Microsoft Shares Jump on 15% Sales Jump in Q3

Posted on

Tech giant Microsoft saw its shares rise on Wednesday after the company reported third quarter financial results that revealed a 15% jump in sales.

The company also said that the coronavirus had “minimal” impact on its revenue.

Microsoft reported its results after the market closed and beat on both the top and bottom line. Shares soared as much as 5% in extended hours. The growth in sales was fueled by the company’s cloud business. Growth from its Azur cloud software however dropped to 59%.

For the third quarter, earnings were $1.40 a share adjusted. Revenue was $35.02 billion while net income rose 22%
to $10.8 billion. Analysts had expected $1.26 in adjusted earnings a share and $33.66 billion in revenue.

Microsoft said the coronavirus “had minimal net impact on the total company revenue” in the quarter and that “effects of COVID-19 may not be fully reflected in the financial results until future periods.”

Looking forward, Microsoft expects $35.85 billion to $36.80 billion in fiscal fourth-quarter revenue, or $36.33 billion in the middle of the range. The forecast is higher than the $36.42 billion Refinitiv consensus estimate.

Chief Financial Officer Amy Hood went into detail on the effects Microsoft expects from the COVID-19 pandemic moving forward. She stated, “In our consumer business, we expect continued demand across Windows OEMs, Surface and Gaming to shift to remote work play and learn from home. Our outlook assumes this benefit remains through much of Q4 though growth rates may be impacted as stay at home guidelines ease.”

She added, “We assume advertising spend levels for March do not improve in Q4, which will impact search and LinkedIn. In our commercial business, our strong position in durable growth markets means we expect consistent execution on a large annuity base with continued usage and consumption growth. … However, we expect the sales dynamic for March to continue including a significant impact in LinkedIn from the weak job market and increased volatility in new, longer lead-time-deal closures.”

Hood also said that Microsoft expects “a material sequential increase” in capital-expenditure spending in the current quarter “to support growing usage and demand for our cloud services.”

Disclaimer: We have no position in Microsoft Corporation (NASDAQ: MSFT) and have not been compensated for this article.

Daily updates