Microsoft earnings beat as cloud growth comes in better than feared

Microsoft earnings beat as cloud growth comes in better than feared

Microsoft CEO Satya Nadella speaks at the company’s Ignite Spotlight event in Seoul on Nov. 15, 2022.

SeongJoon Cho | Bloomberg | Getty Images

Microsoft shares rose 5% in extended trading on Tuesday after the software maker issued fiscal third-quarter results that exceeded analysts’ predictions.

Here’s how the company did:

  • Earnings: $2.45 per share, vs. $2.23 per share as expected by analysts, according to Refinitiv.
  • Revenue: $52.86 billion, vs. $51.02 billion as expected by analysts, according to Refinitiv.

Overall company revenue increased 7% year over year in the quarter ended March 31, according to a statement. Net income, at $18.30 billion, was up 9%.

Revenue in Microsoft’s Intelligent Cloud business segment, which includes the Azure public cloud, Enterprise Services, SQL Server and Windows Server, generated $22.08 billion in revenue. That’s up 16% and higher than the $21.94 billion consensus among analysts surveyed by StreetAccount.

Revenue from Azure and other cloud services grew by 27%, compared with 31% in the prior quarter. The average estimate from analysts polled by CNBC had expected 26.5% growth, while those consulted by StreetAccount were looking for 27.2%.

The Productivity and Business Process segment containing Dynamics, LinkedIn and Office, posted $17.52 billion in revenue, which was up about 11% and above the StreetAccount consensus of $17.05 billion.

The More Personal Computing segment, featuring Bing, Windows, Surface and Xbox, delivered $13.26 billion in revenue, down 9% but more than the $12.25 billion StreetAccount consensus.

Sales of Windows operating-system licenses to device makers declined some 28%. Research firm Gartner estimated that PC shipments declined 30% in the quarter.

During the quarter, Microsoft announced a new multibillion-dollar investment in OpenAI and said it would draw on the company’s artificial intelligence models for a new version of its Bing search engine and enhancements to the Microsoft 365 productivity software.

Notwithstanding the after-hours move, Microsoft shares are up 15% so far this year, while the S&P 500 index is up 6% in the same period.

Executives will discuss the results with analysts and issue guidance on a conference call starting at 5:30 p.m. ET.

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