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Microsoft CEO Satya Nadella, left, departs federal court in Washington, DC, on October 2, 2023.
Nathan Howard | Bloomberg | getty images
Microsoft Shares fell 2% in extended trading Tuesday after the software maker released fiscal second-quarter results that beat analysts’ estimates and a light quarterly revenue outlook.
Here’s how the company performed compared to analysts’ consensus in a survey conducted by LSEG, formerly known as Refinitiv:
- Earning: $2.93 per share, vs. $2.78 per share expected
- Income: $62.02 billion, vs. $61.12 billion expected
As for guidance, Microsoft called for fiscal third quarter revenue between $60 billion and $61 billion, or the middle of the range, $60.50 billion. Analysts polled by LSEG had expected $60.93 billion. But based on the consensus among analysts surveyed by StreetAccount, the company is projected to have lower-than-expected revenue and operating expenses during the quarter.
Microsoft’s revenue increased 17.6% year-on-year in the quarter ended December 31, according to a statement. Net income, $21.87 billion, or $2.93 per share, increased from $16.43 billion, or $2.20 per share.
The company’s Intelligent Cloud segment posted revenue of $25.88 billion, 20% above the consensus of $25.29 billion among analysts surveyed by StreetAccount. The group includes Azure cloud infrastructure, SQL Server, Windows Server, Nuance, GitHub, and enterprise services.
In that segment, revenue from Azure and other cloud services grew 30%. Analysts polled by CNBC had expected growth of 27.7%, and the StreetAccount consensus was 27.5%. Last quarter’s metric was 29%. Six points of growth for Azure and other cloud services were tied to artificial intelligence, Microsoft finance chief Amy Hood said on a conference call with analysts.
Microsoft CEO Satya Nadella said on the call that the number of commitments to spend on Azure increased to more than $1 billion during the quarter.
Revenue from the Productivity and Business Processes unit, including office productivity software, LinkedIn and Dynamics, totaled $19.25 billion. That was 13% higher and above the $18.99 billion StreetAccount consensus.
The More Personal Computing segment contributed $16.89 billion in revenue, up nearly 19% and slightly above the StreetAccount consensus of $16.79 billion. This section includes Windows, Surface, Bing, and Xbox.
During the second quarter of the fiscal year, Microsoft completed the acquisition of video game publisher Activision Blizzard, its largest deal to date. The company also announced custom cloud chips and began selling the $30 monthly Copilot AI add-on to Microsoft 365 productivity software bundles. But Nadella and Hood did not share the number of customers who have started paying for the Copilot service.
“While it’s still early days for Microsoft 365 Copilot, we’re excited by the adoption so far and expect to see revenue growth over time,” Hood said.
And layoffs continued in the quarter. Microsoft’s LinkedIn subsidiary cut about 700 jobs in October, on top of the 10,000 it announced at the beginning of the year. Last week, Microsoft said it was laying off about 1,900 employees, or about 9% of the workforce in its gaming unit following the Activision deal.
Despite the after-hours move, Microsoft shares have gained about 9% so far in 2024, while the S&P 500 index has gained 3% during that period.
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