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Microsoft stock rises on upbeat Q4 earnings

Microsoft (MSFT) reported better-than-expected results for the fourth quarter 2018. Non-GAAP earnings of $1.13 per share on revenue of $30.08 billion, beat consensus estimates. Analysts had predicted earnings of $1.08 per share and revenue of $29.3 billion for the quarter ended June 30, 2018. GAAP EPS swelled 7% to $1.14. The stock, which dropped 0.68% to $104.40 during today’s regular trading session, was up after the earnings release.

LIVE BLOG: Microsoft Q4 2018 Earnings Call

Microsoft Xbox Live Monthly Active Users since 2016

 

The rival of Nintendo and Sony witnessed a 39% increase in gaming revenue to $2.29 billion and Xbox live active users grew 8% to 57 million compared to the prior-year quarter. Xbox software and services revenue climbed 36%, primarily from third-party title strength.

Microsoft Gaming Revenue Since 2017

“We had an incredible year, surpassing $100 billion in revenue as a result of our teams’ relentless focus on customer success and the trust customers are placing in Microsoft. Our early investments in the intelligent cloud and intelligent edge are paying off, and we will continue to expand our reach in large and growing markets with differentiated innovation,” said CEO Satya Nadella.

In the recently concluded quarter, commercial cloud revenue soared 53% year-over-year to $6.9 billion. Productivity and Business Processes segment’s revenue stood at $9.7 billion compared to the estimate of $9.55-9.75 billion.

Revenue from Intelligent Cloud grew 23% to $9.6 billion versus the company’s outlook of $8.95-9.15 billion.  As expected, Azure revenue growth of 89% was not as high as in the past few quarters. This is the first time Azure’s revenue growth fell below 90% in the past five quarters.

In More Personal Computing, Microsoft’s the largest segment, revenue of $10.8 billion surpassed the company’s outlook of $10.3-10.6 billion, aided by strong revenue growth in gaming, Surface, Windows commercial products and cloud services businesses.

Microsoft Q4 2018 earnings
Microsoft Q4 2018 Earnings Infograph

After the stellar earnings results and healthy outlook, many analyst firms have raised the price targets for Microsoft. The list includes BMO Capital (to $125 from $109), JPMorgan (to $115 from $110), Stifel Nicolaus (to $118 from $107), Deutsche Bank (to $130 from $120), Citigroup (to $113 from $100) and Raymond James (to $126 from $124).

Related: Cloud drives Microsoft’s Q3 results

 

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