Microsoft Reports Earnings and Revenue That Surpassed Analysts’ Estimates For Its Fiscal Second Quarter

Tech titan Microsoft has reported its earnings for its fiscal second quarter and the results beat the expectations of analysts on a large scale. Microsoft reported earnings of $2.48 per share, adjusted, beating the consensus of analysts set at $2.31 per share, according to Refinitiv. Revenue for the quarter was $51.73 billion. Analysts had expected revenue to be $50.88 billion, according to Refinitiv.

According to a statement issued, revenue grew by 20 percent from the previous year compared with almost 22 percent in the previous quarter. Microsoft’s net income soared 21 percent to $18.77 billion.

Microsoft stock initially dropped in extended trading after the company issued a sales forecast that surpassed estimates by analysts, before going green again.

The tech giant recorded $36.77 billion in unearned revenue at the end of the year below a consensus of $36.90, according to StreetAccount. The company mentioned that it expects to recognize 45 percent of its $152 billion in remaining performance obligation over the next year. This is the first time the percentage would be falling below 50 percent since 2017. Although it raised some concerns, especially with investors, Microsoft’s Chief Financial Officer Amy Hood said that demand remains strong across the business’ wings.

Microsoft expects to have revenue of between $48.5 to $49.3 in its fiscal third quarter, according to Amy Hood. On the other hand, analysts already project revenue of $48.23 billion, according to Refinitiv. The financial chief added that the company expects full-year operating margins to increase slightly.

As of the close of Tuesday, Microsoft’s stock was down 14 percent since the New Year began, and experts say it is on the path to its most terrible month since 2010. This follows a trend of a selloff in tech stocks as investors are preparing for increasing interest rates.

Christopher Ouimet, a portfolio manager at Logan Capital Management which owns Microsoft stock worth about $60 million said “We’d be buyers here. We think there’s a lot of noise in the marketplace right now. Most of the high-growth stocks are getting washed out here”. He added that the rise in the yield for the 10-year Treasury note has little to do with if the company will be able to sell Azure contracts.

Microsoft’s Intelligent Cloud Segment which houses the Azure public cloud, GitHub and server products such as Windows Server, recorded growth of 25.5 percent at $18.33 billion in revenue. A consensus by analysts estimated $18.3 billion, according to StreetAccount.

Azure and other cloud services had a growth of 46 percent equaling an expectation of 46 percent according to a CNBC survey of 15 analysts and abover 45.3 percent from a consensus from analysts polled by StreetAccount. In the last four quarters the growth stood at least 50 percent.

Revenue from Microsoft’s More Personal Computing segment which houses Windows, devices, advertising and gaming was up 15.5 percent at $17.47 billion, surpassing an estimate of $16.56 billion according to StreetAccount.

Sales of Windows licenses grew by 25 percent in the last quarter of 2021, the company said. Revenue for Xbox hardware grew 4 percent. The company’s gaming wing which now represents almost 11 percent of its total revenue gained more traction from investors this month.

Its productivity and Business processes which cover Office, Dynamics and LinkedIn had revenue of $15.94 at 19 percent growth. It also beat analysts’ estimates of $15.86 billion, according to StreetAccount.

According to Microsoft’s CEO Satya Nadella, the Teams communication app that comes with Office productivity software subscription now boasts of 270 million monthly active users. Microsoft generated $15 billion in security revenue in 2021, the CEO said. This figure is up almost 45 percent from 2020 when the security revenue increased by over 40 percent.