Microsoft Shares Rise On Cloud Revenue Gains

Microsoft Shares Rise On Cloud Revenue Gains – The Microsoft logo is seen on an office building in New York, United States on July 28, 2015. Mike Segar

Apr 27 () – Microsoft Corp ( MSFT.O ) beat analysts’ expectations on quarterly sales and profit forecasts on Tuesday, but its shares fell amid some doubts about one-off gains in results and high hopes for performance. year, slightly reduced. . Gathering

Microsoft Shares Rise On Cloud Revenue Gains

The Redmond, Wash.-based company has become one of the world’s most valuable companies after grabbing a slice of the fast-growing cloud computing market and expanding into business services such as Teams Collaboration Services and the LinkedIn social network, valued at $2 trillion a year later. approaching 50% inventory growth last year

Microsoft Shares Rise On Upbeat 2023 Sales Growth Forecast

Those services were still in demand during the pandemic, with Microsoft’s Azure cloud service closing in on market leader Amazon Web Services ( AMZN.O ), with growth of 50 percent in the quarter. People who work and study at home buy new computers and video consoles, which develop the Microsoft Windows operating system and video games.

Net income for the third quarter ended March 31 rose 44 percent from a year earlier to $15.5 billion. Adjusted revenue and earnings per share were $41.7 billion and $1.95 per share, beating analysts’ estimates of $41.03 billion and $1.78 per share, according to Refinitiv data.

Shares fell 2.5 percent after executives gave a better-than-expected forecast on a conference call with investors.

“One-off tax and currency benefits boosted Microsoft’s third-quarter numbers, resulting in the market not welcoming the better-than-expected numbers,” said Nicholas Hite, equity analyst at Hargreaves Lansdowne. Net income includes a favorable tax benefit of $620 million from the India ruling.

Microsoft Shares Rise On Cloud Revenue Gains

The deal is risky at Microsoft’s valuation of 32.8 times next year’s earnings. Disappoint even a little and the market will be merciless.”

Sales of what Microsoft calls its “business cloud,” which includes server infrastructure such as Azure along with cloud-based versions of Office software, rose 33 percent to $17.7 billion. Sales of customer management Dynamics 365, which competes directly with Salesforce.com ( CRM.N ), rose 45%, while the business version of Office 365 added 15% more users.

“This is the fourth consecutive quarter with 15 percent job growth in a very large base,” Microsoft CFO Amy Hood said of the results for Office 365 for business customers.

Microsoft continued to double down on cloud software, announcing earlier this month that it would buy artificial intelligence software company Nuance Communications Inc ( NUAN.O ) for $16 billion, debt-free, to bolster its healthcare business. slow Read more

Big Tech: What Do Q3 Earnings Reveal?

Microsoft said Azure, its cloud computing business that competes with Amazon’s ( AMZN.O ) Web Services and Alphabet’s Google Cloud ( GOOGL.O ), grew 50% or 46% in the quarter. Currency adjustment has grown. That was down 48 percent on a currency-adjusted basis last quarter, but in line with analysts’ expectations of 46.3 percent growth, according to Visible Alpha.

Microsoft’s “intelligent cloud” division, which includes Azure, had total sales of $15.1 billion, beating analysts’ estimates of $14.92 billion, according to Refinitiv data.

Microsoft said Microsoft Teams has 145 million daily users, up from 115 million in October. Microsoft’s productivity software division, which includes Office and Teams, reported sales of $13.6 billion, compared with estimates of $13.49 billion, according to Refinitiv.

LinkedIn’s sales rose 23 percent on a currency-adjusted basis, slightly beating Visible Alpha’s estimate of 21.9 percent, as revenue picked up after a sharp decline in jobs and hiring at the start of the pandemic.

Microsoft (msft) Earnings Q2 2021

Microsoft’s PC unit, which includes the Windows operating system and the Xbox game console, had revenue of $13.0 billion, compared with analysts’ expectations of $12.57 billion, according to Refinitiv data. Windows sales to PC makers rose 10 percent, compared with 1 percent growth in the previous quarter.

In a call with investors, Microsoft forecast productivity revenue for the fourth quarter of $13.93 billion, beating Refinitiv’s estimate of $13.57 billion. Sales of the smart cloud and personal computing businesses were forecast at $16.32 billion and $13.80 billion, respectively, beating estimates of $16.0 billion and $13.26 billion, according to Refinitiv data. In recent years, including during the global pandemic. But the strong US dollar and very high inflation are holding back Microsoft’s growth prospects. In early June, the company lowered its guidance for the fiscal fourth quarter, which ended June 30. Microsoft is also fighting antitrust complaints in Europe over competition among cloud service providers, which could further limit the company’s growth.

Investors will be watching closely to see how Microsoft handles these and other issues when the company reports earnings for the fourth quarter of fiscal 2022 on July 26, 2022. Microsoft’s fiscal year (FY) ends on June 30. Analysts predict poor performance by Microsoft’s standards: Adjusted earnings per share (EPS) and revenue are expected to grow, but at the slowest pace in recent quarters.

Investors will also focus on year-over-year revenue growth from Microsoft Azure and other cloud services. Together, they are a key component of Microsoft’s cloud business, providing a full suite of services for developers, IT professionals and enterprises. Revenues from Azure and other cloud services are expected to grow significantly from last year, but also to decline.

Microsoft Sales Grow On Cloud Strength, Shares Dip On Heightened Valuation

Last year, Microsoft shares slightly outperformed the market. The stock broke away from the market in October 2021, rising as the company reported strong fiscal first-quarter earnings that month. But it reached a plateau in November and December 2021, and a significant decline began at the end of the calendar year. Since then, Microsoft stock has generally moved lower, going up and down as the market rises, though generally slightly ahead of the S&P 500. As of July 23, Microsoft stock has a 1-year total return of -8.3%. -9.3 percent for the S&P 500 over the same period.

Due to Covid-19, Microsoft saw only minor interruptions in adjusted EPS growth. The company reported a relatively modest 6.6% year-over-year increase in adjusted earnings per share in the fourth quarter of fiscal 2020, which coincided with the onset of the pandemic. Otherwise, the lowest year-over-year adjusted EPS growth between Q1 and Q2-22 was 21.9%. Growth accelerated during fiscal 2021, reaching 48.3 percent growth in the fourth quarter of that year. After that, however, adjusted EPS growth began to slow, falling to just 13.7 percent year-over-year in the last reported quarter, fiscal 3Q22. Now, analysts expect that pace to slow as Microsoft reported adjusted growth of earnings per share of only 5.5%. percent over the prior year in the fourth quarter of fiscal year 2022. This would be the smallest increase in at least four years.

Microsoft’s revenue growth has generally been steady in recent years. From the first quarter of fiscal year 2020 to the third quarter of fiscal year 2022, revenue increased from 12.4% to 22.0% over the same period of the previous year. In the last three quarters, for the first, second and third quarters of fiscal year 2022, respectively, there has been an average decrease from 22.0% to 20.1% to 18.4% compared to the previous year. Analysts expect this slowdown to continue into the fourth quarter, with revenue growing by about 13.3% in the quarter.

As mentioned above, investors will also focus on revenue growth from Azure and other cloud services. Azure is a cloud platform that provides developers, IT professionals and enterprises with a set of tools and services that can be used for networking, storage, mobile and web application services, artificial intelligence, Internet of Things (IoT). IoT) and different types can be used. Other computer tools are required. At the end of the fourth quarter of 2021, Azure’s share was approximately 22% of the global cloud market, trailing only Amazon.com Inc.’s Web Services. (AMZN). The cloud computing market is growing rapidly, and Azure is generally growing faster than Microsoft. However, Microsoft still has to compete with Amazon, Alphabet Inc’s Google Cloud. (GOOGL) and various smaller competitors. This is especially important because work-from-home and hybrid businesses that started during the pandemic may have leverage to help the cloud services market.

Microsoft Q2 Earnings (msft): Slowing Cloud Growth Despite Strong Report

Microsoft’s Azure business and other cloud services have grown at a remarkable pace, more than tripling quarterly revenue in just three years. As incomes increased, the growth rate slowed. For example, in the fourth quarter of fiscal 2019, Azure and cloud revenues increased by 63.0% compared to the same period last year. Although sales remain strong, they have not been able to achieve the same growth rate in the following 11 reported quarters. Growth has slowed significantly in recent quarters, from 51.2 percent in Q4 2021 to 44.7 percent in Q3 2022. Analysts now expect growth to slow to 43.1% in Q4-FY22.

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