For the quarter gone by, Microsoft’s revenue stood at $82.89 billion, higher than expectations of $81.39 billion. Its Earnings Per Share (EPS) of $4.27 was also higher than expectations of $4.06. Revenue growth during the quarter stood at 18%, lagging peers like Microsoft and Meta, whose topline grew much faster.
Microsoft now expects current quarter revenue to be between $86.7 billion to $87.8 billion, the mid-point for which, at $87.25 billion is lower than estimates of $87.53 billion. Azure will continue to grow between 39% to 40% in constant currency terms, the company said.However, this means that Microsoft’s operating margin could decline to 44% in the fourth quarter, lower than consensus projections of 44.6%. Gross margins at 67.6% were also the lowest since 2022.
Microsoft spent $31.9 billion as capex during the quarter, up 49% year-on-year but lower than the consensus forecast of $34.9 billion. For the calendar year, Microsoft sees capex to be at $190 billion, including a $25 billion impact from higher component prices. Analysts had projected the figure to be $154.6 billion.
CEO Satya Nadella said that the company crossed an annual revenue run-rate of $37 billion for its AI business, more than double from the same period last year.
Shares of Microsoft fell as much as 3.5% in extended trading after the results announcement, but recovered marginally to trade little changed at $425. The stock has risen 19% in the last one month.
