Software giant Microsoft reported better than expected September quarter earnings Tuesday after the close. The Azure public cloud for hosting applications and websites grew 48%, accelerating from 47% in the prior quarter, faster than the 44% growth. Server products and cloud services revenue advanced 22%.
Software giant Microsoft reported better than expected September quarter earnings Tuesday after the close. The Azure public cloud for hosting applications and websites grew 48%, accelerating from 47% in the prior quarter, faster than the 44% growth. Server products and cloud services revenue advanced 22%.
Microsoft is the clear No. 2 provider of on-demand computing processing and storage behind market pioneer Amazon.com.
Microsoft Third Quarter Earnings After Tuesday Close
$1.82 Beat EPS $1.54 Forecast and $37.5 Bil Revenue Beat $35.72 Billion Forecast
Earnings
Microsoft Corp. (NASDAQ: MSFT) reported september quarter earnings: $1.82 per share, adjusted, vs. $1.54 per share as expected by analysts, according to Refinitiv. Revenue was: $37.15 billion, vs. $35.72 billion as expected by analysts, according to Refinitiv.
Market Reaction After hours $208.93 ▼$4.32 (-2.03%)
Highlights
- Microsoft revenue grew 12% on an annualized basis, down from 13% growth in the prior quarter, according to a MSFT statement.
- Revenue for commercial PCs cratered 22% months after support for Windows 7 ended; the category had surged last year, making outperformance this year more difficult.
- The Azure public cloud for hosting applications and websites, grew 48%, accelerating from 47% in the prior quarter. Microsoft doesn’t disclose revenue from Azure in dollars. Analysts had expected around 44% growth.
- Microsoft’s Intelligent Cloud segment, featuring Azure, Enterprise Services, GitHub and server products such as SQL Server and Windows Server, contributed $12.99 billion in revenue, up 20% year over year and more than the $12.73 billion consensus among analysts polled by FactSet.
- The Productivity and Business Processes segment, which includes Dynamics, LinkedIn and Office, delivered $12.32 billion in revenue. That’s up 11% and higher than the $11.78 billion FactSet consensus.
- Teams, one part of the Office 365 productivity app bundle, now has over 115 million daily active users, up from 75 million in April.
- Revenue from the More Personal Computing segment, containing search advertising, Surface, Windows and Xbox, came to $11.85 billion. That means the segment’s revenue grew 6% year over year, and it was above the $11.18 billion consensus among analysts surveyed by FactSet.
- Licensing revenue from Windows device makers declined 5% in the quarter, and licensing revenue for commercial devices in particular fell some 22%, compared with the 4% decrease in the prior quarter, the worst performance in more than five years.
- Technology industry research company Gartner estimated that third-quarter PC shipments grew 3.7% year over year and saw the fastest growth in the U.S. in a decade.
- The Commercial Cloud collection of products, including Azure, Dynamics 365, commercial LinkedIn and Office 365 services, added up to $15.2 billion in revenue, representing almost 41% of total revenue, up from around 38% in the prior quarter. Commercial Cloud gross margin was 71%, passing the 70% mark for. the first time.
- This is the first quarter Microsoft benefits from an accounting change that extended the useful life of its server equipment from three years to four years.
Outlook
Q2 revenue guidance
- Office consumer growth of mid single digits
- Full yr double digit commercial growth
- “Azure growth will remain strong”
- Enterprise services growth of low single digits
- Gaming growth in the high 20% range @Xbox game pass service up to 15M MAUs -“We are delighted by early Xbox reviews” -“will be most affordable & powerful console available” “Pace of users adopting multiple Office 365 workloads has accelerated”
- Hardware gaming growth of 40%
Source: MSFT, CNBC
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