Microsoft Corp. reported strong fiscal fourth-quarter financial results today that easily beat market expectations, once again showing strong growth within its cloud businesses.

Still, the company’s shares dropped more than 2% in after-hours trading after it offered revenue guidance for the current quarter that came in lighter than anticipated.

The Redmond-based firm reported diluted earnings of $1.46 per share on revenue of $38 billion in the quarter, up 13% from the same period one year ago. Wall Street was expecting a profit of $1.37 per share on revenue of $36.5 billion.

For its full fiscal year 2020, Microsoft reported a net income of $44.3 billion, or $5.76 per share, on revenue of $143 billion, up 14% from a year ago.

Microsoft saw strong demand for its cloud services throughout the fourth quarter, something that analysts attributed to the COVID-19 pandemic that’s forcing people to continue working from home. That helped to boost revenue across its three major businesses, including its Intelligent Cloud and Productivity and Business Processes segments.

“The last five months have made it clear that tech intensity is the key to business resilience,” Microsoft Chief Executive Satya Nadella (pictured) said in a statement. “Organizations that build their own digital capability will recover faster and emerge from this crisis stronger. We are the only company with an integrated, modern technology stack, powered by cloud and AI and underpinned by security and compliance, to help every organization transform and reimagine how they meet customer needs.”

Microsoft’s Intelligent Cloud business, which comprises its Azure public cloud service, GitHub, Windows Server, SQL Server and its enterprise services, reported revenue of $13.37 billion, up 17% from a year ago. However, Azure saw its revenue growth slow to just 47%, from 59% in the previous quarter.

Analyst Patrick Moorhead of Moor Insights & Strategy told SiliconANGLE that Microsoft blew the estimates away, benefiting from the reaction of businesses, governments and schools to the ongoing coronavirus pandemic.

“These are not discretionary business spends but required spends to weather the pandemic and relate to working, governing and schooling from home,” Moorhead said. As such, he said there was no need to be concerned that Azure’s revenue growth had declined slightly. “While I am not yet concerned with the declining Azure numbers as the revenue base is growing, it’s something to keep our eyes on.”

Daniel Elman, an analyst at Nucleus Research, told SiliconANGLE that he believes there’s every chance that Azure’s revenue growth could accelerate again in future quarters.

“This makes sense with the understanding that COVID-19 and associated remote working arrangements have caused organizations to accelerate their digital transformations dramatically,” he said. “The demand for further cloud usage and services will continue, so this growth could accelerate even further, especially as it becomes more and more apparent now that the companies with the most integrated, modern and resilient technology stacks are those that will bounce back the fastest from any economic hardship or future shutdowns.”

Microsoft’s Productivity and Business Processes unit, which includes Office, Dynamics and LinkedIn, reported $11.75 billion in revenue, up 6% from a year ago. Within that segment, LinkedIn revenue grew by 10%, which was its slowest growth since Microsoft acquired the business in 2016.

LinkedIn is one of the few Microsoft businesses that has suffered due to the coronavirus pandemic. Although it may be seeing more activity from people who’ve lost their jobs in the last few months, it recently announced it was laying off 960 of its own workers due to lower demand for its recruiting solutions among business customers.

“LinkedIn could see revenue drop again as customers continue to shrink their digital ad spends,” Elman said. “Still, it certainly won’t go anywhere as it is dominant in its market area.”

As for Microsoft’s More Personal Computing business, which includes Windows, Search, Surface and Xbox, revenue rose 14% year-over-year to $12.91 billion. Xbox content and services revenue grew by 65%, thanks to what Microsoft Chief Financial Officer Amy Hood said were record levels of engagement with more people staying at home and playing video games. The company also saw strong sales of its Surface devices, with revenue up 28% compared to a year ago.

“Surface was another highlight for Microsoft,” Moorhead said. “As I said last quarter, all Microsoft needed was the supply for growth, and in Q4 it had it.”

Elman said that while hardware has become less central to Microsoft’s strategy in recent years, the demand has returned with people being forced to stay in their homes.

“If workers are going to be out of home offices for long, they don’t want to use laptops or tablets,” he said. “They want more computing power and performance, multimonitor setups and other technologies to make home offices more like the workplaces users are familiar with.”

Microsoft said it’s expecting revenue of $35.61 billion in its fiscal first quarter, which implies growth of 8%. That forecast was slightly lower than expected, however, with Wall Street analysts calling for $35.91 billion in revenue.

Photo: Kmeron/Flickr