Microsoft posted the biggest quarterly growth since 2018

Shares of Microsoft, the software and hardware maker company, declined by 3% in extended trading Tuesday. The slump was pushed by the firm’s report about fiscal third-quarter earnings and quarterly revenue guidance that came in stronger than analysts had anticipated.

The company reported $1.95 per share and revenue of $41.71 billion. In comparison, Refinitiv analysts were hoping for earnings and revenue of $1.78 per share and $41.03 billion, respectively.

Microsofts published 19% annualized revenue growth for the quarter, which ended 31 March. Remarkably, that’s the biggest quarterly surge the company has posted since 2018. Increases in PC sales resulting from COVID-driven shortages in 2020 partly drove the gain.

According to Amy Hood, Microsoft’s finance chief, the company anticipates $43.6 billion to $44.5 billion in revenue in the fiscal fourth quarter.

The firms’ Intelligent Cloud segment delivered $15.12 billion in revenue in the fiscal third quarter. Remarkably, that was up 23% year over year.

Furthermore, Microsoft’s More Personal Computing unit, including Windows, gaming, devices, and search, came up with $13.04 billion in revenue. That increased about 19%, higher than the $12.55 billion consensuses. Technology research firm Gartner estimated earlier in April that PC manufacturers shipped almost 70 million units in the quarter, 32% more than in the year-ago quarter. Remarkably, that’s the fastest increase since 2000.

Microsoft Shares Are up 18% Year to Date

The operating margin for the Intelligent Cloud segment that includes Azure also fell to 42.5% from around 44.5%. Microsoft’s overall operating margin came in at 40.9%, declined from 41.6%.

Microsoft said it had won a U.S. Army contract worth up to $21.9 billion over a decade for augmented reality headsets. The firm also issued patches to address vulnerabilities in its Exchange Server on-premises email and calendar software that Chinese hackers exploited.

Remarkably, Microsoft shares are up 18% year to date, compared with a rise of about 12% for the S&P 500 over the same period.