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Factors to Consider Ahead of Microsoft's (MSFT) Q3 Earnings
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Microsoft Corporation (MSFT - Free Report) is set to report third-quarter 2019 results on Apr 24.
The company’s third-quarter results are likely to benefit from enterprise strength, robust Office 365 & Azure adoption. Further, its blockchain deals and acquisition synergies to enter the AR/VR market is a key catalyst in the to-be-reported quarter.
Office 365 is a subscription plan to access Office applications and other productivity services utilized in cloud services. Microsoft is firing on all cylinders to catch up with Alphabet’s G-Suite by empowering Office 365.
LinkedIn is also growing much faster than previously anticipated. In the last reported quarter, LinkedIn revenues surged 29% from the year-ago quarter (up 30% at cc).
Click here to know how the company’s overall Q3 performance is expected to be.
For third-quarter 2019, Productivity and Business Processes revenues are expected between $9.9 billion and $10.10 billion, backed by double-digit growth in Office commercial and Dynamics. Office is expected to be in the low-single digits due to growth in Office 365 which will partially be offset by the consumer PC market headwinds.
The Zacks Consensus Estimate for revenues for the Productivity and Business Processes segment is currently pegged at almost $10 billion, higher than $9 billion reported in the year-ago reported quarter.
Notably, Microsoft is adding features on a regular basis to these applications. Apart from strengthening cybersecurity features of Microsoft 365, the company in recent past integrated new AI-driven features, including automated slide design, Cortana reminders, enhanced search experiences and real-time meeting transcription, among others. The momentum is expected to continue in the to-be-reported quarter.
Intelligent Cloud revenues (including GitHub) are expected between $9.15 billion and $9.35 billion in the first-quarter. Azure's revenue growth is likely to reflect continued strength in the consumption and per-user based services.
The Zacks Consensus Estimate for revenues for the Intelligent Cloud segment is currently pegged at almost $9.28 billion, higher than $7.89 billion reported in the year-ago reported quarter.
The addition of new capabilities to Azure, with focus on existing workloads like security, IoT and Edge AI is likely to benefit the company in to-be reported quarter.
Microsoft Gaming Segment Highlights
For the third quarter, Microsoft anticipates Gaming revenues to grow at a moderate rate. The company is likely to benefit from an improving user engagement. Further, robust performance from Xbox software and services owing to third-party title strength will aid the segmental revenues in the to-be-reported quarter.
The Zacks Consensus Estimate for Gaming revenues in the first-quarter is currently pegged at almost $2.44 billion.
Microsoft seems to be gaining traction from the cloud gaming industry with the latest breakthroughs. The company’s increasing investments will possibly expand its market reach and drive innovation in the streaming games.
The company is not only focusing on an exclusive original content but also making gaming easily accessible to all consumers including mobile users, which is a positive. Thus, this is likely to keep gaming revenues ticking in the to-be-reported quarter.
Nevertheless, management expects operating margin to increase slightly on a year-over-year basis in the soon-to be reported quarter, owing to higher investments in commercial sales capacity, cloud engineering and LinkedIn.
Zacks Rank & Key Picks
Microsoft currently carries a Zacks Rank #3 (Hold).
Long-term earnings growth rate for Synopsys, MeetMe and Fortinet is projected at 10%, 20% and 15.5%, respectively.
Is Your Investment Advisor Fumbling Your Financial Future?
See how you can more effectively safeguard your retirement with a new Special Report, “4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future.”
Image: Bigstock
Factors to Consider Ahead of Microsoft's (MSFT) Q3 Earnings
Microsoft Corporation (MSFT - Free Report) is set to report third-quarter 2019 results on Apr 24.
The company’s third-quarter results are likely to benefit from enterprise strength, robust Office 365 & Azure adoption. Further, its blockchain deals and acquisition synergies to enter the AR/VR market is a key catalyst in the to-be-reported quarter.
Office 365 is a subscription plan to access Office applications and other productivity services utilized in cloud services. Microsoft is firing on all cylinders to catch up with Alphabet’s G-Suite by empowering Office 365.
LinkedIn is also growing much faster than previously anticipated. In the last reported quarter, LinkedIn revenues surged 29% from the year-ago quarter (up 30% at cc).
Click here to know how the company’s overall Q3 performance is expected to be.
Microsoft Corporation Price
Microsoft Corporation Price | Microsoft Corporation Quote
Azure, Office 365 & Dynamics Momentum to Continue
For third-quarter 2019, Productivity and Business Processes revenues are expected between $9.9 billion and $10.10 billion, backed by double-digit growth in Office commercial and Dynamics. Office is expected to be in the low-single digits due to growth in Office 365 which will partially be offset by the consumer PC market headwinds.
The Zacks Consensus Estimate for revenues for the Productivity and Business Processes segment is currently pegged at almost $10 billion, higher than $9 billion reported in the year-ago reported quarter.
Notably, Microsoft is adding features on a regular basis to these applications. Apart from strengthening cybersecurity features of Microsoft 365, the company in recent past integrated new AI-driven features, including automated slide design, Cortana reminders, enhanced search experiences and real-time meeting transcription, among others. The momentum is expected to continue in the to-be-reported quarter.
Intelligent Cloud revenues (including GitHub) are expected between $9.15 billion and $9.35 billion in the first-quarter. Azure's revenue growth is likely to reflect continued strength in the consumption and per-user based services.
The Zacks Consensus Estimate for revenues for the Intelligent Cloud segment is currently pegged at almost $9.28 billion, higher than $7.89 billion reported in the year-ago reported quarter.
The addition of new capabilities to Azure, with focus on existing workloads like security, IoT and Edge AI is likely to benefit the company in to-be reported quarter.
Microsoft Gaming Segment Highlights
For the third quarter, Microsoft anticipates Gaming revenues to grow at a moderate rate. The company is likely to benefit from an improving user engagement. Further, robust performance from Xbox software and services owing to third-party title strength will aid the segmental revenues in the to-be-reported quarter.
The Zacks Consensus Estimate for Gaming revenues in the first-quarter is currently pegged at almost $2.44 billion.
Microsoft seems to be gaining traction from the cloud gaming industry with the latest breakthroughs. The company’s increasing investments will possibly expand its market reach and drive innovation in the streaming games.
The company is not only focusing on an exclusive original content but also making gaming easily accessible to all consumers including mobile users, which is a positive. Thus, this is likely to keep gaming revenues ticking in the to-be-reported quarter.
Nevertheless, management expects operating margin to increase slightly on a year-over-year basis in the soon-to be reported quarter, owing to higher investments in commercial sales capacity, cloud engineering and LinkedIn.
Zacks Rank & Key Picks
Microsoft currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same industry are Synopsys, Inc. (SNPS - Free Report) , MeetMe, Inc. and Fortinet, Inc. (FTNT - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Synopsys, MeetMe and Fortinet is projected at 10%, 20% and 15.5%, respectively.
Is Your Investment Advisor Fumbling Your Financial Future?
See how you can more effectively safeguard your retirement with a new Special Report, “4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future.”
Click to get it free >>