Microsoft Just Had its Biggest Revenue Growth in Years

Microsoft shares were moving lower about 3% in after-hours trading on Tuesday despite the software giant announcing fiscal third quarter earnings and quarterly revenue guidance that exceeded expectations.

For the third quarter, Microsoft reported earnings of $1.95 a share adjusted. This was better than the $1.78 a share that had been expected by analysts, per Refinitiv.

Revenue at $41.71 billion was higher than the $41.03 billion that was expected by analysts, per Refinitiv.

Microsoft also posted 19% annualized revenue growth for the quarter, which ended on March 31st. This was the biggest quarterly increase for the tech company since 2018.

The company also revealed that its Azure public cloud grew 50%, which was faster than the 46% growth analysts had expected, according to a CNBC review of 14 equity research notes. Azur also had seen a revenue growth of 50% in the prior quarter. The company does not disclose Azure’s revenue in dollars.

The company’s Cloud segment saw $15.12 billion in revenue, a growth of 23% YOY and ahead of the FactSet consensus estimate of $14.92 billion.

The Productivity and Business Processes segment, which has Office, Dynamics and LinkedIn, had seen $13.55 billion in revenue, up 15% and more than the $13.49 billion FactSet consensus. The Teams chat and calling app had hit 145 million daily active users, up from 115 million in October, Microsoft CEO Satya Nadella revealed.

Looking ahead, the company’s CFO, Amy Hood, has said that Microsoft is expecting $43.6 billion to $44.5 billion in revenue in the fiscal
fourth quarter. At the middle of the range that would represent 16% growth, more than the $42.98 billion consensus estimate among analysts polled by Refinitiv.

The PC market endured “significant ongoing constraints in the supply chain,” Hood said on Tuesday.

Microsoft also shared that in the third quarter it had won a U.S. Army contract worth up to $21.9 billion over a decade for augmented reality headsets based on its latest HoloLens device.

Microsoft shares are up 18% year to date.

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