Microsoft Stock Is Falling Despite Strong Earnings

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Microsoft shares are trading higher precocious Tuesday aft the bundle elephantine posted better-than-expected results for its latest quarter, and provided upbeat guidance for the September quarter.

For the fiscal 4th fourth ended June 30, Microsoft posted gross of $46.2 billion, up 21% from a twelvemonth agone and up of analysts’ forecast of $44.1 billion. Profits were $2.17 a share, beating the Wall Street statement of $1.90 a share.

On a telephone with analysts, Microsoft CFO Amy Hood said that the institution sees “healthy treble digit gross growth” for the June 2022 fiscal year.

Microsoft exceeded its ain forecast successful each 3 operating segments successful its latest quarter.

Productivity and Business Processes, which includes Office, had gross of $14.7 billion, up 25%, oregon 21% successful changeless currency, up of the guidance scope of $13.8 cardinal to $14.05 billion. Constant currency removes fluctuations owed to changes successful section currency prices.

Intelligent Cloud revenue, including Azure, was $17.4 billion, up 30%, oregon 26% successful changeless currency, beating the guidance scope of $16.2 cardinal to $16.45 billion.

Revenue from the More Personal Computing segment, which includes Windows, Xbox, and Surface, was $14.1 billion, up 9%, oregon 6% successful changeless currency, which was supra the forecast scope of $13.6 cardinal to $14 billion.

Revenue from Azure, the company’s nationalist unreality business, was up 51% from a twelvemonth ago, oregon 45% successful changeless currency. (The institution does not supply a dollar fig for Azure revenue.)

Meanwhile, gross was up 46% astatine LinkedIn, with advertisement gross connected the level eclipsing $1 cardinal for the archetypal time. LinkedIn is present generating much than $10 cardinal successful yearly revenue. Xbox hardware was up 172% successful the quarter, driving 11% wide gross maturation from gaming, with a 4% driblet successful Xbox contented and services.

Revenue was up 53% for hunt advertizing excluding postulation acquisition costs, up 20% for Office commercialized products, and up 25% for Office 365. Server products and services were up 34%.

“Our results amusement that erstwhile we execute good and conscionable customers’ needs successful differentiated ways successful ample and increasing markets, we make growth, arsenic we’ve seen successful our commercialized cloud—and successful caller franchises we’ve built, including gaming, security, and LinkedIn, each of which surpassed $10 cardinal successful yearly gross implicit the past 3 years,” Microsoft CEO Satya Nadella said successful a statement.

Hood added successful a connection that the institution saw 30% year-over-year maturation successful commercialized bookings, with 36% maturation successful commercialized unreality revenue, which includes Azure, Office 365 and different unreality software, to $19.5 billion. 

Microsoft besides said it present has astir 250 cardinal monthly progressive users for its Teams cloud-based communications software.

The institution repurchased $7.2 cardinal worthy of banal successful the quarter.

On the expert call, Hood, the CFO, projected September 4th gross that was good up of erstwhile Street estimates.

For the Productivity and Business Processes segment, she sees gross of betwixt $14.5 cardinal and $14.75 billion, up of the aged Street estimation of $14.1 billion. For Intelligent Cloud, she sees gross ranging from $16.4 cardinal to $16.65 billion, good up of the Street astatine $15.7 billion. For More Personal Computing, Hood expects gross to scope from $12.4 cardinal to $12.8 billion, astir successful enactment with the Street astatine $12.7 billion.

At the apical of the scope for each category, gross would beryllium $44.2 billion, up of the Street statement astatine $42.5 billion.

For fiscal 2021, Microsoft had gross of $168.1 billion, up 18% from a twelvemonth ago, with profits of $8.05 a share, up from $5.76 a stock successful fiscal 2020.

After initially trading little aft hours, Microsoft shares are present up 1% successful precocious trading.

Write to Eric J. Savitz astatine eric.savitz@barrons.com

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