Microsoft's Quarterly Earnings: Shares Drop, Azure Surprises

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Despite beating anticipated earnings with $2.99 per share, concerns arose regarding Microsoft’s revenue growth.

  • Microsoft Azure, contributed $23.99 billion in revenue.
  • The company’s shares have surged 46% year to date.

On Tuesday, July 25, Microsoft shares tumbled 4% in after-hours trading as the tech giant’s quarterly guidance failed to meet analyst expectations.

Microsoft’s projected fiscal first-quarter revenue of $53.8 billion to $54.8 billion disappointed investors, igniting concerns about the company’s future growth – despite beating anticipated earnings with $2.99 per share. 

The software developer’s intelligent cloud segment delivered $23.99 billion in revenue. This includes Microsoft Azure and the giant’s cloud platform. 

“Microsoft Cloud surpassed $110 billion in annual revenue, up 27% in constant currency, with Azure all up accounting for more than 50% of total for the first time,” said CEO Satya Nadella.  

While the company has yet to disclose the exact revenue figure for Azure, the platform’s revenue grew 26% during the first quarter, surpassing experts’ expectations of 25% growth. 

“As expected in Azure, we saw a continuation of the optimization and new workload trends from the prior quarter,” Amy Hood, Microsoft’s finance chief, told analysts during a conference call.  

As for the giant’s productivity and business process segment, which includes LinkedIn and Office software, these segments contributed $18.29 billion in revenue, hitting a 10% increase in Year-over-Year (YoY). In parallel, Windows, devices, gaming, and search advertising (other branches of the company’s computing segments) contributed $13.91 billion in revenue, marking a 4% drop in YoY, but exceeded analysts’ estimation of $13.58 billion. 

“Even with strong demand and a leadership position, growth from our AI services will be gradual as Azure AI scales and our Copilots reach general availability dates,” Hook added. 

The Redmond-based giant’s shares surged 46% year to date, remarkably outperforming the broader market index S&P 500 which rose by 19%. Microsoft’s quarterly performance endorsed investors’ faith in its AI initiatives and business strategies. 

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