Microsoft sales and profit top estimates
WASHINGTON: Microsoft Corp. reported quarterly sales and profit that topped analysts’ estimates for a ninth straight quarter, lifted by booming cloudcomputing demand. This time, investors weren’t satisfied.
Sales in the period ended March 31 rose to $41.7 billion, the software maker said Tuesday in a statement. That compared with the $41.1 billion average estimate of analysts polled by Bloomberg. Still, projections ranged as high as $41.9 billion, with some analysts and investors saying recent gains in the stock had swollen expectations beyond the consensus numbers.
The software giant’s market capitalization flirted with $2 trillion the past few days as shares soared, buoyed by enthusiasm for the company’s growing cloud-services business and the strongest quarter for personalcomputer shipments in more than two decades. That meant even though sales climbed a robust 19% and Azure cloud revenue rose at the same clip as last quarter, some Microsoft investors were looking for a bigger blockbuster.
“Expectation creep has set in,” wrote Piper Sandler analyst Brent Bracelin in a note to clients ahead of the results. “Investor sentiment remains universally bullish.” Microsoft shares dropped about 2.5% in extended trading following the report.
Azure, which sells internetbased computing services to corporations, saw sales increase by 50%, matching the gain posted in the previous quarter.
Net income in the recent period was $15.5 billion, or $2.03 a share, Microsoft said. Analysts had predicted $1.78. The results included a tax benefit related to a decision by the Supreme Court in India. The revenue gain marked the 15th straight quarter of double-digit growth, and the company has exceeded analysts’ projections for revenue and earnings in each period since the third quarter of fiscal 2019, according to Bloomberg data.
Commercial cloud sales in the fiscal third quarter rose 33% to $17.7 billion, Microsoft said. Gross margin in that segment widened 3 percentage points to 70%, mostly due to an accounting change, the company said in a slide posted on its website. Microsoft said revenue in the Intelligent Cloud unit rose to $15.1 billion.