Microsoft
MSFT
is set to report
third-quarter fiscal 2022
results on Apr 26.
The Zacks Consensus Estimate for revenues is pegged at $48.96 billion, implying growth of 17.40% from the figure reported in the year-ago quarter.
The consensus mark for earnings has stayed at $2.18 per share over the past 30 days, suggesting 11.79% growth from the figure reported in the year-ago quarter.
Microsoft’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters, the average surprise being 10.88%.
Microsoft Corporation Price and EPS Surprise
Microsoft Corporation price-eps-surprise
|
Microsoft Corporation Quote
Let’s see how things have shaped up for the upcoming announcement:
Azure & Teams Momentum to Aid Growth
Continued strength in its cloud computing platform, Azure, is expected to have positively impacted the company’s fiscal third-quarter numbers. Azure is witnessing rapid adoption owing to the accelerated digital transformation by business enterprises globally. Microsoft’s industry-specific cloud offering is also driving adoption.
Intelligent Cloud revenues are anticipated between $18.75 billion and $19 billion in the fiscal third quarter. Azure’s revenue growth is likely to reflect continued strength in consumption-based services. The Zacks Consensus Estimate for Intelligent Cloud revenues is currently pegged at $18.88 billion, indicating 24.9% growth from the figure reported in the year-ago quarter.
Strong adoption of Dynamics 365 is expected to have driven top-line growth in the to-be-reported quarter. Microsoft expects revenue growth for Dynamics to be in the mid-20% range, driven by strength in Dynamics 365, including continued momentum in PowerApps.
Momentum witnessed for Teams, Microsoft’s workspace communication offering, might have acted as a tailwind. Teams’ user growth is expected to have been driven by the continuation of remote work and mainstream adoption of hybrid/flexible work model.
In fiscal second quarter, Teams’ monthly user base count surpassed 270 million. Introduction of Teams Rooms, Mesh for Teams and Teams Essentials are noteworthy developments.
Teams’ expanding customer base and features are actually helping Microsoft win share in the enterprise communication market against
Zoom
ZM
.
Markedly, at the end of fourth-quarter fiscal 2022, Zoom had roughly 509,800 customers (with more than 10 employees), up 9% year over year.
Solid uptick in Teams and strong Azure demand instill investors’ confidence in Microsoft, which currently carries a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Shares of Microsoft are down 16.5% year to date against Zoom’s plunge of 45.1%.
PC Shipment Decline to Have Hurt Top Line
Revenues from Windows are likely to have been driven by steady traction seen in Windows Commercial products and cloud services’ growth amid weak PC demand.
Per IDC data,
80.5 million PCs were shipped during the first quarter of 2022
, down 5.1% from the year-ago period, primarily due to supply chain and geopolitical challenges.
Among big PC vendors,
Dell Technologies
DELL
,
Apple
AAPL
and ASUS registered an increase in shipments.
While Apple had a market share of 8.9%, Dell registered a market share of 17.1%. Moreover, Dell’s PC sales improved 6.1% year over year to 13.7 million units, while Apple witnessed an increase of 4.3% to 7.2 million units.
Microsoft expects Surface revenues to grow in the mid-teens range, driven by strong demand for premium devices.
Microsoft expects fiscal third-quarter Windows commercial products and cloud services revenues to grow in the low double-digit range, driven by demand for Microsoft 365 and advanced security solutions.
The consensus mark for revenues from Windows stands at $6.17 billion, suggesting 9.3% growth from the figure reported in the year-ago quarter.
More Personal Computing revenues are expected between $14.15 billion and $14.45 billion. The company expects overall Windows OEM revenues to increase in the high single-digit range.
The Zacks Consensus Estimate for More Personal Computing revenues is currently pegged at $14.27 billion, indicating 9.5% growth from the figure reported in the year-ago quarter.
Stay on top of upcoming earnings announcements with the
Zacks Earnings Calendar
.
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