Microsoft Corp saw its third-quarter profit and revenue beat expectations on Tuesday, with demand for the software giant's cloud-based services benefiting from the coronavirus pandemic shift to hybrid working.
The company reported revenue of $49.36 billion in the third quarter, compared with $41.7 billion a year earlier, versus average estimates of $49.05 billion.
Microsoft's net income rose to $16.73 billion, or $2.22 per share, in the quarter ended March 31, 2022, from $15.46 billion, or $2.03 per share, a year earlier, beating analyst expectations of $2.19.
Third-quarter Azure annual growth of 46.0% was steady from the previous quarter and in line with estimates of 45.6% growth.
Microsoft shares rose 2.2% to $276.76 in after-hours trade in New York on Tuesday, having dropped 3.7% in the day's session.
Laura Hoy, equity analyst at Hargreaves Lansdown commented: “Microsoft beat earnings estimates in the third quarter, but the reaction’s been tepid so far. Still, you can’t fault the tech stalwart - after a busy year of acquisitions the group’s still sitting on over $50bn in cash.
"Cloud predictably led the way this quarter, underscoring CEO Satya Nadella’s claims that Microsoft will thrive in an environment of belt-tightening because it helps companies do more with less. There’s no question the pandemic’s pushed the world round a digital corner, and access to the cloud and Microsoft’s suite of Office products is a must. That should insulate the group’s revenue somewhat as companies start to trim the fat to cope with inflation."
She added: "Microsoft’s gaming arm delivered respectable 6% growth. That’s about to get a whole lot heftier as Microsoft turns its attention to bolstering this part of the business. If cloud can keep up the momentum as the gaming division balloons, Microsoft could be in for a strong year.”
Contact the author at jon.hopkins@proactiveinvestors.com