Microsoft reported a 21 per cent year-on-year increase in net profit in the second quarter of its fiscal year, driven by strong growth in its cloud and personal computer businesses. The company's net profit rose to $18.8 billion in the three months to the end of December, about $3.3bn more than the prior year period, however it was down 8.2 per cent on a quarterly basis. Revenue during the October-December period jumped 20 per cent to $51.7bn, exceeding analysts' expectations of $50.8bn. The second quarter of the 2021 financial year marked the Redmond, Washington-based company’s 18th straight quarter of double-digit revenue growth. The company's stock, which has increased almost 25 per cent in the past 12 months, reached nearly $288.49 a share in extended-hours trading on Tuesday, up by more than 1.5 per cent. Digital technology is the “most malleable resource at the world’s disposal to overcome constraints and reimagine everyday work and life”, Microsoft’s chairman and chief executive Satya Nadella said. “As tech as a percentage of global GDP [gross domestic product] continues to increase, we are innovating and investing across diverse and growing markets … with a common underlying technology stack and an operating model that reinforces a common strategy, culture and sense of purpose,” Mr Nadella said. Revenue in the company’s intelligent cloud business increased 26 per cent year-on-year to $18.3bn in the second quarter. Driven by Azure — a cloud computing service operated by Microsoft — and other cloud services revenue growth, Microsoft’s server products and cloud services sales increased almost 29 per cent in the three-month period. “Solid commercial execution, represented by strong bookings growth driven by long-term Azure commitments, increased Microsoft cloud revenue,” the company’s executive vice president and chief financial officer Amy Hood said. The company’s operating income grew 24 per cent to $22.2bn in the previous quarter from the prior year period while the diluted earnings per share was up 22 per cent on an annual basis at $2.48. The company’s productivity and business processes division, which includes both its Microsoft Office business and revenue from LinkedIn, surged 19 per cent to $15.9bn. LinkedIn revenue increased almost 37 per cent annually. Microsoft did not give a dollar figure for its LinkedIn revenue and did not disclose the number of users. Microsoft 365 Consumer (a bundle of various apps) subscribers increased to 56.4 million at the end of the last quarter, up 4.3 per cent on a quarterly basis, the company said. Sales in the personal computing division rose 15 per cent to $17.5bn in the quarter. Surface revenue increased 8 per cent yearly, as the company experienced a surge in the sale of its PCs as more businesses adopted hybrid work modes due to the pandemic, Microsoft said. Search and news advertising revenue increased by 32 per cent annually, while Xbox content and services revenue jumped 10 per cent in the second quarter. Xbox Game Pass service — a catalogue of downloadable games or the Netflix for video games — now has more than 25 million subscribers, up from 18 million in January last year. To strengthen its gaming portfolio, Microsoft last week agreed to buy video-game company <a href="https://www.thenationalnews.com/business/technology/2022/01/18/microsoft-buys-video-game-maker-activision-blizzard-for-687bn/" target="_blank">Activision Blizzard</a> in a $68.7bn all-cash deal. It will make Microsoft the third-largest gaming company in the world by revenue, behind China’s Tencent and Japan’s Sony. The deal, which is expected to close in the fiscal year 2023, is the US technology manufacturer’s largest acquisition to date, exceeding its $26.2bn purchase of professional networking platform LinkedIn in 2016. Microsoft also returned $10.9bn to shareholders in the form of share repurchases and dividends in the last quarter, a yearly increase of 9 per cent compared to the prior year period. The company spent more than $5.7bn on research and development, about 11.1 per cent of its total sales in the quarter. This is 17.5 per cent more than what was spent on R&D in the same period last year.