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Microsoft Beats Estimates as Azure Grows 48%

Microsoft beat consensus on revenue and earnings per share as Azure grew 48%, and the shares rose after hours. Doubled capital spending and guidance on tonight's call are the counterweights.

Microsoft (NASDAQ: MSFT), the software and cloud computing group, beat analyst consensus on revenue and earnings per share for its fiscal first quarter, and its shares rose 4.2% in after-hours trading. The results were released today after the US close.

The shares closed at $531.01 today, down 0.06%, before the release.

MSFT.US

Revenue for the quarter to the 30th of September rose 19% to $92.3bn from $77.7bn a year earlier. Microsoft Cloud revenue reached $63.9bn, up 30%, with growth accelerating. Azure, its cloud computing platform, grew 48%.

Commercial remaining performance obligation, the backlog of signed customer contracts, rose 73% to $677bn.

The consensus averages 38 analysts for revenue and 25 for earnings per share. The EPS consensus is labelled “GAAP Normalized”, so it is set against Microsoft’s non-GAAP $4.89, which excludes OpenAI investment effects: a $207m net gain this quarter, against a $3.1bn net loss a year earlier.

ActualConsensusYear earlier
Revenue$92.3bn$90.74bn$77.7bn
EPS (non-GAAP)$4.89$4.72$4.13

Revenue was about 1.7% ahead, or $1.54bn. EPS was 17 cents, about 3.6% above consensus and above the top of the analyst range, $4.86.

Microsoft’s Amy Hood said: “We delivered a strong start to the fiscal year with Microsoft Cloud revenue of $63.9 billion, with growth accelerating to 30% (up 31% in constant currency) year-over-year… Results exceeded expectations across revenue, operating income, and earnings per share.”

Spending is the counterweight. Additions to property and equipment doubled to $39.4bn from $19.4bn, against operating cash flow of $58.0bn, up from $45.1bn.

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