Dow Jones software leader Microsoft Corporation (NASDAQ:NASDAQ:MSFT) saw its profits fall during the fiscal fourth quarter 2022 as the effects of a stronger US dollar and an extended production shutdown in China cut into revenue.
Earnings per share (EPS) came in at US$2.23 versus consensus estimates of US$2.29.
Total revenue hit US$51.9 billion, less than analyst estimates of just over US$52.8 billion, but still 12% above the comparable year-ago quarter’s profit of US$46.2 billion.
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Microsoft had previously downgraded its 4Q revenue guidance from US$52.4 billion to $51.9 billion.
Shares of the technology behemoth fell 1.5% after the bell on Tuesday, hovering around US$248. The stock hit a record high of $349.67 a share in 2021.
“We see real opportunity to help every customer in every industry use digital technology to overcome today’s challenges and emerge stronger,” said Satya Nadella, CEO of Microsoft. “No company is better positioned than Microsoft to help organizations deliver on their digital imperative – so they can do more with less.”
“In a dynamic environment we saw strong demand, took share, and increased customer commitment to our cloud platform. Commercial bookings grew 25% and Microsoft Cloud revenue was $25 billion, up 28% year over year,” said Amy Hood, executive vice president and chief financial officer of Microsoft. “As we begin a new fiscal year, we remain committed to balancing operational discipline with continued investments in key strategic areas to drive future growth.”
Revenue from the Intelligent Cloud business has slowed in recent quarters, dropping from 31% year-over-year growth in fiscal 1Q 2022 to 26% growth in 2Q and 3Q. This fourth fiscal quarter generated revenue of $20.91 billion in revenue, up 20% but below the consensus of $21.10 billion.
Microsoft said unfavourable foreign exchange rate movement within the quarter negatively impacted revenue and diluted earnings per share $595 million and $0.04, along with extended production shutdowns in China that continued through May and a deteriorating PC market in June contributed to a negative impact on Windows OEM revenue of over $300 million.
Microsoft sells software for corporations, schools and governments, plus operates LinkedIn, the Xbox gaming unit and advertising. Microsoft will also serve as the technology provider for Netflix’s upcoming ad-supported subscription tier.
Contact the author at susie@proactiveinvestors.com