Microsoft Delivers Stellar Q2 Results Beating on Earnings and Revenue

Tech giant Microsoft reported its second quarter financial report this week and revealed that it surpassed estimates on both the top and bottom lines.

The company also delivered an optimistic forecast for the fiscal third quarter.

While the stock initially dropped in extended trading, shares turned positive after the company issued a sales forecast that also exceeded estimates.

For the quarter Microsoft reported earnings per share of $2.48, adjusted. Analysts according to Refinitiv had been waiting for earnings of $2.31 a share, adjusted.

Revenue at $51.73 billion came in ahead of the $50.88 billion that was expected by analysts, per Refinitiv.

Revenue saw a 20% jump from a year earlier and was compared to a nearly 22% jump in the previous quarter. Net income also ballooned up 21% to hit $18.77 billion.

The company however had $36.77 billion in unearned revenue at the end of the year, below the StreetAccount consensus of $36.90 billion. Microsoft said it expects to recognize 45% of its $152 billion in remaining performance obligations over the next year, the first time that percentage has slipped below 50% since at least 2017.

Amy Hood, Microsoft’s finance chief said the company expects revenue of $48.5 billion to 49.3 billion in the fiscal third quarter. This came ahead of the $48.23 billion Refinitiv consensus.

Hood said the company now expects full-year operating margins to widen slightly.

“We’d be buyers here,” said Christopher Ouimet, a portfolio manager at Logan Capital Management remarked. He added, “We think there’s a lot of noise in the marketplace right now. Most of the high-growth stocks are getting washed out here.”

Revenue from Azure and other cloud services grew 46%, ending a streak of four quarters at or above the 50% mark.

During the quarter, Microsoft released Windows 11 as the successor to Windows 10 and introduced the $249 Surface Laptop SE for school use that runs a special version of Windows 11.

“There are now more than 1.4 billion monthly active devices running Windows 10 or Windows 11,” CEO Satya Nadella said. That compares with over 1.3 billion active Windows 10 devices as of April 2021.

As of the close on Tuesday, the stock is down 14% since the start of 2022

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.