Microsoft’s fiscal third-quarter results and quarterly guidance beat analysts’ expectations, sending shares up 9% in extended trading on Tuesday.
During a conference call with analysts, Microsoft’s chief financial officer Amy Hood projected revenue between $54.85 billion and $55.15 billion for the company’s fiscal fourth quarter.
Microsoft Exceeds Analyst Expectations
The midpoint of the range, $55.35 billion, indicates growth of 6.7%, exceeding the consensus estimate of $54.84 billion among analysts polled by Refinitiv. Hood is optimistic regarding artificial intelligence.
The net income increased by 9 percent to $18.3 billion, or $2.45 per share, from $16.73 billion, or $2.22 per share, in the prior year. According to a statement, revenue increased 7% to $52.86 billion from $49.36 billion the previous year.
The Intelligent Cloud business segment of Microsoft generated $22,08 billion in revenue. This segment includes the Azure public cloud, Enterprise Services, SQL Server, and Windows Server. This is an increase of 16% and is greater than the $21.94 billion estimated by analysts.
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Business Process Generates $17.52 Billion
Compared to the previous quarter, revenue from Azure and other cloud services increased by 27%, compared to 31% growth. Analysts polled anticipated average growth of 26.5%, while those consulted anticipated 27.2%.
The Productivity and Business Process segment, which includes Dynamics, LinkedIn, and Office, generated $17.52 billion in revenue, an 11% increase over the $17.0 billion StreetAccount consensus estimate.
Microsoft reported that an increase in revenue per user contributed to a 14% increase in revenue from commercial Office 365 productivity software subscriptions.
The More Personal Computing segment, which includes Bing, Windows, Surface, and Xbox, generated $13.26 billion in revenue, down 9% but exceeding the StreetAccount consensus of $12 billion. Nadella said that the number of people using Bing on a daily basis has surpassed 100 million and that revenue from gaming subscriptions is on track to hit $1 billion.
Higher channel inventory levels negatively impacted sales of Windows operating system licenses to device manufacturers, which fell by 28%. Gartner estimates that PC shipments have decreased by 30%. Hood stated that the demand for PCs was somewhat higher than anticipated by management.
Microsoft announced a new multibillion-dollar investment in OpenAI during the quarter and stated that it would use OpenAI’s artificial intelligence models for a new version of its Bing search engine and enhancements to its Microsoft 365 productivity software.
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