Microsoft shares rebound on upbeat guidance

  • July 26, 2022

Microsoft Corporation (NASDAQ: MSFT) reported weaker-than-expected results for its Q4 on Tuesday as macro headwinds resulted in a bigger hit compared to what the management had anticipated when it downwardly revised guidance last month.

Shares still climbed over 5.0% on upbeat guidance.

Key takeaways from Microsoft Q4 earnings report

Earned $16.74 billion versus the year-ago figure of
EPS of $2.23 was better than $2.17 in Q4 of the previous year
Revenue went up 12% year-over-year to $51.87 billion
Consensus was $2.29 of EPS on $52.38 billion in revenue
Azure revenue up 40% fell shy of expectations for a 43% growth

At $20.91 billion, revenue from “Intelligent Cloud” jumped 26%, as per the earnings press release, but still came in short of the FactSet consensus.

Other notable figures and Adam Parker’s remarks

Other notable figures in Microsoft’s Q4 earnings report include a 2.0% annualised increase in “More Personal Computing” while “Productivity and Business Processes” climbed 13%.

Both figures, however, came in below the experts’ forecast. Discussing the earnings print on CNBC’s “Closing Bell: Overtime”, Crossmark Global’s Victoria Fernandez said:

I don’t see that there’s a tremendous amount wrong in this report. We wanted to hear what that corporate business is looking like. The CFO is saying that’s still strong. So, all in all, pretty well which is why we’ve seen the stock rebound here.

Microsoft reiterates its full-year outlook

For the current financial quarter, Microsoft expects its revenue to fall between $49.25 billion to $50.25 billion. In comparison, analysts had called for a higher $51.49 billion. The implied gross margin of 69.85%, however, was better then the consensus of 69.30%.

The tech titan also reiterated its full-year guidance despite the more challenging macro environment.

Microsoft stock is now down 25% versus the start of 2022. Wall Street has a consensus “buy” rating on MSFT with upside to $338 or 35% increase from here.

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