Microsoft beat Wall Street estimates for the quarter ended Sept. 30, with Azure cloud revenue up 48%. Shares rose in extended trading, even as free cash flow declined 27% from a year ago.
Microsoft shares rose 4% in extended trading on Wednesday after the company reported better-than-expected quarterly results, driven by 48% growth in its Azure cloud infrastructure business.
Adjusted earnings per share came in at $4.89 against $4.73 expected, based on LSEG consensus. Revenue reached $92.28 billion versus $90.69 billion expected, up 19% year over year.
Azure revenue disclosed in dollars for the first time
For the first time, Microsoft disclosed Azure revenue in dollars, at $33.17 billion in the quarter. Analysts polled by StreetAccount expected $32.32 billion, and the growth rate in the June quarter was 42%.
The company now reports under two operating segments. In Agents and Infra, which contains Azure, revenue rose almost 25% to $76.8 billion, above the $75.63 billion consensus. Devices and Consumer revenue slipped 3% to $15.48 billion, beating the $15.05 billion consensus.
Spending climbs while cash flow falls
Microsoft reported $45.2 billion worth of capital expenditures and finance leases during the quarter, up about 30% from a year earlier. Analysts surveyed by StreetAccount had projected $50.67 billion.
Around 75% of capital expenditures are now tied to short-lived assets such as Intel chips and Nvidia graphics processing units, up from about 66% in the past three quarters.
Meanwhile, free cash flow declined 27% to $18.63 billion. Alphabet reported more than $9 billion in negative free cash flow in the quarter.
Microsoft shares were up about 10% year to date as of Wednesday's close, trailing the S&P 500, which has gained 13% over the same period.
Source: CNBC
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