Microsoft shares moved 3% lower in extended trading Tuesday after the software maker reported fiscal third-quarter earnings that came in stronger than analysts had expected. The company’s operating margin narrowed somewhat as cloud became a larger part of its business.
Here’s how the company did:
Earnings: $1.95 per share, adjusted, vs. $1.78 per share as expected by analysts, according to Refinitiv.Revenue: $41.71 billion, vs. $41.03 billion as expected by analysts, according to Refinitiv.
The software and hardware maker posted 19% annualized revenue growth for the quarter, which ended March 31, according to a statement. That’s the biggest quarterly increase the company has posted since 2018, thanks in part to gains in PC sales resulting from coronavirus-driven shortages last year.
The company said its Azure public cloud, which competes with market leader Amazon Web Services, grew 50%, faster than the 46% growth analysts had expected, according to a CNBC review of 14 equity research notes. In the prior quarter Azure revenue grew 50%. Microsoft does not disclose Azure revenue in dollars.
Microsoft’s Intelligent Cloud segment delivered $15.12 billion in revenue, which was up 23% year over year and above the FactSet consensus estimate of $14.92 billion. Intelligent Cloud contains Azure, Windows Server, SQL Server, Visual Studio, GitHub and Enterprise Services.
The Productivity and Business Processes segment, containing Office, Dynamics and LinkedIn, contributed $13.55 billion in revenue, up 15% and more than the $13.49 billion FactSet consensus. The Teams chat and calling app reached 145 million daily active users, up from 115 million in October, Microsoft CEO Satya Nadella said on a conference call with analysts.
The company’s More Personal Computing unit, which includes Windows, gaming, devices and search, came up with $13.04 billion in revenue. That was up almost 19% and higher than the $12.55 billion consensus. Technology research company Gartner estimated earlier this month that PC manufacturers shipped nearly 70 million units in the quarter, 32% more than in the year-ago quarter, the fastest growth since Gartner started tracking the PC market in 2000. That benefits Microsoft’s sales of Windows licenses to PC makers, which were up 10%.
The outcome was greater