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Software giant Microsoft reported better than expected September quarter earnings Wednesday after the close. LinkedIn,  Cloud offerings, Azure infrastructure services, Office 365 productivity software and Dynamics enterprise software were all ahead of forecasts.


Microsoft is the clear No. 2 provider of on-demand computing processing and storage behind market pioneer Amazon.com.

Microsoft Third Quarter Earnings After Wednesday Close

$1.38 Beat EPS $1.25 Forecast and $33.1 Bil Revenue Beat $32.23 Billion Forecast

Earnings

Microsoft Corp. (NASDAQ: MSFT) reported on net income up 21% to $10.7 billion or $1.38 per share,excluding certain items, ahead of the analysts’ expectation of $1.25 per share. Revenue climbed by 14% to $33.1 billion, above the consensus estimates of $32.23 billion according to Refinitiv.

Revenue increased 14% on an annualized basis in the first quarter of Microsoft’s 2020 fiscal year, which ended on September 30. he top business segment in the fiscal first quarter was More Personal Computing, the traditional core of the company. Analysts had expected that to happen. In the previous quarter Microsoft’s Intelligent Cloud business segment, which includes Azure, was larger than any other segment for the first time in more than three years.

Market Reaction > After hours $137.17 −0.070 (-0.051%)

Highlights

  • Commercial bookings saw 30% growth helped by strong new business and renewal execution.
  • Commercial cloud revenue surged 36% to $11.6 billion.
  • Azure revenue soared by 59%.
  • Server product revenue rose by 12% driven by hybrid and premium solutions, demand related to SQL Server 2008 and Windows Server 2008 end of support, and GitHub.
  • Enterprise Mobility installed base increased by 36% to over 120 million seats.
  • LinkedIn revenue increased 25% with continued strength across all businesses.
  • LinkedIn sessions grew 22% with record levels of engagement and job postings.
  • The higher revenue per search drove search advertising revenue, excluding traffic acquisition costs, higher by 11%. 
  • Surface revenue declined by 4% due to the timing of product lifecycle transitions.
  • The healthy Windows 10 demand and strong momentum in advance of Windows 7 end of support drove Windows OEM Pro revenue higher by 19%
  • Continued pressure in the entry-level category hurt Windows OEM non-Pro revenue that fell by 7%
  • Windows Commercial products and cloud services revenue grew by 26% driven by an increase in Microsoft 365 agreements.
  • Gaming revenue declined by 7% as a decrease in volume of consoles sold hurt Xbox hardware by 34%.
  • Xbox content and services revenue was relatively unchanged with strength in Minecraft and subscriptions offset by a high prior-year comparable from a third-party title.

Micron Technology Q2 2019 Earnings

Outlook

  • With respect to guidance, analysts are looking for Microsoft to forecast $36.02 billion in revenue for the fiscal second quarter, according to Refinitiv.

Source: MSFT Earnings Release, AlphaStreet

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