Microsoft Shares Edge Higher On Fiscal First Quarter Earnings Report

Tech giant Microsoft reported its first quarter financial results on Tuesday, beating revenue expectations with 22% growth.

Shares were up higher about 2% in extended trading on Tuesday after Wall Street absorbed earnings that exceeded analysts’ estimates.

For the first quarter Microsoft reported earnings per share of $2.27, coming in 20 cents higher than the $2.07 that was expected by analysts according to Refinitiv.

Revenue at $45.32 billion was also higher than the $43.97 billion as expected by analysts per Refinitiv.

Total company revenue grew about 22% YOY said the company. This was the fastest growth since 2018. Revenue had grown 21% in the previous quarter.

Net income at $20.5 billion represented a staggering 48% growth.

The company’s Intelligent Cloud segment, which comprises the Azure public cloud, enterprise services, GitHub, SQL Server, System Center, Visual Studio and Windows Server, had brought in $16.96 billion in revenue, which was up 31% year over year. That’s more than the $16.51 billion consensus estimate among analysts polled by StreetAccount.

Microsoft said Azure and other cloud services grew 50% year over year in the quarter while a CNBC survey of 12 analysts had expected growth of just 47%.

Amy Hood, the company’s finance chief, called for Azure growth to be relatively stable in constant currency. This time around Azure growth was 48% in constant currency, above the 45% figure in the prior quarter.

Hood remarked, “We expect healthy broad-based growth in our Azure consumption business consistent with recent trends and our user business, while continuing to benefit from Microsoft 365 momentum to see a moderation of growth rates given the size of the install base.”

She also called for an acceleration in Windows sales to device manufacturers in the fiscal second quarter, with a growth rate reaching the “low to mid teens.”

In the quarter, Microsoft introduced new Surface PCs, said it was acquiring security start-ups CloudKnox and RiskIQ and announced plans to increase the cost of commercial Office 365 subscriptions.

Looking ahead, Microsoft called for $50.15 billion to $51.05 billion in fiscal second-quarter revenue. This would be about $50.60 billion at the middle of the range, exceeding the $48.92 billion consensus among analysts polled by Refinitiv.

Microsoft shares have risen 39% this year so far.

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