Microsoft crushes on earnings and revenue, stock pops


Microsoft announced earnings for the fourth quarter of its just-finished fiscal year 2016 on Tuesday afternoon after the stock market’s closing bell.

You can read the full results here, from a Microsoft press release.


For the quarter, Microsoft announced:

  • Earnings of $0.69 per share on an adjusted basis, up from $0.60 a year ago. Analysts were expecting $0.58.
  • Revenue of $22.6 billion, up from $22.18 billion a year ago. Analysts were expecting $22.14 billion.

At the time of this writing, Microsoft stock is up about 3% in after-hours trading.

Even amid the solid earnings and revenue, Wall Street is keeping a very close eye specifically on the growth of Microsoft’s cloud business — a crucial business with a strong potential for leading the company to further revenue growth, even amid a shrinking PC industry.

Microsoft says that it had a $12.1 billion “run rate” for commercial cloud products in the last quarter. If you took the amount it generated from business-focused cloud services, like Azure and Office 365, and extrapolated it out for a year, then it would total $10 billion.

The company’s stated goal is to reach $20 billion by 2018, a milestone that investors really want to see.

microsoft cloud run rate chart

To that end, Microsoft announced that its Intelligent Cloud unit, which houses the Microsoft Azure cloud business and the rest of the company’s tools for servers and data centers, grew 7% to $6.7 billion. Revenue from Microsoft Azure cloud, specifically, grew 102% from the last quarter. That’s a positive sign for Microsoft investors.

Revenue in the More Personal Computing segment, which includes Windows and the Surface, Xbox, and phone-hardware businesses, sank by 4%.

Microsoft blames this largely on lowered phone-hardware sales, amid layoffs and changes to the business, as the overall devices business lowered by 35%.

Last is the Productivity segment, which grew 5% as the Microsoft Office 365 cloud productivity subscription service continues to attract subscribers.

Still, while Office 365 is making money, Microsoft says that overall Office volume is down, as people buy less of the boxed software and more of the cloud-based service.


Source: Business Insider