Microsoft stock rose as much as 6% in extended trading on Tuesday after the company reported fiscal second-quarter earnings Azure cloud revenue growth and quarterly revenue guidance that exceeded analysts' expectations.
Here's how the company did:
- Earnings: $2.03 per share, adjusted, vs. $1.64 per share as expected by analysts, according to Refinitiv.
- Revenue: $43.08 billion, vs. $40.18 billion as expected by analysts, according to Refinitiv.
Microsoft revenue grew 17% on an annualized basis, up from 12% growth in the prior quarter, according to a statement.
With respect to guidance, Microsoft sees $40.35 billion to $41.25 billion in fiscal third-quarter revenue. The middle of the range, at $40.8 billion, implies 16.5% growth and is higher than the $38.70 billion consensus among analysts polled by Refinitiv.
In the fiscal second quarter, revenue from Microsoft's Intelligent Cloud business segment totaled $14.60 billion. The segment includes the Azure public cloud, server products such as Windows Server, GitHub and enterprise services. Revenue was up 23% year over year and above the $13.77 billion consensus among analysts polled by FactSet.
Microsoft said Azure revenue grew 50%. Analysts had expected around 42% growth. Microsoft doesn't disclose Azure revenue in dollars.
The More Personal Computing segment, containing Windows, gaming, devices and search advertising, generated $15.12 billion in revenue, which was up 14% and came in higher than the $13.47 billion FactSet consensus estimate. Technology industry research company Gartner estimated that PC shipments, excluding Chromebooks, grew 10.7% in the quarter.
The segment's operating margin narrowed to 34.6% from 40% following the introduction of two Xbox video-game consoles in November. Analysts polled by FactSet had expected a 26% margin from the segment. The company now has 18 million people subscribing to the Xbox Game Pass service for accessing dozens of games, up from 15 million in September.
The Productivity and Business Processes segment, including Office, Dynamics and LinkedIn, produced $13.35 billion in revenue, which was up 13% and more than the $12.89 billion consensus.
In the quarter Microsoft released $500 Xbox Series X and $300 Series S consoles, along with a small version of its Surface Laptop PC called the Surface Laptop Go. The company also said some of its source code had been accessed after the company had detected malicious SolarWinds software in its environment.
Amy Hood, Microsoft's finance chief, said during a conference call with analysts that she expects double-digit revenue growth and "healthy operating-margin expansion" for the full fiscal year, which ends on June 30, even after a change in the useful life of servers and savings related to the coronavirus. She said gaming revenue would grow around 40% in the fiscal third quarter, down sequentially from 51%.
On Tuesday Microsoft stock closed at $232.33 per share, posting a new all-time high for the first time since September. Excluding the after-hours move, Microsoft shares are up around 5% since the start of 2021, while the S&P 500 index is up about 3%.
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