Tech giant, Microsoft reportedly saw its shares tumble by 7% during extended trading this week after reporting weak quarterly guidance and lower-than-expected cloud revenue in the first fiscal quarter.

The company’s earnings came at $2.35 per share, beating analyst expectations of $2.30 per share, while its revenue reached $50.12 billion, above the analyst expectations of $49.61 billion, as per Refinitiv.

In terms of guidance, the Redmond-headquartered firm is observing a revenue between $52.35-$53.35 billion for the second fiscal quarter, indicating a 2% growth on-quarter.

Meanwhile, analysts, as per a poll by Refinitiv, estimated revenue at $56.05 billion.

Apparently, the implied operating margin in the second quarter for Microsoft will be around 40%, below the 42% estimate by analysts polled by StreetAccount.

According to a statement by Microsoft, the total revenue in the first quarter grew 11% year-over-year, with CEO Satya Nadella blaming cyclical trends that are impacting the company’s consumer business.

Microsoft’s net income dipped 14% to $17.56 billion.

Meanwhile, its Intelligent Cloud business segment, which includes Azure, SQL Server, Windows Server, Nuance, and Enterprise Services, earned $20.33 billion in quarterly revenue, a 20% rise on-quarter but faintly lower than the analyst expectations of $20.36 billion.

Microsoft further stated that Azure revenue rose 35% this quarter, compared to the 40% rise in the previous quarter. However, analysts estimated the growth between 36.4-36.9%.

Amy Hood, Chief Finance Officer at Microsoft, said that there was moderate growth in Azure consumption and that its gross margin was affected by the high energy costs during the quarter.

Its Productivity and Business Processes segment, which includes Microsoft 365 productivity software subscriptions, LinkedIn, and Dynamics, recorded $16.47 billion in revenue, a 9% growth on-quarter, beating analyst expectations of $16.13 billion.

This is the first time that the quarterly revenue from the Microsoft Cloud metric, including Azure, commercial parts of LinkedIn and Dynamics 365, and commercial Office 365 subscriptions, made up for over 50% of Microsoft’s total revenue.

Source credit: https://www.cnbc.com/2022/10/25/microsoft-msft-earnings-q1-2023.html