Microsoft (MSFT 73.80, -0.42) has shed 0.6% in pre-market after beating earnings and revenue expectations and providing middle-of-the-road guidance.
The software company reported above-consensus fourth quarter earnings of $0.75 per share on a 9.1% year-over-year increase in revenue to $24.70 billion, which also exceeded expectations.
Microsoft's reported earnings excluded a tax benefit, which amounted to $1.80 billion or $0.23/share. Furthermore, the company is among the early adopters of a new accounting standard that will result in a single revenue recognition model across industries. The new approach is more closely aligned with International Financial Reporting Standards (IFRS). Microsoft adopted the new standard on July 1 while all public US companies must adopt the change by the beginning of 2018.
Productivity and Business Processes revenue grew 21.0% year-over-year to $8.40 billion. LinkedIn contributed $1.10 billion to segment revenue. Revenue from Office commercial products and cloud services grew 5.0%. Office 365 commercial revenue jumped 43.0%. Office consumer products and cloud services revenue grew 13.0% with Office 365 consumer subscribers increasing to 27 million.
Intelligent Cloud revenue rose 11.0% year-over-year to $7.40 billion. Server products and cloud services revenue increased 15.0% with 97.0% revenue growth in the Azure platform driving the overall increase. Enterprise Services revenue declined 3.0%.
More Personal Computing revenue declined 2.0% to $8.82 billion, mainly due to lower phone revenue. Windows OEM revenue ticked up 1.0% while Windows commercial products and cloud services revenue rose 8.0% thanks to annuity revenue growth. Search advertising revenue, excluding traffic acquisition costs, rose 10.0% due to higher revenue per search and higher search volume. Surface revenue declined 2.0% while Gaming revenue grew 3.0%.
Looking ahead, the company does not expect major changes in key trends. First quarter revenue in Productivity and Business Processes is expected between $8.10 billion and $8.30 billion with about $1.10 billion coming from LinkedIn. Intelligent Cloud revenue is expected between $6.90 billion and $7.10 billion. Personal Computing revenue is expected between $8.60 billion and $8.90 billion.