Microsoft Stock Jumps After Earnings Beat.Microsoft Stock Jumps After Earnings Beat. The Cloud Looks Strong.
Microsoft shares traded higher after the company posted better-than-expected financial results for its September quarter, aided by better performance than expected from the company’s cloud computing business.
The software firm posted revenue of $56.5 billion, up 13% from a year ago, and $2 billion ahead of Wall Street estimates.
Profits were $2.99 a share, well ahead of the consensus of $2.65 a share. Importantly, the company’s Azure cloud business grew 28% on a constant currency basis in the quarter, well above the company’s forecast for growth of 25% to 26%; on a GAAP basis Azure grew 29%. The company said Microsoft Cloud revenue was $31.8 billion, up 24%.
Microsoft shares closed up 3.1% Wednesday, the day after the report.
In the quarter, the company posted revenue of $18.6 billion for its Productivity and Business Processes segment, up 13% from a year ago, and ahead of its guidance range of $18 billion to $18.3 billion. That includes 15% growth in Office Commercial products.
Microsoft said its Intelligent Cloud segment, which includes Azure, had revenue of $24.3 billion, up 19%, and well ahead of its forecast range of $23.3 billion to $23.6 billion. Server products and cloud services revenue was up 21%.
Revenue from the More Personal Computing segment was $13.7 billion, up 3%, and nicely above the guidance range of $12.5 billion to $12.9 billion. Search and news advertising revenue excluding traffic acquisition costs rose 10%. One big surprise in the quarter was that Windows OEM revenue—paid by PC manufacturers—was up 4%. The company’s guidance had called for a decline in the low-to-mid teens.
The company said commercial bookings in the quarter were up 14%, or 17% adjusted for currency.
Microsoft repurchased $3.6 billion of common stock in the quarter.
Microsoft shares have surged 36% in 2023, amid investor excitement about the company’s substantial investment in OpenAI, its integration of AI software into Bing, and its rollout of AI Copilot software across its software lineup.