Will Azure Act In Favor Of Microsoft (MSFT) In Q4 Earnings?
Zacks Investment Research | Jul 16, 2017 09:00PM ET
Microsoft Corp (NASDAQ:MSFT) is set to report fourth-quarter fiscal 2017 results on Jul 20. Notably, the company has a positive record of earnings surprises in the trailing four quarters, with an average surprise of 10.40%.
Last quarter, the company posted a positive earnings surprise of 5.80%. Earnings (adjusted for Windows 10 deferrals and currency effect) of 73 cents per share increased 15% year over year but declined 12% on a sequential basis.
Revenues (adjusted for Windows 10 deferrals) of $23.56 billion decreased 9.6% sequentially but increased 6.3% from the year-ago quarter (up 7% in constant currency or CC). Further, it exceeded the Zacks Consensus Estimate of $23.55 billion.
Notably, Azure revenues soared 94% at CC on a year-over-year basis. Microsoft noted that Azure premium revenues grew triple digits for the 11th consecutive quarter, with more than 80% of Azure customers using the premium services.
Azure’s strong performance has also helped the company to outperform the S&P 500 on a year-to-date basis. The stock returned 17.1%, while the index gained 10%.
Let’s see how things are shaping up for this announcement.
Factors at Play
We believe that Azure’s performance will be the key catalyst in the to-be reported quarter. Microsoft anticipates commercial cloud services to continue to drive annuity growth, on the back of expanding installed base, growing consumption and higher number of renewals.
Management forecasts commercial unearned revenues of $26.8–$27 billion, in line with historical seasonality. We note that acquisitions like
Lam Research (NASDAQ:LRCX) , with an Earnings ESP of +1.33% and a Zacks Rank #1.
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