Microsoft reported better-than- expected earnings for the second quarter. After the company issued a sales forecast that exceeded estimates, the stock turned positive.
The company did it.
According to a statement, revenue increased by 20% from a year earlier, compared with 22% growth in the previous quarter. Microsoft's net income increased by 21%.
At the end of the year, the company had $36.77 billion in revenue that was below the StreetAccount consensus of $36.90 billion. 45% of Microsoft's remaining performance obligations are expected to be recognized over the next year, the first time that percentage has fallen below 50% in at least a year.
Amy Hood, Microsoft's finance chief, alleviated investor concerns on the earnings call, indicating that demand remains strong across much of the business.
Hood said the company expects revenue to go up in the third quarter. Hood said the company expects operating margins to increase slightly.
Since the start of the year, the stock is down 14.0% and is on pace for its worst month since 2010. The slump has come alongside a broad selloff in technology stocks as investors brace for rising interest rates.
Christopher Ouimet is a portfolio manager at Logan Capital Management, which has $60 million in Microsoft stock. Most of the high-growth stocks are washed out here.
Ouimet said the rise in the yield for the 10-year Treasury note has nothing to do with whether Microsoft is going to be able to sell Azure contracts.
The Intelligent Cloud segment of Microsoft generated $18.33 billion in revenue. It's a bit higher than the analysts' consensus of $18.6 billion, but it's still 25.5% growth.
The revenue from the cloud services grew at a faster rate than the previous four quarters. According to a CNBC survey of 15 analysts, the expectation was 46%, while StreetAccount had been looking for 45.3% growth.
Microsoft doesn't give out revenue in dollars. Hood said there will be a growth acceleration in constant currency in the current quarter.
The More Personal Computing segment includes Windows, advertising, devices and gaming. The StreetAccount consensus was $16.56 billion.
Microsoft said sales of Windows licenses increased in the fourth quarter. PC shipments had fallen, according to a research firm.
Microsoft launched the Xbox Series X and Series S consoles a year ago. In the previous quarter, hardware revenue for the Xbox surged.
The gaming component of Microsoft became more relevant to investors this month, when the company announced plans to acquire the publisher of Call of Duty for $68.7 billion, the largest deal in Microsoft's 46-year history.
The Productivity and Business Processes segment had revenue of over 15 billion dollars. StreetAccount had expected more than 15 billion. Microsoft's CEO said that the Teams communication app has over 270 million monthly active users.
The company generated over fifteen billion dollars in security revenue, up 45% from the prior year. Security revenue increased more than 40% in 2020.
During the quarter, Microsoft released Windows 11 as the successor to Windows 10 and introduced the $249 Surface Laptop SE for school use that runs a special version of Windows 11.
There are more than one billion monthly active devices running Windows 10 or Windows 11. As of April 2021, there were over 1.3 billion active Windows 10 devices.
We are buyers of Microsoft, says Dan Ives.
All Rights Reserved © 2024
