Microsoft Stock Slides on Q4 Earnings as Azure Growth Slows

Updated 5:20 PM EST

Microsoft (MSFT) – Get the Microsoft Corporation report reported weaker-than-expected fourth-quarter results on Tuesday as the stronger U.S. dollar dampened the impact of overseas demand for its flagship cloud computing division.

Microsoft said revenue from Azure, its flagship cloud division, grew 40% year-over-year, notably slowing from its prior-quarter gains in the mid-to-high 40% range, companies said. having reduced their spending on digital infrastructure and the dollar continuing its 2022 rise.

The group’s overall revenue rose 12.4% to $51.87 billion for the three months ending June, Microsoft’s fourth fiscal quarter, missing analysts’ estimates of a total of $52.45 billion. and the company’s lowered forecast to between $51.94 billion and $54.74 billion.

Microsoft’s net income rose 2% to $16.7 billion as adjusted profit rose 2.7% from a year ago to $2.23 per share, well below consensus forecasts of Street of $2.29 per share. Microsoft had forecast a range between $2.24 and $2.32 per share in early June.

Microsoft earned just over half of its $168.1 billion revenue in 2021 from overseas markets, according to the group’s latest annual report, with international growth outpacing the domestic market by about 300 basis points.

The US dollar index, which tracks the greenback against a basket of six global currency pairs, hit a 20-year high of 108.54 earlier this month and is up more than 17, 2% compared to the same period last year.

“We see a real opportunity to help every customer in every industry use digital technology to overcome today’s challenges and emerge stronger,” said CEO Satya Nadella. “No company is better positioned than Microsoft to help organizations meet their digital imperative – so they can do more with less.”

Microsoft shares fell 0.1% in extended trading hours immediately after the earnings release to point to a Wednesday opening price of $251.81 apiece.

In terms of reporting segments, Productivity and Business Processes revenue increased 13% to $16.6 billion, Microsoft said, while Intelligent Cloud revenue increased 20% to $20. .9 billion dollars.

Personal computing revenue rose just 2% to $14.4 billion amid what the group described as “prolonged production shutdowns in China that continued through May and a deterioration in the PC market in June,” both of which “contributed to a negative impact on Windows OEM revenue of more than $300 million.”