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Microsoft Posts Better-Than-Expected Earnings

The tech giant late Wednesday posted results for its fiscal first quarter ended Sept. 30, beating Street estimates for both revenue and profits.

The tech giant late Wednesday posted results for its fiscal first quarter ended Sept. 30, beating Street estimates for both revenue and profits.

Microsoft late Wednesday posted better-than-expected results for its fiscal first quarter ended Sept. 30, beating Street estimates for both revenue and profits.

For the quarter, the software giant reported revenue of $33.1 billion, up 14% from the comparable year-ago quarter and ahead of the Wall Street analyst consensus forecast of $32.23 billion. Profits were $1.38 a share, up 24% from a year ago and ahead of the consensus at $1.24 a share. Operating income was $12.7 billion, up 27%.

Microsoft finished the quarter with $136.6 billion in cash and securities. In the quarter, the company returned $7.9 billion in cash to shareholders, including $4 billion paid out to buy back 29.1 million shares, as well as dividends.

Microsoft (ticker: MSFT) said its closely watched “commercial cloud business,” which includes Azure, Office 365, and other cloud offerings but isn’t a formal Microsoft reporting segment, had $11.6 billion in revenue in the quarter, up 36% from a year ago. Revenues from Azure were up 59%.

“The world’s leading companies are choosing our cloud to build their digital capability,” CEO Satya Nadella said in a statement. “We are accelerating our innovation across the entire tech stack to deliver new value for customers and investing in large and growing markets with expansive opportunity.”

Among the company’s reporting segments, productivity and business process revenue was $11.1 billion, up 13%. Intelligent Cloud revenue was $10.8 billion, up 27%. Personal-computing revenue was $11.1 billion, up 4%, with search advertising up 11%, Windows OEM revenue was up 9% and Windows Commercial products’ revenue was up 26%.

On the post-earnings conference call, the company said it expects revenue for the December quarter of $11.3 billion to $11.5 billion from productivity and business processes; $11.25 billion to $11.45 billion from Intelligent Cloud; and $12.6 billion to $13 billion from personal computing.

That implies a range of $35.15 billion to $35.95 billion, slightly below the Street consensus at $36.02 billion. The company also said it now expects its full-year operating margin to be up slightly from the previous year.

Microsoft stock is up 1%, at $138.55, in premarket trading at 6:22 a.m. Thursday.

Write to Eric J. Savitz at eric.savitz@barrons.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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