Microsoft Earnings: Despite a Beat, Shares Sag

Finally, More Personal Computing accounted for $9.9 billion in revenue, a 13% (11% CC) increase YoY. Microsoft's own revenue forecast had been $25.25 billion to $25.95 billion.

Intelligent cloud revenue rose 17% and Windows OEM revenue rose 4% both nominally and in constant currency. Azure alone grew revenues by 93 per cent, which is a little down from the 98 per cent figure in the previous quarter. Operating income grew by 23% (20% CC) to $8.3 billion, and net income grew by 35% (31% CC) to $7.4 billion. The Windows and Devices Group was effectively split up and put inside the Experiences and Devices group (which includes Microsoft's Office 365 and other productivity applications) and the Cloud and Artificial Intelligence Platform group (which includes infrastructure products like Windows Server and the Azure cloud platform).

Windows still remains the main revenue contributor for Microsoft's More Personal Computing business segment. Weiss expects commercial Office 365 sales to jump 38% in the period, compared to a 41% increase in fiscal Q2. The software behemoth reported diluted earnings per share (EPS) of $0.95 on revenues of $26.8 billion.

There are now 30.6 million Office 365 consumer subscribers, with Office consumer products and cloud services revenue growing by 12% (9% CC).

LinkedIn, which Microsoft purchased for $26.2 billion previous year, revenue grew 37%; the company also saw a record number of job postings and session growth of over 30%. Surface revenue was up 27% due to product end-of-life cycles. After all, it was the quarter before Microsoft refreshed the Surface Pro and launched the Surface Laptop.

Earnings: 95 cents per share, excluding certain items, vs. 85 cents per share as expected by analysts, according to Thomson Reuters.

LinkedIn revenue rose 37% year over year and gaming revenue rose 18% driven by Xbox software and services revenue growth of 24%, primarily on the strength of third-party titles.

  • Joe Gonzales