Pandemic-induced demand for cloud computing services helped push Microsoft’s quarterly earnings past analysts’ estimates though its guidance for the current quarter fell short of expectations.

All three of Microsoft’s core segments grew strongly in the first quarter, with overall revenue rising 12% to $37.2 billion and net income increasing to $13.89 billion, or $1.82 per share, from $10.68 billion, or $1.38 per share, a year earlier.

Analysts had expected earnings of $1.54 per share on revenue of $35.72 billion.

“It was another healthy quarter, with continued demand for remote offerings continuing to power results,” Microsoft CFO Amy Hood told Reuters.

Revenue from Microsoft’s “Intelligent Cloud” segment rose 20% to $13 billion in the first quarter, with 48% growth in Azure, the company’s challenger to Amazon Web Services. Analysts had forecast revenue of $12.7 billion.

The “More Personal Computing” division, which includes Windows software and Xbox gaming consoles, posted a 6% gain in revenue to $11.8 billion, while Productivity and Business Processes grew 11% to $12.3 billion.

As Reuters reports, the COVID-19 pandemic “has accelerated a move already under way toward cloud-based computing” and for Microsoft, “has also boosted demand for its Windows operating systems for laptops and its Xbox gaming services as families work, learn and play from home.”

Research firm International Data Corp. said Tuesday that by the end of next year, 80% of enterprises will have a mechanism in place to shift to cloud-centric infrastructure and applications — double the level before the pandemic.

Azure is now a bigger source of Microsoft revenue than its iconic Windows software package, said Brent Bracelin, an analyst at Piper Sandler.

In the second quarter, Microsoft will launch the new Xbox consoles. But its projection of $13.2 billion to $13.6 billion in revenue from “More Personal Computing” came in below Wall Street’s $14 billion estimate, sending its stock down more than 1.5% to $213.25 in after-hours trading Tuesday.

The company guided for overall revenue of $39.5 billion to $40.4 billion, up from $36.9 billion in the 2019 holiday period but below analysts’ average estimate of $40.5 billion.

(Photo credit should read GERARD JULIEN/AFP via Getty Images)

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