Microsoft beats Q2 earnings views, slightly misses on revenue expectations

Microsoft (MSFT) beat analysts’ earnings views, while slightly missed on revenue expectations for the second quarter fiscal 2019. The tech heavyweight reported EPS of $1.10 on revenue of $32.47 billion for the December quarter. Wall Street had expected Microsoft to earn $1.09 per share on revenue of $32.49 billion. Shares of Microsoft dropped about 2% in the after-market hours.

“Our strong commercial cloud results reflect our deep and growing partnerships with leading companies in every industry including retail, financial services, and healthcare,” said Satya Nadella, CEO.

Azure revenue growth was flat at 76% compared to the first quarter of 2019.

LinkedIn revenue increased $381 million or 29%, with strong engagement highlighted by LinkedIn sessions growth.

“Our solid execution delivered another strong quarter, with commercial cloud revenue growing 48% year-over-year to $9.0 billion,” said CFO Amy Hood. Productivity and Business Processes
segment’s revenue increased 13% year-over-year to $10.1 billion compared to the estimate of $9.95-10.15 billion.

Revenue from Intelligent Cloud soared 20% to $9.4 billion versus the company’s outlook of $9.15-9.35 billion. In More Personal Computing, Microsoft’s the largest segment, revenue rose 7% to $13 billion versus the company’s outlook of $12.80-13.20 billion.

Gaming revenue increased 8% year-over-year for the recently concluded quarter. Xbox live monthly active users count grew 8.5% to 64 million from 59 million in the second quarter of 2018. 

In October 2018, Microsoft completed the GitHub acquisition. In November 2018, the company acquired FSLogix to enhance the Office 365 virtualization experience and XOXCO to help advance conversational AI. In the recent months, Microsoft partnered with Walgreens Boots Alliance (WBA), Kroger (KR) and Gap Inc. (GPS).

On November 28, 2018, Microsoft announced a quarterly dividend of $0.46 per share, payable on March 14, 2019, to shareholders of record on February 21, 2019, with the ex-dividend date as February 20, 2019.

Nearly 80% of the analysts covering Microsoft either have “strong buy” or “buy” ratings on the stock and the stock’s 12-month consensus price target stands at $125.70. The stock closed at $106.38, up 3.34% on Wednesday.

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