Between a very mixed fourth quarter and favorable forecasts for the start of the new fiscal year, operators on Wall Street have chosen: it is with an increase that Microsoft’s publication is welcomed. In pre-market quotations, the action of the American software and cloud giant climbed nearly 4%, reducing its loss, since the start of the year, to 21%. This is less than that of the Nasdaq Composite, down sharply by 26% over the first seven months of 2022.
For the fourth quarter, ended June 30, of its 2021-2022 fiscal year, Microsoft generated revenue of $51.87 billion, for earnings per share of $2.23. Levels lower than expected by the consensus (respectively 52.38 billion and 2.29 dollars). This 12% quarterly year-on-year sales growth is the weakest the company has recorded since 2020.
A dollar too strong
In question, in particular, the strength of the dollar, supported, of course, by the more restrictive monetary policy of the American Federal Reserve, and while the company carries out, like many software publishers, a large part of its activity in international. Over one year, the greenback is, for example, up nearly 15% against the euro. Already in June, management had warned of the impact of exchange rate trends and reduced its forecasts.
The other pitfall, if any, comes from Microsoft’s flagship businesses, software suites and the cloud. Performance was both slightly disappointing in a more complicated economic environment marked by a slowdown in PC sales. In the first branch, sales of productivity solutions Office, Dynamics and from the LinkedIn network amounted to 16.6 billion euros, up nearly 13% over one year but below 16.67 billion expected.
Surprisingly strong predictions
In Intelligent Cloud, which includes revenue from Azure public cloud and enterprise application hosting services like SQL Server and Windows Server, billings rose 20% to $20.91 billion. below the 21.10 billion targeted by analysts. For Azure, growth was once again very strong, at 40%, but lower than the 46% of the previous quarter. The activity was penalized by a level of consumption a little lower than expected, in particular in storage, specified Amy Hood, in charge of finances of Microsoft.
Fortunately, the forecasts are surprisingly strong Wedbush analyst Dan Ives enthused. this is what investors and the stock market in general will remember. For the first quarter of the current fiscal year, Microsoft is targeting revenue of between $49.25 billion and $50.25 billion. The mid-range of $49.75 billion suggests revenue growth of around 10%, reflecting deteriorating PC sales and slowing growth in cloud infrastructure. But the expected implied gross margin, at 69.85%, is above the consensus level of 69.3%. And, for the year as a whole, the company is above all confident in its ability to live up to the forecast put forward three months ago, namely double-digit revenue growth, despite a currency impact. estimated at 4%, including 5% for the current quarter.