Microsoft Jumps 5% as Azure Growth Hits 48% — SkimNews
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Microsoft posted adjusted EPS of $4.89 against the $4.73 LSEG consensus and revenue of $92.28 billion versus $90.69 billion expected for the quarter ended Sept. 30, with revenue up 19% year over year and net income of $36.63 billion, or $4.92 a share, versus $27.75 billion, or $3.72, a year earlier; adjusted earnings exclude a roughly $200 million impact from investing in OpenAI.
- Azure grew 48%, and Microsoft disclosed cloud revenue in dollars for the first time at $33.17 billion, above the $32.32 billion StreetAccount consensus, versus 42% growth in the June quarter; shares rose 5% in extended trading Wednesday.
- Agents and Infra generated $76.80 billion in revenue, up almost 25% and ahead of the $75.63 billion consensus, as Microsoft reported results under two operating segments for the first time since 1998 after 11 years of three; the segment spans Azure, Microsoft 365 cloud products, productivity and server licensing, industry solutions and frontier and support services.
- Devices and Consumer contributed $15.48 billion, down 3% but above the $15.05 billion consensus, covering search and advertising, Xbox, devices and Windows operating system licenses; sales of devices and Windows licenses fell 22%, and Gartner reported PC shipments slid 22% as higher memory and storage costs elevated prices.
- Microsoft 365 cloud services revenue reached $27.78 billion, above the $27.37 billion consensus.
- Microsoft's free cash flow fell 27% to $18.63 billion even as capital expenditures and finance leases rose about 30% to $45.2 billion, below the $50.67 billion projected; Alphabet posted negative free cash flow for the quarter and Meta said last week it went free cash flow negative.
- Microsoft cut 4,800 jobs in the fiscal first quarter and on Monday offered buyouts to up to 60,000 employees as it strives to balance a costly AI build-out with capital efficiency; it also established an AI implementation unit and revealed a Copilot AI "super app" with coding abilities.
Why it matters: Microsoft shareholders got the headline: a $92.28B revenue beat, Azure up 48% and shares 5% higher after hours, with net income rising to $36.63B from $27.75B. The counterweight is cash and jobs: free cash flow fell 27% to $18.63B, Windows license sales dropped 22%, and Microsoft is cutting 4,800 jobs while offering buyouts to up to 60,000 staff.
Ask SkimNews
