Microsoft Earnings, Revenue Beat in Q4, But Cloud Revenue Slows

This post was originally published on this site – Microsoft (NASDAQ:MSFT) on Wednesday reported fourth-quarter earnings and revenue that beat consensus estimates, but signs of slowing quarterly cloud revenue weighed on sentiment.

Microsoft shares lost 2.8% in after-hours trade following the report.

The company announced earnings per share of $1.46 on revenue of $38.03B. Analysts polled by anticipated EPS of $1.38 on revenue of $36.43B.

Revenue in productivity and business processes was up 6% to $11.8 billion and its intelligent cloud business, which includes cloud business Azure, grew 17% to $13.4 billion.

The company said Azure grew 47% in the quarter, down from a growth rate of 59% in the third quarter of last year.

“In the productivity and business processes and Intelligent cloud segments, cloud usage and demand increased as customers continued to work and learn from home. Transactional license purchasing continued to slow, particularly in small and medium businesses, and LinkedIn (NYSE:LNKD) was negatively impacted by the weak job market and reductions in advertising spend,” Microsoft said.

Revenue in personal computing was up 14% to $12.9 billion as the Windows operating system, surface, and gaming benefited from “increased demand to support work-, play-, and learn-from-home scenarios, while Search was negatively impacted by reductions in advertising spend,” it added.

Microsoft shares are up 34% from the beginning of the year, still down 2.08% from its 52 week high of $216.35 set on July 9. They are outperforming the S&P Global (NYSE:SPGI) 100 which is up 3.29% from the start of the year.

“Microsoft’s earnings momentum will continue as it expands its market share in the cloud-computing market while maintaining its leading position with legacy software products such as Windows and Office,” analyst Haris Anwar said.”The company’s diversified business model makes it a great defensive play for investors, while helping the company achieve sustained, double-digit growth in revenue, earnings per share and free cash flow. The cloud computing segment alone is big enough to drive the company’s revenue growth for the next three to four years.”

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