Microsoft Corp. (NASDAQ: MSFT) reported fiscal 2020 third-quarter results after markets closed Wednesday. The software behemoth reported diluted quarterly earnings per share (EPS) of $1.40 on revenues of $35.0 billion. In the same period last year, the company reported EPS of $1.14 on revenues of $XX billion. The consensus estimates called for EPS of $1.26 on revenues of $33.66 billion.
The Dow’s U.S. Technology Index, which jumped by around 47% in 2019, is down about 3.5% for the year to date. Microsoft stock rose nearly 60% last year but has declined by about 9% so far in 2020. The company said that the COVID-19 pandemic had “minimal net impact” on revenue for the quarter.
The company said it returned $9.9 billion to shareholders in the third quarter through a combination of share buybacks and dividend payments.
Gross margins in the quarter rose to $24.05 billion, an increase of about one percentage point year over year, to total nearly 69% of revenue.
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CEO Satya Nadella said:
We’ve seen two years’ worth of digital transformation in two months. From remote teamwork and learning, to sales and customer service, to critical cloud infrastructure and security – we are working alongside customers every day to help them adapt and stay open for business in a world of remote everything. Our durable business model, diversified portfolio, and differentiated technology stack position us well for what’s ahead.
The company’s CFO, Amy Hood, added:
In this dynamic environment, our sales teams and partners executed a solid third quarter, with Commercial Cloud revenue generating $13.3 billion, up 39% year over year.
Intelligent cloud revenue rose 27% and Windows Commercial revenue rose 17% on a nominal basis. The company now claims 39.6 million subscribers to its Office 365 Consumer subscription base. Revenue growth in the company’s Azure platform rose 59% year over year.
The company said it would provide forward guidance on its conference call. The consensus estimate for the company’s fourth fiscal quarter calls for EPS of $1.37 on revenues of $36.42 billion. For the full fiscal year ending in June 2020, EPS is forecast at $5.55 on revenues of $140.15 billion.
Revenue from sales of the company’s Surface rose by 1% and search advertising revenue rose 1%, excluding traffic acquisition costs.
LinkedIn revenue rose 21% year over year and Xbox content and services revenue rose by 2%.
Shares traded up about 0.9% at $179.00 in after-hours trading Wednesday after closing at $177.43. The stock’s 52-week range is $119.01 to $190.70 and the 12-month consensus price target on the stock was $196.61.
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