Microsoft reported earnings today, beating Wall Street estimates on EPS, but coming in with a slight miss on revenue. Still, Microsoft was able to show strong growth in its crucial Office and Azure cloud computing segments.
Now, the stock is dipping between 1% and 3% in after-hours trading.
- Earnings per share of $US0.73 versus $US0.70 expected.
- Revenue of $US23.6 billion, versus $US23.62 expected.
Investors were looking for signs of growth in Microsoft’s cloud computing businesses, and they got it.
Revenue from its Productivity and Business Processes unit, which includes the fast-growing Office 365 cloud productivity suite, was up 22% from the same period in 2016, to $US8 billion. There are now 26.2 million consumers subscribed to Office 365.
Plus, this was the first full quarter since Microsoft’s $US26.2 billion LinkedIn acquisition closed in December 2016, giving us our first glimpse into how they’re playing together. LinkedIn operates under that same Productivity and Business Process unit, and contributed $US975 million in revenue but an overall $US386 million loss.
The Intelligent Cloud unit, which encompasses the Microsoft Azure cloud and Windows Server businesses, was up 11% over the same period in 2016 to $US6.8 billion. Azure itself saw revenue grow 93% from the same period last year, but Microsoft doesn’t disclose specific financials for that service.
More Personal Computing, which includes Windows, was down 7% year-over-year — a dip that Microsoft blames on its struggling phone business. The business of selling Windows to PC manufacturers was up 5%, and other Windows sales and services were up 6%. Surface revenue was down 26% year-over-year, while gaming revenue is up 4%.
Get the latest Microsoft stock price here.