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Microsoft (MSFT) Q2 Earnings Preview: Revenue, Intelligent Cloud & More

Benjamin Rains

Shares of Microsoft MSFT fell 2% Tuesday, just one day before the firm is projected to report its quarterly financial results along with fellow market giants Boeing BA, Facebook FB, Qualcomm QCOM, Alibaba BABA, Visa V, Tesla TSLA, and many more. So, let’s take a look at what investors should expect from Microsoft’s earnings after the closing bell Wednesday

Quick Overview

Microsoft has expanded into everything from IoT to cloud computing in recent years, while also maintaining its strength as a software and personal computer powerhouse. MSFT came in second only to Amazon AMZN last quarter in terms of cloud market share. The company has also grown its Xbox-driven gaming division through initiatives such as its Netflix NFLX-style Game Pass—which Apple AAPL is reportedly ready to test out.

MSFT stock closed regular trading Tuesday down 2.04% at $102.94 a share. This marked an 11.4% downturn from its 52-week high of $116.18 a share.

 

Q2 Outlook

Microsoft’s quarterly revenues are projected to jump 12.3% from the year-ago period to hit $32.45 billion, based on our current Zacks Consensus Estimate. This would come up short of last quarter’s 19% revenue growth, but match the year-ago period’s 12% climb.

Meanwhile, the tech powerhouse’s adjusted quarterly earnings are expected to climb 13.54% to reach $1.09 per share. Again, this would mark a sequential slowdown compared to Q1 fiscal 2019’s 36% bottom-line expansion.   

Productivity & Business Processes

More specifically, MSFT’s Productivity & Business Processes unit is projected to see its revenues jump nearly 13% to reach $10.096 billion, based on our current NFM consensus estimates. This division, which includes Office, LinkedIn, and Dynamics CRM, saw its revenues pop 19% last quarter.

Intelligent Cloud

MSFT’s Intelligent Cloud revenues are expected to surge 19% to touch $9.295 billion. This closely watched unit surged 24% last quarter and 15% in the year-ago period.

More Personal Computing

Lastly, More Personal Computing is expected to see its revenues climb 7.5% to touch $13.086 billion. This would mark a downturn from last quarter’s 15% jump in MSFT’s largest business segment that includes Windows.

Bottom Line

Microsoft is currently a Zacks Rank #2 (Buy) based mostly on its recent earnings estimate revision activity. Microsoft is set to report its Q2 fiscal 2019 financial results after the closing bell Wednesday. With that said, make sure to check back here for our full analysis of Microsoft’s actual results.

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