MSFT Stock: How Did Microsoft Perform In Fiscal Q3 of 2022?
27 Abril 2022 - 8:05AM
Finscreener.org
Tech
giant Microsoft (NASDAQ: MSFT)
reported its fiscal third quarter of 2022 (ended in March) results
yesterday after market hours. In Q3, Microsoft’s sales stood at
$49.36 billion, with adjusted earnings of $2.22 per share.
Comparatively, analysts forecast revenue of $49.03 billion and
adjusted earnings of $2.18 per share in Q3. In the year-ago period,
Microsoft reported revenue of $41.7 billion and earnings of $2.03
per share.
Due to its revenue and earnings beat, MSFT stock is trading 4.6%
higher in pre-market today, valuing the company at $2.1 trillion,
by market cap. Due to the ongoing sell-off surrounding growth
stocks, Microsoft is trading 21% below record highs. However, MSFT
stock has still returned 327% to investors in the last five years
and 935% in the last 10 years.
Let’s see what drove Microsoft revenue in Q3 and if the stock
should be part of your portfolio today.
Microsoft cloud sales rose 32% in Q3
According to Microsoft
CEO, Satya Nadella, digital technology will be a key driver
that will power global economic output. So, the company is focused
on expanding its opportunity across the tech stack as it aims to
widen its portfolio of products and services.
In fiscal Q3 of 2022, customer commitments to Microsoft’s cloud
platform coupled with strong sales execution drove commercial
bookings growth at 28%. Comparatively, Microsoft’s cloud sales rose
32% year over year to $23.3 billion.
Further, LinkedIn sales grew by 34% while intelligent cloud
revenue stood at $19.1 billion in Q3. In an interview with
Bloomberg, the tech heavyweight confirmed hardware sales for Xbox
surged by 14% which was better than initial estimates. The Xbox is
gaining market share as it continues to disrupt the cloud gaming
vertical.
In fiscal Q4 of 2022, Microsoft’s productivity and business
process revenue is forecast between $16.65 billion and $16.9
billion. While Office 365 sales might decline on a sequential
basis, it will be offset by personal computing revenue which is
forecast between $14.65 billion and $14.95 billion in Q4.
Additionally, intelligent cloud sales are forecast between $21.1
billion and $21.35 billion in Q3 with operating expenses estimated
between $14.8 billion and $14.9 billion. Due to low engagement
hours and supply chain constraints, Microsoft expects gaming sales
to decelerate in the near term.
Microsoft also confirmed the ongoing war between Russia and
Ukraine is expected to lower sales by $110 million in Q4. The
lockdown measures imposed in China resulting in production
shutdowns will also impact the top-line going forward.
What next for MSFT stock and investors?
Microsoft is a money-generating machine as it has successfully
built a software business allowing the company to generate cash
flows across business cycles. Its suite of solutions includes
Microsoft Office as well as Dynamics which is used for enterprise
resource planning. These products are all the more powerful when
tied to cloud offerings and business intelligence tools.
Microsoft is well poised to benefit from multiple wide-moat
franchises that generate high margins. Additionally, the IT
spending on cloud workloads is estimated between 5% and 10%
providing Microsoft Azure with enough room to grow in the upcoming
decade.
Microsoft has a well-diversified business that includes a social
media platform in LinkedIn and a video game platform in Xbox. It
also announced
the acquisition of Activision
Blizzard (NASDAQ: ATVI),
one of the largest gaming companies in the world, for $69
billion.
In a nutshell, Microsoft is a top long-term bet given its robust
financials, wide economic moat, strong growth in its cloud
business, billion-dollar acquisitions, and more. Analysts tracking
MSFT stock expect it to gain another 35% in the next 12-months.
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