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Dow Jones NewsApr 30, 11:41 PM UTC
DJ Microsoft Earnings Rise on Double-Digit Growth Across Key Units -- 4th Update
By Dan Gallagher and Connor Hart
Microsoft needed a win. Its latest quarterly results and forecast are giving it one.
The software titan saw its share price jump 7% in after-hours trading on Wednesday following its fiscal third quarter report. The report showed strong growth in revenue and earnings across all of the company's business segments, with the closely watched Azure cloud service solidly beating Wall Street's forecasts.
Microsoft's projections for the June-ending quarter were also ahead of analysts' expectations. That should help the company improve its standing with investors who have soured on the stock over the last year on worries about slowing cloud growth combined with blowout spending on artificial intelligence.
Microsoft's share price fell after its previous three quarterly reports, and the stock has lagged all its megacap tech peers over the last 12 months save for Google-parent Alphabet, which has lost two federal antitrust lawsuits in that time.
The latest results also show Microsoft's resilience in a world now marked by extreme uncertainty over tariffs. During the company's conference call, Chief Financial Officer Amy Hood said "demand signals" across the company's businesses have remained consistent so far this month.
That at least indicates that the major corporations that drive the bulk of Microsoft's revenue aren't slashing their technology budgets just yet. Chief Executive Satya Nadella called software "the most valuable resource we have to fight any type of inflationary pressure or any type of growth pressure, where you need to do more with less." Microsoft's business segment forecast implied total revenue of $73.7 billion for the fiscal fourth quarter, which was 2% ahead of Wall Street's projections.
Microsoft's total revenue for the March-ending quarter jumped 13% from a year earlier to just over $70 billion. Operating income came in at $32 billion -- 6% above the consensus forecast from analysts. Revenue for the company's Azure cloud-computing service leaped 35% year over year, compared with the 31% growth Wall Street had predicted.
Net income for the quarter came in at $25.8 billion, or $3.46 per diluted share. Analysts were expecting per-share earnings of $3.22.
The company also reported capital expenditures that include equipment acquired under finance leases of $21.4 billion. That was about $1 billion less than analysts had expected for the period, according to consensus estimates from Visible Alpha.
Capital expenditures are a closely watched figure among the big tech companies pouring billions into artificial intelligence. Meta Platforms, parent company of Facebook and Instagram, boosted the high end of its capital expenditure forecast for this year by 11% to $72 billion in its own quarterly report Wednesday.
Hood said Wednesday that Microsoft's capex will rise in its next fiscal year, but at a slower rate than the 57% jump the company is expected to report for the current fiscal year ending in June.
Revenue for each of Microsoft's key units surpassed the guidance the company issued in January. Its productivity and business-processes unit, which includes its Microsoft 365 products, notched revenue of $29.9 billion, up 10% from last year and ahead of internal forecasts for sales as high as $29.7 billion.
Sales across Microsoft's personal-computing business rose 6% to $13.4 billion, topping the company's forecast of $12.4 billion to $12.8 billion. The company said " tariff uncertainty" led to higher inventory levels of personal computers, which will likely start clearing out in the current quarter. Tariffs won't be great for PC sales over the longer term. But today's Microsoft has far more resilient businesses in the mix.
Write to Dan Gallagher at dan.gallagher@wsj.com and Connor Hart at Connor.Hart@wsj.com
(END) Dow Jones Newswires
April 30, 2025 19:41 ET (23:41 GMT)
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