Microsoft Corp (NASDAQ:MSFT) is set to report higher earnings on increased revenue for the September quarter, the first quarter of fiscal 2025.
After tonight's closing bell, the software maker is set to report earnings per share (EPS) of $3.08, up 3% from $2.99 in the year-ago quarter.
Revenue is expected to grow by almost 14% to $64.41 billion, compared to $56.52 billion in Q1 2024.
During Microsoft’s Q4 2024 earnings call in July, CFO Amy Hood noted that Q1 revenue would be impacted by a less than 1-point foreign exchange headwind.
Gross margins are expected to be about 70%, attributed by Hood to the impact of the company scaling its AI infrastructure.
The CFO guided Azure revenue growth between 28% and 29% year-over-year in Q1, noting the company’s expectation that Azure growth will accelerate in the second half of fiscal 2025.
For Intelligent Cloud, revenue growth is expected to be between 18% and 20% year-over-year to $28.6 billion to $28.9 billion.
Productivity and Business Processes revenue is guided to grow between 10% to 11% to $20.3 billion to $20.6 billion.
Office 365 revenue growth is expected to be 14%, with Hood noting seat growth across customer segments and average revenue per use growth (ARPU) through E5 and its AI assistant Copilot for Microsoft 365.
The company’s gaming segment is expected to see revenue growth in the mid-30s and Xbox content and services revenue is expected to grow in the mid to low 50s, driven by the impact of Microsoft’s acquisition of video game company Activision Blizzard.
Microsoft is likely to beat Wall Street estimates for Q1. It has a history of outperformance, having only reported a single revenue miss over the past eight quarters.
Shares of Microsoft traded at $436 ahead of its earnings on Wednesday. The stock is up 18.5% in the year to date, lagging the tech-laden Nasdaq which has risen about 29% over the same period.
- Updated with share price movement -