Microsoft Quarterly Results Impress Analysts, But Not Investors

02 February, 2018, 00:42 | Author: Tracy Craig
  • Microsoft FY18 Q2 earnings: $28.9 billion in revenue backed by cloud, Office growth

Intelligent Cloud revenue was up 15 percent to $7.8 billion, with Microsoft citing factors including a 98 percent increase in Azure cloud revenue. The company reported $28.9 billion in revenue, a 12% year-over-year increase.

Microsoft's coyness around Azure makes it hard to make a direct comparison with Amazon Web Services (AWS), but it does clump together a bunch of its cloud services under a "Commercial Cloud" heading to at least give us something; this includes Office 365, Dynamics 365, Azure and other cloudy things. Analysts expected earnings of 86 cents a share on sales of $28.35 billion, according to Zacks Investment Research. Beasley is impressed by the increase of active users and believes ad revenue will just continue to grow.

Microsoft (MSFT) shares failed to get a bounce Thursday from the software company's beat-and-raise quarterly results posted late Wednesday. LinkedIn witnessed a growth of over 20% and contribution of $1.3 billion.

By unit, Microsoft reported second quarter revenue of $9 billion, up 25 percent from a year ago, for its productivity and business processes division.

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It should be noted that many American companies are now taking large one-time charges to account for changes to the USA tax law in December, which cut the overall corporate rate and offered a lowered rate for companies repatriating overseas profits to the United States.

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

Microsoft's Q2 star was unquestionably the Intelligent Cloud division, which brought in revenue of $7.8 billion.

This came despite Xbox playing second fiddle to Sony in the console market, while Nintendo's Switch was the unexpected hit of the year. All three of the company's operating groups saw growth. That's above the FactSet consensus estimate of $12.02 billion in revenue for More Personal Computing. Earlier this month, a KeyBanc analysis concluded its Azure cloud services had grabbed back market share from its biggest competitor, Amazon, though it still trails by 42 percentage points in the no. 2 spot. "Strong execution from our sales teams and partners is driving growth across our businesses". Microsoft said that gaming revenue was up 8 percent in the gaming industry's all-important holiday quarter.

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