Microsoft beats on earnings, stock ticks up

Microsoft CEO Satya Nadella speaks at the Digital-Life-Design conference in Munich, Germany, on January 16, 2017.

Tobias Hase | dpa | Getty Images

Microsoft stock rose after the company released better-than-expected earnings results for the fourth quarter of its 2019 fiscal year.

Here are the key numbers:

  • Earnings: $1.37 per share, excluding certain items, vs. $1.21 per share as expected by analysts, according to Refinitiv
  • Revenue: $33.72 billion, vs. $32.77 billion as expected by analysts, according to Refinitiv

On an annualized basis revenue grew 12% in the quarter, which ended on June 30, according to a statement. It’s the ninth straight quarter of double-digit annualized revenue growth, according to FactSet.

Microsoft’s Intelligent Cloud business segment, which includes the Azure public cloud, Windows Server, SQL Server, Visual Studio, GitHub and consulting services, produced $11.39 billion in revenue in the quarter. Analysts polled by FactSet had been expecting $11.02 billion in Intelligent Cloud revenue.

Revenue from Azure increased 64% year over year, the lowest growth rate in at least four years. Microsoft doesn’t disclose exact revenue figures for Azure.

Ahead of earnings, analysts at Bank of America Merrill Lynch, KeyBanc Capital Markets and Stifel signaled they were expecting annualized Azure growth to fall to about 68%. The moderating Azure growth is more about the law of large numbers than falling demand, Stifel analysts led by Brad Reback, who rate Microsoft as a buy, wrote in a note distributed to clients on Sunday.

“Our partner conversations this quarter continued to emphasize Azure’s momentum, which are enabling the company to significantly outpace the overall market’s growth as they see Azure contract commitments seeing significant uplift in terms of contract value and duration,” Goldman Sachs analysts led by Heather Bellini, who have a buy rating on Microsoft stock, wrote in a Thursday note.

The Stifel analysts also highlighted quarterly PC shipment data that IDC released last week, which suggested 4.7% year-over-year growth, partly thanks to increased Intel chip supply. “Net/net, we view these better-than-expected results as a modest tailwind for Microsoft’s Windows business for the quarter,” they wrote.

In the quarter Microsoft acquired Express Logic, announced Azure updates and introduced an Xbox console that has no disc drive.

Shares of Microsoft are up about 33% since the beginning of 2019.

Executives will discuss the results and provide guidance on a conference call with analysts at 5:30 p.m. Eastern time.

This is breaking news. Please check back for updates.

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