Microsoft announced 30% Growth in its Net Income in 2021 Q1 Earning Results

Microsoft (NASDAQ: MSFT) announced 2021 Q1 earning results on October 27th, 2020. According to the announcement, the total revenue, operating income and net income increased 12%, 25% and 30%, respectively (YoY, 3 months). In addition to 12% growth in its revenue, the free cash flow margin was 37.6%, showing excellent growth and profitability. The PSR based on the total revenue in the 1st quarter was 10.9, indicating that its stock price is still cheap compared to the level of its revenue. 

Microsoft is seemingly transforming from a product revenue based company to a service revenue based company. Service revenue accounts for 57.5% of Microsoft’s total revenue, and the revenue of the service segment grew 23.5%. We expect that growth in the total revenue based on the growth in service segment will be continued in the future.

Revenues in major segments showed double-digit growth including drastic 48% growth of IaaS and PaaS based cloud service Azure, despite 5% decrease in Windows OEM.

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