Microsoft Tops Earnings Expectations But Faces Slowing Cloud Growth
Microsoft beats quarterly profit and revenue estimates, but its stock drops as Azure cloud growth slows and the company issues weak forward guidance.
Microsoft reports better-than-expected earnings and revenue for its fiscal first quarter, but shares fall 7% in extended trading due to disappointing cloud numbers. The tech giant earns $2.35 per share on $50.12 billion in revenue, beating analyst estimates as overall sales grow 11% year over year.
The company's Intelligent Cloud segment generates $20.33 billion, missing consensus estimates as Azure growth slows to 35% from 40% in the previous quarter. Higher energy costs negatively impact Azure's gross margin, and finance chief Amy Hood notes that cloud consumption continues to moderate.
Looking ahead, Microsoft provides weak guidance for the fiscal second quarter with revenue expectations of $52.35 billion to $53.35 billion, falling significantly short of the $56.05 billion analysts anticipate. Net income declines 14% to $17.56 billion, reflecting cyclical pressures on the consumer business despite an accounting change that boosts the bottom line.