Microsoft shares rose 5% in extended trading on Wednesday after the company reported better-than-expected quarterly results, driven by 48% growth in its Azure cloud infrastructure business.
Here’s how the company fared relative to LSEG consensus:
- Earnings per share: $4.89 adjusted vs. $4.73 expected
- Revenue: $92.28 billion vs. $90.69 billion expected
Microsoft’s revenue grew 19% year over year in the quarter, which ended on Sept. 30, according to a statement.
Net income of $36.63 billion, or $4.92 per share, increased from $27.75 billion, or $3.72 per share, in the same quarter of last year. Adjusted earnings exclude a roughly $200 million impact from investing in OpenAI.
Free cash flow of $18.63 billion moved 27% lower. Cloud rival Alphabet showed negative free cash flow for the quarter, while Meta said last week that it went free cash flow negative.
Microsoft has been rapidly building out data center infrastructure to accommodate artificial intelligence demand. The company had $45.2 billion worth of capital expenditures and finance leases during the quarter, up about 30%. Analysts surveyed by StreetAccount had projected $50.67 billion.
For the first time in an earnings statement, Microsoft disclosed revenue from its Azure cloud in dollars, at $33.17 billion in the quarter. Analysts polled by StreetAccount had expected $32.32 billion, which would have represented growth of more than 44%. The growth rate in the June quarter was 42%.
Microsoft reported results under two operating segments for the first time since 1998. For the past 11 years it had three segments that divided up its Azure, Office and Windows businesses.
Agents and Infra gave Microsoft $76.80 billion of its revenue, which was up almost 25% and more than the $75.63 billion consensus among analysts polled by StreetAccount. The segment contains Azure, along with Microsoft 365 cloud products, productivity and server licensing, industry solutions and frontier and support services.
Revenue from Microsoft 365 cloud services came to $27.78 billion, above the $27.37 billion consensus.
The other new segment, Devices and Consumer, contributed $15.48 billion in revenue, down 3% but higher than StreetAccount’s consensus of $15.05 billion. It includes search and advertising, Xbox, devices and Windows operating system licenses sold to device makers.
This story is developing. Please check back for updates.
WATCH: What to expect from Microsoft
About The Author
