Microsoft (MSFT) Q3 2022 results

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Microsoft CEO Satya Nadella speaking at the DLD (Digital-Life-Design) conference in Munich, Germany on January 16, 2017.

Tobias Hase | dfa | wedding ring | Getty Images

Microsoft shares fell 1% in extended trading on Tuesday, even as the software maker reported fiscal third-quarter results that beat analysts’ expectations.

Here’s how the company did it:

  • Earnings: $2.22 per share, adjusted, versus $2.19 as expected by analysts, according to Refinitiv.
  • Revenue: $49.36 billion, versus $49.05 billion as forecast by analysts, according to Refinitiv.

Microsoft’s revenue grew 18% year over year in the quarter that ended March 31, compared with 20% in the prior quarter, according to a statement. Sales and marketing spending totaled $5.6 billion, up 10% from a year ago and the fastest growth in more than three years.

The company’s Intelligent Cloud segment, which contains Microsoft’s Azure public cloud for application hosting, as well as SQL Server, Windows Server and enterprise services, generated $19.05 billion in revenue. That’s up 26% and above the $18.90 billion consensus among analysts polled by StreetAccount.

Revenue from Azure and other cloud services jumped 46% in the quarter, compared to 46% growth in the prior quarter. The expectation was 45.3%, according to a CNBC survey of 13 analysts, while analysts polled by StreetAccount were looking for growth of 43.6%.

Microsoft’s Productivity and Business Processes segment, which contains Office productivity software, LinkedIn and Dynamics, reported revenue of $15.79 billion in the quarter, up about 17% and slightly higher to StreetAccount’s consensus estimate of $15.75 billion. Microsoft increased the prices of some Office 365 productivity software subscriptions during the quarter.

The more personal computing segment, which includes Windows, Xbox, search advertising and Surface, generated $14.52 billion in revenue, up 11% and more than the StreetAccount consensus of $14.27 billion. dollars.

Microsoft said revenue from Windows license sales to PC makers increased 11% in the quarter. Microsoft had forecast high single-digit growth in January. Research firm Gartner estimated that PC shipments fell 6.8% in the quarter, marking the biggest decline since the first quarter of 2020, following a pandemic-fueled market expansion. Excluding PCs running Google’s Chrome OS operating system, which has become more popular during Covid, shipments rose 3.9%.

Revenues from security products and services fall under each of Microsoft’s three segments. In January, Microsoft said its security revenue grew nearly 45% in 2021, faster than any other major product category. The company first disclosed financial figures for its security business last year, surprising some observers.

During the quarter, Microsoft announced a plan to acquire video game publisher Activision Blizzard for $68.7 billion, the largest transaction in Microsoft’s 47-year history. Microsoft also completed its acquisition of Nuance Communications and set out an expansion strategy in healthcare, a sector Nuance is focused on. Nuance took a dime off Microsoft’s quarterly profit but added $111 million in revenue.

Excluding after-hours movement, Microsoft stock is down 19% since the start of 2022, underperforming the S&P 500 index, which is down about 12% over the same period.

Executives will discuss the results with analysts and provide guidance on a conference call beginning at 5:30 p.m. ET.

This is breaking news. Please check for updates.

LOOK: “We see about a thousand vulnerabilities patched by Microsoft each year,” says Weingarten of SentinelOne.

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