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MSFT Stock 2% After Market, Microsoft Posts 13% Higher Revenue in Q4

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by Teuta Franjkovic · 3 min read
MSFT Stock 2% After Market, Microsoft Posts 13% Higher Revenue in Q4
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Microsoft reported Q4 earnings that exceeded Wall Street’s expectations, as the still-raging coronavirus outbreak proved no match for the tech giant’s booming cloud computing business. MSFT stock went down after hours.

Shares of technological behemoth Microsoft Corporation (NASDAQ: MSFT) rose by 1.44% to $211.75 on Wednesday when the company reported better-than-expected fiscal Q4 earnings that surpassed analysts’ estimations. However, MSFT stock fell in after-hours trading by 2.24% to $207.01.

Adjusted earnings per share stood at $1.46, versus $1.34 per share as expected by analysts, according to Refinitiv.
Revenue was $38.03 billion, versus $36.50 billion as expected by analysts.

The company’s overall revenue rose by 13% on a yearly basis in the quarter, which ended on June 30, according to a statement. Revenue jumped 15% in the quarter before.

Microsoft Earnings Fell in Q4 Due to Retail Strategy

The company’s earnings slipped a bit due to a shift in Microsoft’s retail strategy. On June 26 Microsoft said it would close its physical stores, resulting in a one-time charge of $450 million, or 5 cents per share, before taxes. Microsoft then stated 83 Microsoft Store retail locations will be permanently closed and that the company plans to focus on its online store at instead, where customers can go for support, sales, training and more.

Satya Nadella, chief executive officer of Microsoft stated:

“The last five months have made it clear that tech intensity is the key to business resilience. Organizations that build their own digital capability will recover faster and emerge from this crisis stronger. We are the only company with an integrated, modern technology stack — powered by cloud and AI and underpinned by security and compliance — to help every organization transform and reimagine how they meet customer needs.”

Be it as it may, Microsoft’s Intelligent Cloud business segment, which incorporates the Azure public cloud, Windows Server, SQL Server, GitHub and enterprise services, stated it had revenue of $13.37 billion that represents the rise of 17% year over year and surpassing of the $13.11 billion consensus among analysts polled by FactSet. Azure revenue grew at a little bit of a slower pace to 47% from 59% in the previous quarter. Microsoft didn’t specify Azure revenue in dollars.

Office and LinkedIn Rose

The Productivity and Business Processes unit, that includes Office, Dynamics and LinkedIn, amounted to the revenue of $11.75 billion representing the increase of 6% and less than the FactSet consensus of $11.91 billion.

The company’s More Personal Computing unit, including Windows, Surface and Xbox, had $12.91 billion in quarterly revenue, meaning 14% and higher than the $11.48 billion FactSet consensus.

In the quarter Microsoft revealed a plan to shut down its Mixer video game streaming service and announced it is buying of CyberX, Metaswitch and Softomotive. Industry research group Gartner predicted that PC shipments, a factor in Microsoft’s Windows sales, returned to the year-over-year rise in the quarter, following a decrease in the first quarter in connection with the coronavirus outbreak.

With respect to guidance, analysts polled by Refinitiv are looking for $35.91 billion in revenue for the fiscal first quarter.

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