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Microsoft (MSFT) to Report Q3 Results: What's in the Offing?
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Microsoft (MSFT - Free Report) is slated to report third-quarter fiscal 2020 results on Apr 29.
The Zacks Consensus Estimate for fiscal third-quarter earnings is pegged at $1.27 per share, indicating an improvement of 11.4% from the year-ago reported figure. The estimates declined 2.3% over the past 30 days.
The Zacks Consensus Estimate for revenues stands at $33.85 billion, suggesting growth of 10.7% year over year.
Notably, the company has a trailing four-quarter positive earnings surprise of 13%, on average. In the last reported quarter, Microsoft delivered a positive earnings surprise of 14.39%.
Momentum in Microsoft’s cloud computing platform — Azure — is likely to have contributed to the fiscal third-quarter performance.
Moreover, the company’s workspace communication offering, Teams, has been witnessing a robust surge in usage owing to the coronavirus-induced demand. Notably, the company stated that Teams recently set a new daily record of 2.7 billion meeting minutes, up 200% from 900 million minutes on Mar 16. On Mar 19, Microsoft noted that Teams had 44 million daily active users (DAU). Moreover, out of Fortune 100 companies, 93 have implemented Microsoft Teams.
Increasing popularity of the company's products instill investor confidence in the stock. Notably, shares of Microsoft have returned 9% year to date, outperforming the industry’s rally of 2.7%.
The company also enhanced Teams with a slew of new capabilities enabling users to work from home seamlessly, in the wake of the coronavirus crisis.
Furthermore, the company has been strengthening Microsoft 365 (revamped version of Office 365 software suite) and Dynamics 365 suite of solutions to boost enterprise productivity. These initiatives are expected to have driven subscriber base, which in turn is likely to have contributed to the fiscal third-quarter performance.
Moreover, Microsoft has been striving to enhance the LinkedIn platform with robust AI, CRM capabilities at different levels, while maintaining user data privacy preferences. This is expected to have bolstered the adoption of LinkedIn’s subscription products, comprising membership, and education programs. This, in turn, is likely to have favored the top line in the quarter to be reported.
In the gaming segment, the tech giant is expected to have benefited from an increase in Xbox Live monthly active users and the adoption of Game Pass subscriptions as lockdowns trigger the demand for online gaming solutions.
Further, work-from-home and stay-at-home trend in the wake of coronavirus-led lockdown has been boosting demand for office equipment, which is likely to have generated incremental revenues from Surface devices in the to-be-reported quarter.
Moreover, higher investments in cloud and AI engineering, amid stiff competition from Amazon (AMZN - Free Report) in the cloud computing vertical and Slack in enterprise communication domain, are likely to have limited margin expansion in the fiscal third quarter.
Key Developments in Q3
Microsoft inked deal to acquire Affirmed Networks with an aim to gain advanced software and 5G edge computing capabilities to deliver enhanced cloud experience. The latest buyout is anticipated to aid Azure in providing customers with robust 5G edge computing offerings, which is the need of the hour amid rising demand for networking at the edge and data center.
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Microsoft (MSFT) to Report Q3 Results: What's in the Offing?
Microsoft (MSFT - Free Report) is slated to report third-quarter fiscal 2020 results on Apr 29.
The Zacks Consensus Estimate for fiscal third-quarter earnings is pegged at $1.27 per share, indicating an improvement of 11.4% from the year-ago reported figure. The estimates declined 2.3% over the past 30 days.
The Zacks Consensus Estimate for revenues stands at $33.85 billion, suggesting growth of 10.7% year over year.
Notably, the company has a trailing four-quarter positive earnings surprise of 13%, on average. In the last reported quarter, Microsoft delivered a positive earnings surprise of 14.39%.
Microsoft Corporation Price and EPS Surprise
Microsoft Corporation price-eps-surprise | Microsoft Corporation Quote
Factors to Consider
Momentum in Microsoft’s cloud computing platform — Azure — is likely to have contributed to the fiscal third-quarter performance.
Moreover, the company’s workspace communication offering, Teams, has been witnessing a robust surge in usage owing to the coronavirus-induced demand. Notably, the company stated that Teams recently set a new daily record of 2.7 billion meeting minutes, up 200% from 900 million minutes on Mar 16. On Mar 19, Microsoft noted that Teams had 44 million daily active users (DAU). Moreover, out of Fortune 100 companies, 93 have implemented Microsoft Teams.
Increasing popularity of the company's products instill investor confidence in the stock. Notably, shares of Microsoft have returned 9% year to date, outperforming the industry’s rally of 2.7%.
The company also enhanced Teams with a slew of new capabilities enabling users to work from home seamlessly, in the wake of the coronavirus crisis.
Furthermore, the company has been strengthening Microsoft 365 (revamped version of Office 365 software suite) and Dynamics 365 suite of solutions to boost enterprise productivity. These initiatives are expected to have driven subscriber base, which in turn is likely to have contributed to the fiscal third-quarter performance.
Moreover, Microsoft has been striving to enhance the LinkedIn platform with robust AI, CRM capabilities at different levels, while maintaining user data privacy preferences. This is expected to have bolstered the adoption of LinkedIn’s subscription products, comprising membership, and education programs. This, in turn, is likely to have favored the top line in the quarter to be reported.
In the gaming segment, the tech giant is expected to have benefited from an increase in Xbox Live monthly active users and the adoption of Game Pass subscriptions as lockdowns trigger the demand for online gaming solutions.
Further, work-from-home and stay-at-home trend in the wake of coronavirus-led lockdown has been boosting demand for office equipment, which is likely to have generated incremental revenues from Surface devices in the to-be-reported quarter.
However, deteriorating trend in PC shipments in the first quarter, due to coronavirus crisis-induced supply constraints, is likely to have weighed on the company’s performance in the to-be-reported quarter. Per Gartner’s preliminary data, PC shipments in first-quarter 2020 declined 12.3% year over year to 51.6 million units.
Moreover, higher investments in cloud and AI engineering, amid stiff competition from Amazon (AMZN - Free Report) in the cloud computing vertical and Slack in enterprise communication domain, are likely to have limited margin expansion in the fiscal third quarter.
Key Developments in Q3
Microsoft inked deal to acquire Affirmed Networks with an aim to gain advanced software and 5G edge computing capabilities to deliver enhanced cloud experience. The latest buyout is anticipated to aid Azure in providing customers with robust 5G edge computing offerings, which is the need of the hour amid rising demand for networking at the edge and data center.
Moreover, the latest Azure-focused healthcare deals to combat coronavirus crisis, including partnership with Adaptive Biotechnologies (ADPT - Free Report) , deserves a special mention.
Zacks Rank
Currently, Microsoft has a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>