MSFT data by YCharts
What: Shares of the software giant Microsoft (MSFT 2.76%) jumped 19.5% in April, according to data from S&P Capital IQ, as investors reacted favorably to the strong performance of cloud services revenue, earnings and growth in the company’s third-quarter earnings. Factoring in April’s strong performance, Microsoft is up 21.2% year-over-year, outpacing the stronger S&P 500 performance of 12.5%.
So what: For Microsoft investors, it’s the continued strong financial performance of CEO Satya Nadella, who has been CEO for about 15 months. The company’s third-quarter earnings of $0.61 per share beat analysts’ expectations by 19.6%. Based on revenue, the company reported net revenue of $21.7 billion, beating analysts’ expectations of $21.06 billion on posting revenue growth of 6% from one year to the next.
Shortly after taking the reins from Steve Ballmer, Nadella shifted Microsoft’s focus by changing Ballmer’s characterization of Microsoft as a “device and services company” to a “mobile-first, cloud-based” company. first of all”. And Microsoft is outperforming in the cloud. In the recently reported quarter, the company saw commercial cloud revenue growth of 106% year-over-year as Office 365 and Azure continue to reward investors.
Now what: For Microsoft investors, it looks like Nadella’s “mobile-first, cloud-first” strategy is taking hold. During the quarter, Microsoft again recorded triple-digit growth in commercial cloud revenue, its seventh consecutive quarter of triple-digit growth. The company now has an annual run rate (read: projected performance) of its commercial cloud segment of $6.3 billion.
Not only that, but the company is preparing its next big version of Windows – Windows 10 – to bolster its mobile strategy. The company promises a “single, unified platform for desktops, laptops, smartphones and all-in-one devices” to improve the mobile user experience. Early reports indicate that Windows 10 has a feature, Continuum, that changes its behavior based on device and user interface to personalize and improve the experience.
And while Microsoft’s mobile strategy has its work cut out for it, as Appleof iOS and GoogleAndroid dominates with smartphones and tablets, the company seems to be rewarding investors well, mainly on cloud revenue growth. If the company can get into mobile more meaningfully, investors should be rewarded more.
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