Tuesday, 25 September, 2018

Microsoft reports better-than-expected quarterly revenue, profit

Revenue for Microsoft’s fiscal second quarter rose 12% to $28.9 billion as it saw gains in business services and cloud computing Revenue for Microsoft’s fiscal second quarter rose 12% to $28.9 billion as it saw gains in business services and cloud computing
Grady Vargas | 02 February, 2018, 00:35

Some highlights include Office commercial products and cloud services revenue being increased by 10% and Office consumer products and cloud services revenue being increased by 12%. Enterprise Mobility is a strong growth area for Microsoft and their installed base increased to 60 million already.

Wall Street was expecting Microsoft to report second quarter earnings of 86 cents a share on revenue of $28.4 billion.

We say "only" because compared to the sizeable gains made elsewhere, revenue for Surface hardware increased by just 1%, effectively remaining stagnant.

In short, the company beat expectations. Unfortunately, as we already reported, Surface sales were up only 1 percent, with only $1.3 billion in sales.

Microsoft Corp reported better-than-expected quarterly revenue and profit on Wednesday, helped by robust demand for its cloud computing services and flagship Azure product, which has recorded dramatic growth over several quarters.

The total revenue includes a net charge of $13.8 billion related to Tax Cuts and Jobs Act (TCJA). CEO Satya Nadella's continued focus on the importance of cloud also seems to be paying off, with revenue across the Intelligent Cloud division up 15% to $7.8 billion.

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Earnings per share were $0.96, up from $0.83 a year ago.

Dynamics products and cloud services revenue grew 10% driven by Dynamics 365 revenue growth of 67%.

"Our investments in IoT, data, and AI services...position us to further accelerate growth".

This came despite Xbox playing second fiddle to Sony in the console market, while Nintendo's Switch was the unexpected hit of the year. Analysts and investors following Microsoft have wondered if Azure's growth would begin to trail off as the overall revenue number gets larger. "Strong execution from our sales teams and partners is driving growth across our businesses". Analysts had a consensus revenue estimate of $28.39 billion for the quarter.

The company's shares were little changed in extended trading following the report, after closing at a record $95.01 in NY. While shares didn't move much in late trading Thursday, they were already up 11% this year, while the Dow Jones Industrial Average, which counts Microsoft as a component, is up 5.8%. Microsoft said that gaming revenue was up 8 percent in the gaming industry's all-important holiday quarter.

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