Microsoft shares soared on Tuesday after the tech major issued strong future guidance when it reported the second quarter financial results. Though the company said it had the slowest revenue growth since 2020, the stock price jumped 5 percent in extended trading, driven by optimism income growth will be robust in the year ahead.
Microsoft said revenue was up 12 percent year-on-year to hit $51.9 billion. The net income was up 2 percent at $16.7 billion. The company's earnings per share fell short of consensus
Revenue and Income Below Expectations
"We see real opportunity to help every customer in every industry use digital technology to overcome today's challenges and emerge stronger ... No company is better positioned than Microsoft to help organisations deliver on their digital imperative -- so they can do more with less," CEO Satya Nadella said.
However, Microsoft's revenue and income were below expectations while revenue from Azure and other cloud services also dropped below estimates. Revenue from this segment increased by 40 percent but the growth in the previous quarter was 46 percent.
Revenue from Xbox content and services also dipped 6 percent. The revenue from the 'More Personal Computing' vertical stood at $14.4 billion. LinkedIn revenue rose 26 percent in the quarter ended June 30.
Lucrative Deals
"In a dynamic environment we saw strong demand, took share, and increased customer commitment to our cloud platform. Commercial bookings grew 25 per cent and Microsoft Cloud revenue was $25 billion, up 28 per cent year over year ... As we begin a new fiscal year, we remain committed to balancing operational discipline with continued investments in key strategic areas to drive future growth," Amy Hood, executive vice president and CFO, said, according to IANS.
Nadella said in the earnings conference call that Microsoft has landed lucrative Azure deals. "We are seeing larger and longer-term commitments and a record number of $100 million-plus and $1 billion-plus deals this quarter," Nadella said, according to CNBC.
The company said extended production shutdowns in China and the Ukraine-Russia war hit its revenue. While production shutdowns in China cost the company as much as $300 million, it had to spend $126 million to scale down its operations in Russia.
"Today's results are very much reflecting the impact of a challenging economic environment which is hurting almost every mega tech company," Amy Hood added.
