96 cents per share, vs expected EPS of 86 cents — Microsoft earnings

96 cents per share, vs expected EPS of 86 cents — Microsoft earnings

Revenue from the intelligent cloud segment rose 15.3 percent to $7.80 billion in the second quarter, including 98 percent growth for Azure.

Reuters Microsoft Corp. beat Wall Street's profit forecast on Tuesday, helped by growth in its cloud computing business, but took a $13.8 billion one-time charge due to the new USA tax law.

The revenue growth was led by the Productivity and Business Processes division, with double-digit growth in sales of both Office and Dynamics software.

The revenue of Office commercial products and cloud services, including Office 365 commercial showed a growth of 10%, while the Office consumer products and services revenue grew 12%.

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Excluding the charge, second quarter profit was $0.96, compared to an average analyst projection of $0.86. Beasley is impressed by the increase of active users and believes ad revenue will just continue to grow.

At the time of writing, Microsoft stock was down about 1% to around $95 per share.

The Redmond, Washington-based company has rolled out services that add artificial intelligence conversations and language understanding into its cloud programs.

Windows commercial products and cloud services revenue declined 4% due to the impact of an apparent larger deal the company made past year. Operating income was up 10 per cent to $8.7bn.

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This figure beat expectations of $28.4 billion and Microsoft posted a quarterly profit of $7.5 billion.

While Azure's growth is (partially) there to see, Microsoft has over recent months placed a greater emphasis again on on-premise infrastructure, with the launch of Azure Stack. Year-to-date, MSFT has gained 11.07%, versus a 5.64% rise in the benchmark S&P 500 index during the same period.

So far, Nadella & Co.'s work in the past four years to reinvent Microsoft have helped fuel a big market cap increase for investors.

Bernstein's Mark Moerdler has been saying that Microsoft's cloud-computing service, Azure, can eventually hit the same size as the cloud leader, Amazon.com's (AMZN) AWS. Analysts had a consensus revenue estimate of $28.39 billion for the quarter. Productivity sales, mainly Office software, climbed 25% to nearly $9bn. The software giant's revenue was still up 12 percent year-on-year to United States dollars 8.9 billion, and operating profit rose 10 percent to USD 8.7 billion. Commercial cloud's annual revenue run rate is $21 billion now.

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