Microsoft Corporation Tumbles After Earnings Miss

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Microsoft released its latest earnings report after closing bell tonight, posting adjusted earnings of 62 cents per share, non-GAAP revenue of $22.1 billion, and GAAP revenue of $20.5 billion. Analysts had been expecting earnings of 64 cents per share and $22.09 billion in revenue for the third quarter of the company’s fiscal 2016.

Microsoft’s earnings plunge

Reported earnings were 47 cents per share, compared to the year-ago quarter’s 61 cents per share in earnings. Microsoft recorded a 1% increase or 6% increase in constant currency in Productivity and Business Processes revenue, which brought it to $6.5 billion. Revenue from office commercial products and cloud increased 7% on the back of 63% constant currency revenue growth in Office 365. Office consumer products and cloud recorded a 6% increase in constant currency as Microsoft’s consumer subscribership reached 22.2 million. Dynamics products and cloud revenue increased 9%.

Intelligent Cloud revenue increased 3% or 8% in constant currency, reaching $6.1 billion as server products and cloud revenue climbed 5% and Azure revenue skyrocketed by 120%. Microsoft’s Enterprise Mobility customers more than doubled to reach 27,000, and the company grew its installed base by almost four times.

More Personal Computing revenue rose 1% to $9.5 billion, with a 2% decline in Windows OEM revenue. Surface revenue climbed 61% on the back of strong sales of the Surface Pro 4 and Surface Book. The monthly active user base of Xbox Live rose 26% to 46 million, while search ad revenue excluding traffic acquisition costs increased 18%. Management credited growing use of Windows 10 for the growth in search revenue.

Microsoft’s cloud business in focus

Microsoft management emphasized the strength of the company’s cloud business as the company’s commercial cloud annualized revenue run rate surpassed $10 billion. They also reported that Windows 10 is now active on more than 270 million devices.

Microsoft shares tumbled in after-hours trades, falling 4.46% to $53.15 in after-hours trades.

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