- Intelligent Cloud revenue increased by 20% to $20.3 billion, matching analyst predictions.
- Cloud computing is one of Microsoft's fastest-growing businesses, although it faces stiff competition from rivals including Amazon.com Inc. and Alphabet Inc.
- Microsoft beat analyst estimates for both adjusted earnings per share (EPS) and revenue, although EPS was down year-on-year.
|Microsoft Earnings Results|
|Metric||Beat/Miss/Match||Reported Value||Analysts' Prediction|
|Adjusted Earnings Per Share||Beat||$2.35||$2.30|
|Intelligent Cloud Revenue||Match||$20.3B||$20.3B|
Source: Predictions based on analysts' consensus from Visible Alpha
Microsoft (MSFT) Financial Results: Analysis
Microsoft Corp. (MSFT), the world's largest software company by revenue, beat analyst expectations for both profit and revenue in its first-quarter fiscal 2023, driven by growth in its cloud business that was partially offset by declines in personal computing business. Microsoft's 2022 fiscal year (FY) ended June 30, 2022.
Microsoft’s adjusted earnings per share (EPS), excluding certain items, slipped 13% to $2.35 but beat a consensus estimate of $2.30. Revenue rose 11% to $50.1 billion, above expectations, as cloud revenue soared. Microsoft stock was off more than 2% in after-hours trading shortly after the 1Q figures were released.
A strong dollar and accelerating inflation have threatened Microsoft's financial performance. To make matters worse, sales of computing hardware such as PCs have slumped in recent months following a surge early in the pandemic related to the increase in hybrid and work-from-home setups. The company said that healthy demand in its commercial cloud business and particularly its server products and cloud services helped to overcome these challenges.
MSFT Intelligent Cloud Revenue
Microsoft reported Intelligent Cloud revenue of $20.3 billion, a 20% increase that matched analyst predictions. Microsoft's Intelligent Cloud segment, including the company's Azure and other cloud services, is a key component and fast-growing part of its business by offering a comprehensive set of services to developers, IT professionals, and enterprises.
Supply chain-related shortages of servers and IT equipment have helped fuel growth for Microsoft as businesses turn to providers like it that already have key infrastructure in place, according to October 2022 Goldman Sachs equity research on Microsoft. Still, major rivals including Amazon.com Inc.'s (AMZN) Amazon Web Services and Alphabet Inc.'s (GOOGL) Google Cloud are competing for an increasing share of the business.
MSFT Outlook and Stock Performance
Microsoft did not provide forward guidance at the time of its earnings release on Oct. 25.
Shares of Microsoft traded down 2.38% after the earnings release as of 5:22 p.m. New York time. The company's stock has fallen 18% in the last year while the S&P 500 has dropped by 15%.
Microsoft's next earnings report (for Q2 FY 2023) is expected to be released on Jan. 24, 2023.
Microsoft Corp. "Earnings Release FY23 Q1."
Visible Alpha. "Financial Data."
Microsoft Corp. "First Quarter Fiscal Year 2023 Outlook," Slide 3.
ComputerWorld. "PC Sales Fall Off a Cliff."
Yahoo! Finance. "Microsoft Corporation (MSFT)."
TradingView. "Price Chart: MSFT and S&P 500."
MarketScreener. "Microsoft Corp. (MSFT)."