Microsoft Corp (NASDAQ:MSFT) shares plummeted as much as 7% afterhours as heightened cloud expectations overshadowed better-than-expected revenue and profit for the fiscal second quarter.
Revenue for the quarter ended December 31 grew 17% year-over-year to $81.27 billion, above Wall Street estimates of $80.27 billion.
Earnings per share of $4.14 beat the consensus estimate of $3.97.
Microsoft Cloud revenue increased 26% year-over-year to $51.5 billion, with commercial remaining performance obligation increasing 110% to $625 billion.
Azure and cloud services revenue grew 39%, in line with estimates, but disappointing investors hoping for upside.
Revenue from the Productivity and Business Processes segment was $34.1 billion, up 16% year over year. Microsoft 365 Commercial cloud revenue increased 17%, while Microsoft 365 Consumer cloud revenue jumped 29%.
LinkedIn revenue rose 11%, and Dynamics 365 revenue grew 19%.
Revenue in the More Personal Computing segment totaled $14.3 billion, representing a 3% decline from the prior year.
Windows OEM and Devices revenue increased 1%. Xbox content and services revenue fell 5%, while search and news advertising revenue, excluding traffic acquisition costs, increased 10%.
“We are only at the beginning phases of AI diffusion and already Microsoft has built an AI business that is larger than some of our biggest franchises," Microsoft CEO Satya Nadella said in a statement. “We are pushing the frontier across our entire AI stack to drive new value for our customers and partners.”
Amy Hood, Microsoft’s chief financial officer, highlighted that Cloud revenue crossed $50 billion, “reflecting the strong demand for our portfolio of services.”
During Q2, Microsoft returned $12.7 billion to shareholders through dividends and share repurchases, a 32% increase compared with the same quarter of the previous year.
The company said it will provide guidance during its earnings conference call.