Microsoft blows past Wall Street estimates, earnings boosted by cloud revenue

Microsoft blows past Wall Street estimates, earnings boosted by cloud revenue

Microsoft Corp.'s fiscal fourth-quarter revenue rose 13 per cent, signalling persistently strong demand for cloud-computing software and services that are helping businesses keep workers connected from afar.

Microsoft said Teams has been a success during the pandemic, but the product has drawn scrutiny from competitors.

The company's commercial cloud, a closely watched metric by investors, surpassed US$50 billion in annual revenue for the first time this year. Earnings per share of $1.46 beat expectations of $1.37/share. Microsoft mentioned the slowdown contributed to a 34 per cent decline in income for Office solutions utilised by companies, "reflecting continued buyer shift to cloud choices from multi-calendar year on-premises agreements".

"We expect the small and medium business weakness we saw in Q4 to continue, which will impact transactional sales, primarily in Office and Windows OEM", Hood said.

For Microsoft's fiscal 2020 on the whole, revenue grew 14 percent to $143.01 billion, while net income climbed 13 percent to reach $44.28 billion.

The gaming growth stemming from this year's Covid-19 lockdown - supported by a bounce in working and learning from residence - pushed Microsoft's revenues effectively forward of expectations in the newest quarter, in accordance to figures issued late on Wednesday.

Analysts had expected cloud revenue of $13.09 billion in the fourth quarter ended June 30, according to IBES data from Refinitiv. "And this quarter our Commercial bookings were better than expected, growing 12 percent year-over-year", Microsoft Chief Financial OFficer Amy Hood, stated in a declaration.

"On a significant base, server products and cloud services revenue increased 19 per cent and 21 per cent in constant currency".

Lastly, revenue came in 14% higher in Microsoft's More Personal Computing segment at £10.13 billion and was reported stronger than the FactSet consensus of £9.01 billion.

The device - which is termed "Productivity and Business Procedures" and consists of Business products for corporations and customers, LinkedIn revenue and Dynamics items and cloud providers - arrived at $11.75 billion in Q4, missing estimates of $11.9 billion.

Office Consumer products and cloud services revenue increased 6%. Microsoft returned $8.9 billion to shareholders in the form of share repurchases and dividends during the quarter.

However, the company's stock - one of a clutch of high-flying tech stocks that pushed Microsoft's market cap well over $1 trillion - fell by almost 3% in after-hours trading.

Microsoft's productivity and business processes segment rose 6.3 percent to $11.75 billion, driven by the Office 365 growth as well as a 38-percent revenue boost for Dynamics 365.

Microsoft took a $450 million hit because of physical store closures. Additionally, to deliver a more secure workplace, the new Microsoft Endpoint Data Loss Prevention in Microsoft 365 will help customers identify and protect information on endpoints.

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