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Microsoft $MSFT smashed analysts expectations for its fiscal fourth quarter ended June 30 earnings report. The software giant beat on both earnings and revenue.  The result sent the stock to another record high in the after hours market.

Microsoft's Azure cloud-computing segment continued to expand, posting strong gains in its business selling web-based services to corporate customers. $MSFT is now the clear No. 2 provider of on-demand computing processing and storage behind market pioneer Amazon.com $AMZN.

Earnings:

Adjusted earnings per share of 98 cents, up 42% year over year and beating analysts expectations of 71 cents EPS. Revenue was $24.7 billion, up 9% year over year and  an expected $24.27 billion. 

Reaction: Microsoft Corporation After-hours75.25 +0.86 (+ 1.39%) (A new All Time High)

 

Cloud Success

Microsoft’s Azure cloud computing platform growth has slowed down over the last few quarters but annually it's still showing near 100 percent annual growth.  In the last quarter for its “Intelligent Cloud” business (which includes Azure and other components) Microsoft posted revenues of $7.4 billion, up 11 percent from last year. 

MSFT said their annual cloud run rate was $15.2 billion with the delivered and the commercial cloud annualized run rate is now up to 18.9 billion. $MSFT saw a 15 percent growth in server products and cloud services with Azure growing at  97 percent year-over-year .

Just yesterday $MSFT announced a announces a strategic partnership with Dunn & Bradstreet (DNB). $DNB will use Microsoft Azure as its cloud platform. Dun & Bradstreet data will be made available through Microsoft Dynamics 365, a cloud-powered service, and the Microsoft’s Common Data Service. Microsoft and D&B will enter into a co-selling arrangement beginning later this year.

“Innovation across our cloud platforms drove strong results this quarter. Customers are looking to Microsoft and our thriving partner ecosystem to accelerate their own digital transformations and to unlock new opportunity in this era of intelligent cloud and intelligent edge.” said Satya Nadella, chief executive officer at Microsoft in a statement. 

Personal Computing 

This segment was hit with  significantly fewer Surface devices being sold than previous quarters. These numbers may have been affected by Microsoft launching a number of new devices late in the quarter, including a new Surface Pro and and a new laptop. Analysts had expected $8.80 billion in sales for this segment and Microsoft sales were $8.61 billion. Phone revenue dropped by $361 million. 

X Box

The number of Xbox Live active users is steady at near 53 million. Xbox hardware revenue fell 29 percent; Microsoft pointed to lower prices and a decline in the number of consoles it sold.

Bing

The search revenue grew 10 percent year-over-year with the integration of Bing into Windows 10 positively affecting the result.

Microsoft productivity tools

Microsoft reported revenue up 21 percent to $8.4 billion. Office 365 now also has 27 million customers on the consumer side. Microsoft's Dynamics 365 revenue was up 74 percent, while Dynamics in total increased 7 percent. Commercial Office 365 revenue went up 43 percent. LinkedIn contributed $1.1 billion in revenue up from $975 million in Q3.

Guidance

Microsoft did not give guidance for the September quarter, its fiscal Q1, in its earnings press release. 

Source: MSFT, AlphaStreet

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