Microsoft is scheduled to release its next earnings report on Tuesday after closing bell, and Wall Street is looking for $22.2 billion in revenue and 58 cents per share in adjusted earnings. Management guided for between $21.7 billion and $22.4 billion in revenue.

Microsoft Corporation Earnings Preview

The company is expected to show continued strength in its transition toward being a cloud-focused firm, and signs of stabilization in the PC market may support its legacy businesses. However, Microsoft’s mobile efforts still leave much to be desired, according to recent data.

Microsoft shows momentum in the cloud

In a report dated July 18, JPMorgan analyst Mark Murphy and team said their recent survey of 44 top Microsoft resellers indicates that the company’s partners believe it is “improving its technology vision.” They reported that on average, the company’s partners were 2.3% ahead of plan for the fourth fiscal quarter. This is lower than the 4.5% outperformance they reported in the previous quarters, they added.

The JPMorgan team also said that bookings expectations moderated a bit but remain on the plus side. Additionally, the company still holds “a huge lead” compared to some legacy vendors in “technology vision.” In terms of product momentum, Azure is at the top with Office 365 close behind, which Murphy and team explained means that Microsoft’s cloud portfolio continues to show strong momentum. They add that Azure and Office 365 have the two strongest ratings in terms of product momentum all across their software surveys.

Cloud transition going quickly for Microsoft

Another finding from their survey was that 39% of Microsoft resellers believe the pace of transactional business worsened in the fourth quarter compared to the third. Just 23% said they felt that it improved, which the JPMorgan team said could suggest that the transition to becoming a cloud business on the commercial side of Microsoft’s business is actually going more quickly than expected.

Goldman Sachs analyst Heather Bellini and team pointed out in their July 17 report that Microsoft reported weakness in transactional revenue for both its Servers and Tools and commercial Office segments. They believe this weakness continued in the fourth quarter.

Still room for improvement in mobile for Microsoft

There’s no denying that Microsoft remains very strong, as Verto Analytics reports that 224.5 million users accessed the company’s services at least once during the month of June in the U.S. This gives the company a 90.7% reach in the country. Additionally, the company had 152.2 million daily users as of last month, and the average user spends 28.4 hours per month on its services with the average session lasting 6.3 minutes.

Verto adds that Microsoft has 191.7 million PC users, 83.7 million smartphone users and 40.1 million tablet users. The average PC user spends 31.9 hours per month on the company’s services, compared to only 2.3 hours on a smartphone each month and 1.7 hours per month on a tablet. Verto Analytics CEO and founder Dr. Hannu Verkasalo wonders if the company will ever be able to achieve the same level of success in mobile as it has in the cloud. Verto shared the following commentary from Dr. Verkasalo with ValueWalk:

“Microsoft is one of the most puzzling big technology companies at the moment, and they are certainly full of cash – as was witnessed in their deal to acquire LinkedIn in all-cash deal, beating out Salesforce and others. Microsoft currently reaches 190M monthly users in the U.S. on desktop, mainly because of Windows PCs. They have more users under desktop reach than any other app/web publishers, including Google, Yahoo or Facebook. However, at the same time, they are only number six in terms of their mobile reach, behind Twitter or Amazon, for example. They have done serious M&A in trying to get back in the mobile game including the acquisition of Skype and Nokia, but with little remarkable success. Out of all time spent with Microsoft, only 11% takes place on mobile devices, while the same is 40% for Facebook, and 19% even for Yahoo.”

Shares of Microsoft rose by as much as 0.95% to $54.21 during regular trading hours on Monday.