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The stock price of Microsoft Corporation (NASDAQ: MSFT) increased on Tuesday after reporting its second-quarter financial results that exceeded the estimates of Wall Street analysts.

MSFT shares closed at $232.33 each, up by 1.22%. The stock gained an additional 4.11% to $242 per share after-hours.

Microsoft second-quarter financial performance

Microsoft reported that its revenue increased 17% to $43.1 billion in the second quarter ended December 31, 2020. Its revenue was significantly higher than the $40.18 billion expected by Wall Street analysts, according to Refinitiv.

The tech giant's revenue in Productivity and Business Processes went up by 13% to $13.4 billion. Its revenue in Intelligent Cloud surged 23% to $14.6 billion while its revenue in personal computing increased 14% to $15.1 billion.

Microsoft's diluted earnings per share (EPS) was $2.03, also substantially higher than the $1.64 per share consensus. Its net income rose 33% to $15.5 billion.

With respect to its business outlook, Microsoft expected to generate $40.35 to $41.25 billion in revenue in the third quarter. Its expectation is higher than the $38.7 billion consensus estimate by Wall Street analysts.

In a statement, Microsoft CEO Satya Nadella said, “What we have witnessed over the past year is the dawn of a second wave of digital transformation sweeping every company and every industry. “Building their own digital capability is the new currency driving every organization’s resilience and growth. Microsoft is powering this shift with the world’s largest and most comprehensive cloud platform.”

On the other hand, Microsoft Executive Vice President and CFO Amy Hood said, “Accelerating demand for our differentiated offerings drove commercial cloud revenue to $16.7 billion, up 34% year over year. We continue to benefit from our investments in strategic, high-growth areas.”

Microsoft is gaining share in the console market

During a conference call with analysts, Ms. Hood told analysts that she expects the company to achieve double-digit growth in revenue and a "healthy operating-margin expansion" for the full fiscal year ending on June 30.

Mr. Nadella told analysts, "The launch of Xbox Series X and Series S was the most successful in our history, with the most devices ever sold in the launch month." He also noted that the tech giant gaining share in the console market.

Ms. Hood added that Microsoft a "significant demand for the Xbox Series X and S that will still be constrained by supply" in the third quarter.