Microsoft CEO Satya Nadella speaks at a fireside chat with the CEO of German carmaker Volkswagen (unseen) where they unveiled their cooperation for the Volkswagen Automotive Cloud in Berlin on February 27, 2019.
Tobias Schwarz | AFP | Getty Images
Microsoft shares fell as much as 3% in after-hours trading on Wednesday after the company reported better-than-expected fiscal fourth-quarter earnings that exceeded analysts’ expectations.
Here’s how the company did:
- Earnings: $1.46 per share, adjusted, vs. $1.34 per share as expected by analysts, according to Refinitiv.
- Revenue: $38.03 billion, vs. $36.50 billion as expected by analysts, according to Refinitiv.
Microsoft’s overall revenue grew 13% on an annualized basis in the quarter, which ended on June 30, according to a statement. Revenue went up 15% in the prior quarter.
The company’s earnings were pulled down slightly by a shift in Microsoft’s retail strategy. On June 26 Microsoft said it would close its physical stores, resulting in a one-time charge of $450 million, or 5 cents per share, before taxes.
Microsoft’s Intelligent Cloud business segment, which includes the Azure public cloud, Windows Server, SQL Server, GitHub and enterprise services, posted $13.37 billion in revenue, up 17% year over year and above the $13.11 billion consensus among analysts polled by FactSet. Azure revenue growth slowed to 47% from 59% in the previous quarter. Microsoft does not disclose Azure revenue in dollars, but did say its commercial cloud business surpassed $50 billion in revenue for the fiscal year.
The Productivity and Business Processes unit, which contains Office, Dynamics and LinkedIn, contributed $11.75 billion in revenue. That’s up 6% and less than the FactSet consensus of $11.91 billion. LinkedIn’s revenue grew 10%, the slowest growth since 2016 as Microsoft closed the $27 billion acquisition.
The company’s More Personal Computing unit, including Windows, Surface and Xbox, had $12.91 billion in quarterly revenue, which is 14% and higher than the $11.48 billion FactSet consensus. Xbox content and services revenue was up 65% with record engagement as people stayed from home and played games.
In the quarter Microsoft disclosed a plan to shut down its Mixer video game streaming service, and announced the acquisitions of CyberX, Metaswitch and Softomotive. Industry research group Gartner estimated that PC shipments, a factor in Microsoft’s Windows sales, returned to year-over-year growth in the quarter, following a decline in the first quarter in connection with the pandemic.
With respect to guidance, analysts polled by Refinitiv are looking for $35.91 billion in revenue for the fiscal first quarter.
Executives will discuss the fiscal fourth-quarter results on a conference call with analysts starting at 5:30 p.m. Eastern time.
Microsoft shares are up about 34% since the beginning of the year.
This is breaking news. Please check back for updates.
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