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Microsoft released better-than-expected financial results for its fiscal fourth quarter as demand for its cloud-based software increased amid the pandemic-induced change to work and learn from home.
For the quarter ended June 30, Microsoft (ticker: MSFT) posted revenue of $ 38 billion, up 13% from a year ago, and well ahead of Wall Street analyst consensus at $ 36.4 billion . Earnings were $ 1.46 a share, ahead of the street consensus at $ 1.38.
The gross margin in the quarter was 68%, two points below the previous year, while the operating margin was 35%, also two points below.
“The past five months have made it clear that technology intensity is the key to business resilience,” Microsoft CEO Satya Nadella said in a statement.
Microsoft noted that its commercial cloud business exceeded $ 50 billion in annual revenue for the first time in the fiscal year of June 2020. Microsoft said that commercial reserves in the quarter were better than expected, growing 12% year-over-year year.
Revenue in the company’s Productivity and Business Processes segment was $ 11.8 billion, up 6%, or 8% in constant currency, right in the middle of the company’s targeting range.
Revenue for the Smart Cloud segment was $ 13.4 billion, an increase of 17%, or 19% in constant currency, and above the targeting range of $ 12.9 billion to $ 13.15 billion.
More Personal Computing revenue was $ 12.9 billion, up 14%, or 16% in constant currency, and well above the $ 11.3 billion to $ 11.7 billion guideline.
The company said revenue in its Azure cloud business rose 47%, or 50% in constant currency, slowing slightly from 59% growth in the March quarter. Xbox content and service revenue increased 65%, or 68% in constant currency. Surface hardware revenue increased 28%, or 30%, in constant currency, while search ad revenue decreased 18%, or 17%, in constant currency.
The company also repurchased $ 5.1 billion in shares in the quarter.
For the full fiscal year, total revenue was $ 143 billion, an increase of 14%, while earnings were $ 5.76 per share, also up 14%.
Regarding the impact of Covid-19 on the company’s business, Microsoft said that the trends for the fourth quarter were similar to those for the third quarter.
“In the Productivity and Business Processes and Smart Cloud segments, the use and demand for the cloud increased as customers continued to work and learn from home,” the company said. “The purchase of transactional licenses continued to decline, particularly in small and medium-sized businesses, and LinkedIn was negatively affected by the weak labor market and reductions in advertising spending.”
The company added that in the more personal Computing segment, “Windows OEMs, Surface and Gaming benefited from increased demand to support work, play and home learning scenarios, while Search was negatively affected by the reductions. in advertising spending. “
In the company’s call with analysts, CFO Amy Hood said that for the September quarter, Microsoft sees revenue for the Productivity and Business Process segment from $ 11.65 billion to $ 11.9 billion, slightly below from street estimates at $ 12.1 billion.
For Intelligent Cloud, the company sees revenue of $ 12.55 billion to $ 12.8 billion, at the midpoint above the street consensus at $ 12.6 billion. For more personal computing, Microsoft sees revenue of $ 10.95 billion at $ 11.35 billion, according to the street consensus of $ 11.1 billion. The company also noted that it is adjusting the useful life of some equipment, which will result in a non-cash benefit to earnings of $ 900 million in the first quarter and $ 2.7 billion in the full year.
At the upper end of the established ranges, revenue for the quarter would be $ 36.1 billion, slightly above the street at $ 35.9 billion.
In recent operations, Microsoft shares fell 2.1% to $ 207.23.
Write to Eric J. Savitz at [email protected]
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