,” Nadella told shareholders.
“Building their own digital capability is the new currency driving every organisation’s resilience and growth.
“Microsoft is powering this shift with the world’s largest and most comprehensive cloud platform,” he added.
Nadella’s observation that the industry is seeing a resurgence in digital transformation activity following the initial shock of COVID-19 is a sentiment that has already been articulated by analyst firms, partners and other industry players.
For example, Evan Woollacott, senior analyst at Technology Business Research (TBR), recently suggested that although the initial pandemic-prompted rush to new tech worked to boost the importance of both internal and external IT resources, there will also be a long-term need for such services underpinning digital transformation, a trend set to cement the critical role of IT partners into the future.
“In the long term, internal service capabilities and IT services partners will become critical to enabling enterprises’ digital transformations, particularly as front-office cloud deployments mature and as clients explore migrating more customised environments like ERP to cloud or pursue industry-based solution deployments in highly regulated industries like healthcare and the public sector,” Woollacott said.