Microsoft expands earnings growth on continued strength of cloud services
Microsoft earnings growth once again peaked at 20% in the latest quarter, beating Wall Street expectations, as demand for cloud services continued to boost its performance.
Shares of the US software company, however, fell nearly 5% in after-market trading on Tuesday following the earnings announcement, leaving the stock 20% below year-end records. last year amid falling technology stocks. The pullback came despite earnings and margins that were much higher than analysts’ expectations.
The news of Microsoft’s tumultuous end to the year comes a week after it unveiled a deal with paid $75 billion to game company Activision Blizzard. In the most recent quarter, the company’s gaming revenue grew just 8%, with Xbox console sales up 4%, due to a challenging comparison to the year before when gaming revenue doubled and halved. .
Amy Hood, chief financial officer, singled out Microsoft’s cloud services as a reason for the latest success, with cloud revenue up 32% to $22.1 billion. New bookings in the cloud business also grew stronger than Wall Street expected, up 37%.
Overall, Microsoft reported revenue of $51.7 billion, up from $43.1 billion the year before and about $800 million above expectations. Earnings per share rose 22% to $2.48, 17 cents above expectations, as its operating profit margin increased 1 percentage point.