Microsoft shows gain on OpenAI investment after restructuring as cloud growth slows
- Microsoft beat consensus on the top and bottom lines.
- The analyst conference call starts at 5:30 p.m. ET.
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Microsoft shares slipped 3% in extended trading on Wednesday after the software maker posted slowing cloud growth.
Here’s how the company performed in comparison with LSEG consensus:
- Earnings per share: $4.14 adjusted vs. $3.97 expected
- Revenue: $81.27 billion vs. $80.27 billion expected
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Microsoft’s revenue grew 17% year over year in the fiscal second quarter, which ended on Dec. 31, according to a statement.
Net income, at $38.46 billion, or $5.16 per share, was up from $24.11 billion, or $3.23 per share, in the same quarter a year earlier. Adjusted earnings exclude impact from investments in OpenAI.
Revenue from Azure and other cloud services grew 39%, compared with 40% growth in the fiscal first quarter. Analysts surveyed by StreetAccount and CNBC had expected 39.4% and 38.9% growth, respectively.
The company reported $9.97 billion in other income, compared with other expense of $2.29 billion in the same quarter a year ago. The swing comes three months after OpenAI announced a restructuring that involved its for-profit arm becoming a public-benefit corporation.
At year end, Microsoft’s commercial remaining performance obligation, a measurement of unearned revenue and amounts that will be recognized as revenue later, stood at $625 billion, up some 110%. That’s thanks to OpenAI’s $250 billion cloud commitment with Microsoft during the quarter. Microsoft said 45% of commercial remaining performance obligation is tied to OpenAI.
Commercial bookings growth, which tracks quarterly activity, surged to 230% from 112% in the fiscal first quarter.
