Microsoft reported quarterly sales and profit that topped analysts’ estimates, rekindling optimism about CEO Satya Nadella’s cloud strategy as more customers shifted to the company’s Internet-based software and services. Shares jumped as much as 4,7%.
Including some adjustments, fiscal fourth-quarter revenue was US$22,6bn, compared with the average analyst estimate for $22,1bn, according to data compiled by Bloomberg.
Revenue from Azure, the company’s corporate cloud platform, doubled in the quarter that ended 30 June.
Profit, excluding certain items, was $0,69/share, Microsoft said Tuesday in a statement. Analysts on average had forecast profit of $0,58.
During the quarter, Microsoft recorded total charges of $1,1bn, related to the restructuring of the phone business it acquired from Nokia and job cuts.
Shares rose as high as $55,60 after closing at $53,09 in New York. The stock has gained 14% in the past year.
Nadella, well into his third year at the helm, has been reorienting Microsoft’s business around cloud and productivity services to fuel growth as traditional software sales shrink.
Annualised revenue from commercial cloud products was more than $12,1bn in the recent quarter, a number that Microsoft has pledged will reach $20bn by fiscal 2018.
The company is relying on the switch to recurring cloud contracts to help make up for weaker one-time corporate software purchases, which are still on course to decline but came in stronger than the company projected in the recent quarter.
Microsoft continues to see businesses moving to the cloud and subscription-based software and services, chief financial officer Amy Hood said via telephone.
Transactional purchases of legacy products were “a little better this quarter,” she said. “There’s a structural trend and shift to the cloud.”
In traditional products, “quarter to quarter, you see some volatility in the results”.
“The PC market was a little better than we had expected three months ago,” she said. “We saw it more specifically in more developed markets.”
Corporate versions of the Office 365 cloud-based productivity software saw revenue increase by 54% in the fiscal fourth quarter, the Redmond, Washington-based company said. Net income was $3,1bn, or $0,39/share, including the Nokia-related charges, compared with a loss of $3,2bn a year earlier.
Revenue in the Intelligent Cloud division rose by 6,6% to $6,7bn, compared to the $6,6bn average estimate of analysts polled by Bloomberg.
In the current period, Microsoft forecast unit sales of $6,1bn to $6,3bn.
Productivity group sales gained 4,6% to $7bn. Analysts had projected $6,6bn. In the fiscal first quarter, the company expects to report $6,4bn to $6,6bn.
Personal Computing division sales, which include Windows and Xbox, fell by 3,7% to $8,9bn in the recent period, slightly better than the $8,9bn average analyst estimate. Revenue will be $8,7bn to $9bn in the current quarter, Microsoft said.
Fourth quarter unearned revenue, a measure of future sales, was $33,9bn. Five analysts polled by Bloomberg expected an average of $30,9bn.
Microsoft’s profit was boosted in the recent period by a more favourable tax rate. Minus the effects of that gain, profit would have been $0,63/share, according to a research note from UBS Group analyst Brent Thill.
Microsoft in June agreed to buy professional networking service LinkedIn Corp. for $26,2bn.
- Reported with assistance from Beth Mellor
