Microsoft cloud services growth boosts quarterly sales, earnings
WASHINGTON: Microsoft Corp. reported quarterly sales and earnings that topped analysts’ projections, fueled by robust growth in cloud-services demand. Shares jumped as much as 6.9% in late trading.
Revenue in the third quarter, which ended on March 31, rose 18% to $49.4 billion, the Redmond, Washington-based software maker said Tuesday in a statement. Net income rose to $16.7 billion, or $2.22 a share. That compared with average analyst projections for $49 billion in sales and $2.19 a share in earnings, according to a Bloomberg survey.
Chief executive officer Satya Nadella has built up the company’s two main cloud businesses, Azure and internetbased versions of Office, into steady growth engines that help insulate Microsoft from supplychain weakness that hurt the availability of PCs and Xbox consoles. Azure, behind only Amazon.com Inc. in the market for cloud infrastructure services, computing power and storage delivered via the internet, posted 46% growth, matching the rate in the second quarter and meeting estimates.
“Investors were banking we’d get back on a growth trajectory trend for Azure, as opposed to the deceleration we had in the second quarter,” said Dan Morgan, a senior portfolio manager at Synovus Trust Co., which owns shares of Microsoft.
Microsoft shares alternated between gains and losses in extended trading following the report, eventually soaring as high as $289 as investors digested the company’s results. The stock had declined 3.7% to $270.22 at Tuesday’s close in New York.
While the shares jumped 51% in 2021, they have fallen 20% so far this year amid a rout in large technology stocks.
Chief financial officer Amy Hood said Xbox hardware revenue, which rose 14%, came in ahead of her expectations, as Microsoft has been able to get more console supplies into stores. Revenue from Xbox content and services climbed 4% in the recent period. The console has gained market share in each of the past two quarters, Nadella told analysts.