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Microsoft set to report earnings after the bell


Microsoft is set to report earnings for the first quarter of the company's fiscal year – which ended on September 30 – after the closing bell on Thursday. The company is also slated to hold a conference call with analysts at 5:30 p.m. Eastern time.

  • EPS: $0.72, excluding certain items, is expected by analysts, according to Thomson Reuters.
  • Revenue: $23.56 billion is expected by analysts, according to Thomson Reuters.

The company is on track to exceed its self-imposed goal of a $20 billion in annualized revenue run rate for its commercial cloud business – which includes the Azure cloud, the Office 365 subscription-based application suite and Dynamics 365 apps for customer relationship management and enterprise resource planning – either this quarter or next quarter, KeyBanc analysts Brent Bracelin, Clarke Jeffries and Alyssa Johnson wrote in an Oct. 22 note.

"Reaching $20 billion would imply the commercial cloud mix could cross over 20 percent of revenue for the first time in 1Q18, up from 5 percent in early 2015," the KeyBanc analysts wrote. The annualized run rate figure is calculated by multiplying revenue for the last month of the quarter by 12.

On the infrastructure side, the Azure cloud – which is larger than Google's cloud and second only to Amazon Web Services – could contribute around $1.3 billion in revenue for the quarter, which would be up 90 percent year over year, Stifel analysts Brad Reback and Adam Borg wrote in an Oct. 23 note. That would suggest a continuing slight decline in revenue growth in the past few quarters.

As for the commercial versions of Microsoft's Office 365 subscription-based application suite, they could post revenue growth of around 30 percent, which would be down from two years of more than 40 percent growth, PiperJaffray analysts Alex Zukin, Scott Wilson and Taylor Reiners wrote in an Oct. 23 note.

Some of the worst results could come in the traditional Office commercial business -- the KeyBanc analysts think its revenue could be down by 25 percent. Still, Office 365 commercial growth could counteract that in terms of both revenue and revenue growth.

The KeyBanc analysts are expecting gaming revenue to come in at $1.64 billion, which would be down 13 percent, as Microsoft prepares for the launch of the Xbox One X console on Nov. 7. And they expect LinkedIn to contribute $1.1 billion in revenue, which would be flat sequentially.

As for Windows, revenue from companies putting Pro versions of the operating system on devices should come in at $3.85 billion, which would be down by 1 percent, the KeyBanc analysts said.

In terms of guidance, analysts are looking for Microsoft to hit 83 cents in earnings per share, excluding certain items, and $28.15 billion in revenue in the second quarter, which will end on Dec. 31, according to Thomson Reuters.

Microsoft stock is up about 27 percent since the beginning of the year. In its fiscal first quarter the company acquired Cycle Computing, introduced the Azure Container Instances cloud service and said it was working on an artificial intelligence chip for a future version of its HoloLens mixed reality headset.

This is breaking news. Please check back for updates.


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