Microsoft hits $40 billion in quarterly sales for first time, reports record earnings
Microsoft Corp. blew away earnings expectations Tuesday as it surpassed $40 billion in sales and $15 billion in profit in a quarter for the first time, sending shares up from their record closing price.
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In the holiday quarter, Microsoft reported earnings of $15.46 billion, or $2.03 a share, on sales of $43.1 billion, strong growth from the same quarter a year ago, when Microsoft reported earnings of $1.51 a share on sales of $36.9 billion. Analysts on average expected Microsoft to report fiscal second-quarter earnings of $1.64 a share on revenue of $40.23 billion.
Shares jumped more than 4% in after-hours trading following the announcement, after the stock established a new all-time closing high of $232.33 in the regular session, topping a previous record from Sept. 2, 2020. Microsoft stock has increased 40.8% in the past 12 months, as the Dow Jones Industrial Average DJIA,
The product that has most excited investors and analysts in recent years has been Azure, Microsoft’s cloud-computing rival to Amazon.com Inc.’s AMZN,
“This is a shot across the bow at Amazon and Bezos, they’re gaining more and more shares vs. AWS,” Wedbush analyst Dan Ives told MarketWatch in a brief interview after the numbers hit Tuesday. “A year from now, this could start to be a head-to-head battle.”
Ives said that even those bullish on Microsoft weren’t expecting Azure to grow by 50%. Azure growth had been slowing steadily, and Microsoft reported growth of 48% and 47% in the two previous quarters; Ives said expectations were closer to 44% to 45%.
Microsoft is “firing on all cylinders and these numbers start to drive the stock to a $2 trillion market cap,” Ives said.
As personal-computer sales spiked due to work-from-home needs and Microsoft began selling new Xbox consoles in the holiday season, sales in Microsoft’s “more personal computing” segment grew to $15.12 billion from $13.21 billion in the same quarter a year ago. Analysts on average expected segment sales of $13.47 billion. Microsoft said that revenue from Xbox grew 40% in the quarter, while sales of its Surface lines of PCs increased 3%.
Microsoft’s “productivity and business services” division, which includes cloud software assets such as its Office suite as well as LinkedIn and other properties, reported revenue of $13.35 billion, up from $11.83 billion a year ago. Analysts on average expected sales of $12.89 billion.
Microsoft did not provide a forecast for the fiscal third quarter in its announcement, but typically provides that information in its conference call, which was scheduled to begin at 5:30 p.m. Eastern time.
