Microsoft’s quarterly sales rise 15% as the company cites minimal COVID-19 impact in Q3

Microsoft’s quarterly sales rise 15% as the company cites minimal COVID-19 impact in Q3
  • Microsoft tops analysts' estimates for earnings and revenue in the third quarter.
  • The U.S tech giant says the impact of COVID-19 may not have been fully reflected in Q3.
  • The technology company expects £28.77 billion to £29.53 billion in revenue in Q4.

Microsoft Corp. (NASDAQ: MSFT) released its quarterly financial results on Wednesday that showed a 15% increase in its sales attributed to the upbeat performance of its cloud business. Following the release of the Q3 earnings report, Microsoft was reported 5% up in after-hours trading on Wednesday.

The company highlighted that the COVID-19 impact was minimal in the third quarter and that a broader effect can be expected in the next quarter.

Microsoft’s Q3 financial results versus analysts estimates

According to Refinitiv, analysts had estimated Microsoft to print £27 billion in revenue in the third quarter. Their estimate for earnings per share (EPS) was capped at £1.01 per share (adjusted). In its financial report on Wednesday, however, Microsoft boasted a higher revenue of £28.10 billion and topped the experts forecast making £1.12 of adjusted earnings per share. Microsoft’s net income in the quarter that ended on 31st March came in 22% higher in Q3 at £8.67 billion.

On a year over year (YoY) basis, Microsoft’s revenue in the recent quarter was reported 15% up.

In Q4, Microsoft said that it expects to generate £28.77 billion to £29.53 billion in revenue that translates to a 7.7% growth. Refinitiv consensus estimate of £29.22 billion (average) in revenue also lies within this range.

Microsoft’s More Personal Computing Business that includes Windows, Bing, Xbox, and Surface, recorded a 2.9% annualized increase to £8.83 billion in revenue in the third quarter. Its Productivity and Business Processes segment that includes Office, LinkedIn, and Dynamics, on the other hand, posted a broader 14.7% YoY growth in revenue to £9.42 billion in Q3. Microsoft topped analysts’ estimates in both these segments.

Office 365 posts a 16% growth in consumer subscribers

Microsoft also highlighted in its report on Wednesday that Office 365’s consumer subscribers rose to 39.6 million in the recent quarter that marks a 16% growth as compared to the same quarter last year. The Teams communication app also noted an increase from more than 44 million daily active users in mid-March to over 75 million.

Microsoft’s Intelligent Cloud business that includes GitHub, Azure, and server products such as Windows Server and SQL Server, generated a 27% higher revenue of £9.85 billion in the third quarter that was reported stronger than the experts’ forecast.

Microsoft is currently around 12% up year to date in the stock market as compared to a 9% decline in the benchmark S&P 500 index. Including the U.S tech giant’s after-hour rally on Wednesday, it is now roughly 4% down than its record-high in February.

By Wajeeh Khan
Mr. Khan specialises in Public Health by academia but is a trader by passion. Taking up two new hobbies of writing and trading in his teen years, he is now a professional trader and news writer with over 5 years of experience in various financial markets. Khan is passionate about bringing insightful articles to his readers and hopes to add value to their portfolios.
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