Microsoft
shares slipped 1% in extended trading on Tuesday after the software maker issued fiscal fourth quarter earnings.
Here’s how the company did:
- Earnings: $2.69 per share, vs. $2.55 per share as expected by Refinitiv.
- Revenue: $56.19 billion, vs. $55.47 billion as expected by Refinitiv.
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Revenue rose 8% year over year in the quarter, which ended on June 30, according to a statement. Growth has come in under 10% for three consecutive quarters for the first time since 2017. Net income totaled $20.08 billion, compared with $16.74 billion in the year-ago quarter.
Microsoft’s Intelligent Cloud segment contributed $23.99 billion in revenue, up 15% and above the $23.79 billion consensus of analysts surveyed by StreetAccount. The unit comprises the Azure public cloud, SQL Server, Windows Server, Visual Studio, Nuance, GitHub and enterprise services.
Azure revenue grew 26% during the quarter, compared with 27% growth in the previous quarter and 40% in the year-ago quarter. Analysts polled by CNBC and by StreetAccount had expected 25% growth from Azure, which competes with Amazon
Web Services and Google
Cloud Platform.
Microsoft doesn’t report quarterly Azure revenue in dollars. But on a conference call with analysts, Microsoft CEO Satya Nadella said “the Microsoft Cloud surpassed $110 billion in annual revenue, up 27% in constant currency, with Azure all up accounting for more than 50% of total for the first time.”
Google parent Alphabet said Tuesday that revenue from its cloud products, which includes Google Workspace productivity apps in addition to Google Cloud Platform, increased by 28%.
Prompted by concerns about a worsening economy, organizations using cloud services from Microsoft, Amazon and Google have taken time to adjust their existing workloads to reduce costs in the past several months. At the same time, these three prominent U.S. cloud providers have trimmed their own expenses.
For the first time since 2016, Microsoft’s research and development costs declined year over year. In May Nadella told employees that the company won’t lift salaries this year. And on July 10 Nadella issued a memo about a fresh round of job cuts separate from the round of layoffs affecting 10,000 workers that kicked off in January.
Microsoft’s Productivity and Business Processes segment that contains Office productivity software, LinkedIn and Dynamics delivered $18.29 billion in revenue, up 10% and more than the StreetAccount consensus of $18.06 billion.
The company’s More Personal Computing business, which contains the Windows operating system, devices, gaming and search advertising, posted $13.91 billion in revenue. That figure indicates a decline of about 4%, yet it still topped the $13.58 billion StreetAccount consensus.
Sales of Windows licenses to device makers decreased by 12%. Consumers and companies rushed to buy PCs after the onset of Covid, making comparisons difficult for the past year. Technology industry researcher Gartner estimated that PC shipments, including Apple’s
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