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The Zacks Consensus Estimate for revenues is pegged at $55.36 billion, indicating growth of 6.74% from the figure reported in the year-ago quarter.
The consensus mark for earnings has moved south by 0.4% to $2.55 per share over the past 30 days, suggesting 14.35% year-over-year growth.
Microsoft’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing in one, the average surprise being 3.25%.
Strength in Intelligent Cloud and Productivity and Business Processes driven by growth in Teams, Azure and other cloud services is expected to have aided top-line growth in the to-be-reported quarter.
Over the past three months, shares of MSFT have returned 25.7% and outperformed the broader Zacks Computer & Technology sector and its peers Zoom (ZM - Free Report) , Dell Technologies (DELL - Free Report) and Hewlett Packard (HPE - Free Report) , which have gained 20%, 10%, 25.4% and 20.2%, respectively.
Let’s see how things have shaped up for the upcoming announcement:
Teams, Office 365 to Aid Productivity & Business Growth
The momentum witnessed for Teams, Microsoft’s workspace communication offering, might have acted as a tailwind in the to-be-reported quarter. Teams’ user growth is expected to have been driven by the continuation of remote work and mainstream adoption of the hybrid/flexible work model.
For the fiscal fourth quarter, Microsoft expects revenue growth in the Productivity and Business processes segment between 10% and 12% in constant currency (cc) to a range of $17.9-$18.2 billion. Our model estimate is pegged at $17.94 billion, indicating growth of 8.1% year over year.
Teams’ expanding customer base and features have been helping Microsoft win shares in the enterprise communication market against Zoom.
In the to-be-reported quarter, MSFT expanded the availability of Microsoft 365 Copilot to a wider range of customers, which is expected to have boosted revenue growth.
Strong adoption of Dynamics 365 is expected to have driven top-line growth in the to-be-reported quarter. Our model estimate is pegged at revenue growth of 31.5% year over year.
Microsoft and OpenAI's shared commitment to building generative AI systems and products that are trustworthy and safe. In the to-be-reported quarter, the company introduced innovative AI solutions specifically designed for Microsoft Cloud for Nonprofit, which have the potential to revolutionize fundraising and volunteer engagement within the nonprofit sector.
Microsoft and Epic expanded its long-standing partnership to integrate generative AI in the healthcare sector.
Improving yet Persistent Decline in PC Market to Hurt Top Line
Revenues from Windows are likely to have been driven by steady traction seen in Windows Commercial products and cloud services growth amid improving personal computer (PC) demand.
After seven consecutive quarters of year-over-year decline, the PC market is showing initial signs of stabilization, including sequential growth from the previous quarter. Per Gartner report, PC shipments in the April-June 2023 quarter plunged 16.6% year over year to 59.7 million units. The second-quarter PC shipment data shows a strong improvement from the first quarter when PC vendors had shipped 55.2 million units.
Among big PC vendors, Dell Technologies, Hewlett Packard and Lenovo registered a decrease in shipments. Dell Technologies’ PC volumes plunged 21.8% to 13.2 million units, while HPE registered a 0.9% year-over-year decline in shipments to 13.9 million units.
For more personal computing, Microsoft projects revenues between $13.35 billion and $13.65 billion, pressured by improving yet persistent decline in the personal computer market. The company sees Windows OEM revenues to decline in the low-to-mid 20s range.
Our model estimate is pegged at $13.55 billion, indicating a decline of 6.3% from the figure reported in the year-ago quarter.
Microsoft expects Xbox content and services revenue growth in the low to mid-teens due to third-party and first-party content as well as Xbox Game Pass.
For Intelligent Cloud, Microsoft anticipates revenues in cc to increase between 15% and 16% to a range of $23.6-$23.9 billion. MSFT warned that revenues from Azure can have quarterly variability primarily from per user business and in-period revenue recognition depending on the mix of contracts.
Our model estimate is pegged at $23.6 billion, indicating growth of 13.6% from the figure reported in the year-ago quarter.
Image: Bigstock
Microsoft (MSFT) to Report Q4 Earnings: What's in the Cards?
Microsoft (MSFT - Free Report) is set to report fourth-quarter fiscal 2023 results on Jul 25.
The Zacks Consensus Estimate for revenues is pegged at $55.36 billion, indicating growth of 6.74% from the figure reported in the year-ago quarter.
The consensus mark for earnings has moved south by 0.4% to $2.55 per share over the past 30 days, suggesting 14.35% year-over-year growth.
Microsoft’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing in one, the average surprise being 3.25%.
Strength in Intelligent Cloud and Productivity and Business Processes driven by growth in Teams, Azure and other cloud services is expected to have aided top-line growth in the to-be-reported quarter.
Over the past three months, shares of MSFT have returned 25.7% and outperformed the broader Zacks Computer & Technology sector and its peers Zoom (ZM - Free Report) , Dell Technologies (DELL - Free Report) and Hewlett Packard (HPE - Free Report) , which have gained 20%, 10%, 25.4% and 20.2%, respectively.
Microsoft Corporation Price and EPS Surprise
Microsoft Corporation price-eps-surprise | Microsoft Corporation Quote
Let’s see how things have shaped up for the upcoming announcement:
Teams, Office 365 to Aid Productivity & Business Growth
The momentum witnessed for Teams, Microsoft’s workspace communication offering, might have acted as a tailwind in the to-be-reported quarter. Teams’ user growth is expected to have been driven by the continuation of remote work and mainstream adoption of the hybrid/flexible work model.
For the fiscal fourth quarter, Microsoft expects revenue growth in the Productivity and Business processes segment between 10% and 12% in constant currency (cc) to a range of $17.9-$18.2 billion. Our model estimate is pegged at $17.94 billion, indicating growth of 8.1% year over year.
Teams’ expanding customer base and features have been helping Microsoft win shares in the enterprise communication market against Zoom.
This Zacks Rank #3 (Hold) company expects Office 365 revenue growth to be roughly 16% in cc, which is in line with our model estimates. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the to-be-reported quarter, MSFT expanded the availability of Microsoft 365 Copilot to a wider range of customers, which is expected to have boosted revenue growth.
Strong adoption of Dynamics 365 is expected to have driven top-line growth in the to-be-reported quarter. Our model estimate is pegged at revenue growth of 31.5% year over year.
Microsoft and OpenAI's shared commitment to building generative AI systems and products that are trustworthy and safe. In the to-be-reported quarter, the company introduced innovative AI solutions specifically designed for Microsoft Cloud for Nonprofit, which have the potential to revolutionize fundraising and volunteer engagement within the nonprofit sector.
Microsoft and Epic expanded its long-standing partnership to integrate generative AI in the healthcare sector.
Improving yet Persistent Decline in PC Market to Hurt Top Line
Revenues from Windows are likely to have been driven by steady traction seen in Windows Commercial products and cloud services growth amid improving personal computer (PC) demand.
After seven consecutive quarters of year-over-year decline, the PC market is showing initial signs of stabilization, including sequential growth from the previous quarter. Per Gartner report, PC shipments in the April-June 2023 quarter plunged 16.6% year over year to 59.7 million units. The second-quarter PC shipment data shows a strong improvement from the first quarter when PC vendors had shipped 55.2 million units.
Among big PC vendors, Dell Technologies, Hewlett Packard and Lenovo registered a decrease in shipments. Dell Technologies’ PC volumes plunged 21.8% to 13.2 million units, while HPE registered a 0.9% year-over-year decline in shipments to 13.9 million units.
For more personal computing, Microsoft projects revenues between $13.35 billion and $13.65 billion, pressured by improving yet persistent decline in the personal computer market. The company sees Windows OEM revenues to decline in the low-to-mid 20s range.
Our model estimate is pegged at $13.55 billion, indicating a decline of 6.3% from the figure reported in the year-ago quarter.
Microsoft expects Xbox content and services revenue growth in the low to mid-teens due to third-party and first-party content as well as Xbox Game Pass.
For Intelligent Cloud, Microsoft anticipates revenues in cc to increase between 15% and 16% to a range of $23.6-$23.9 billion. MSFT warned that revenues from Azure can have quarterly variability primarily from per user business and in-period revenue recognition depending on the mix of contracts.
Our model estimate is pegged at $23.6 billion, indicating growth of 13.6% from the figure reported in the year-ago quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.