Microsoft
Inside the Numbers
Therefore, Microsoft's performance has a major effect on broader markets. Like the other mega-cap technology stocks, Microsoft was unaffected by the coronavirus pandemic as it beat earnings and revenue figures. Earnings came in at $1.40 per share which was significantly higher than analysts' estimates of $1.26 per share. Revenue for the quarter was $35.02 billion which was higher than expectations of $33.6 billion and was 15% higher than the previous year.
Microsoft also guided higher than expectations between $35.85 to $36.6 billion in the next quarter. The biggest source of growth for Microsoft continues to be its cloud division, Azure, where revenues increased by 59%. Office365 revenues also grew by 25%, and cloud services grew double-digits. Microsoft Teams saw strong growth with 75 million daily active users, an increase of 44 million this quarter, due to the coronavirus and people working from home.
The company did note some slowdown in March from small businesses on cloud spending, lower ad spend and licensing. However, it wasn't significant enough to affect Microsoft's overall momentum. And some of this weakness was offset by increased demand for software products due to work from home and online education.
Stock Performance
Microsoft's stock gained 5% following its earnings beat and upbeat guidance. The report also revealed that disruptions from the coronavirus are not too meaningful yet. Cloud spending and software are integral to business operations and can't be cut like other costs.
Currently, the stock is trading less than 3% from its all-time high. It's impressive to look at Microsoft's revenue growth vs the average revenue growth for the S&P 500 which is just under 5% based on analyst estimates before the coronavirus. Microsoft managed to grow at 15% during this period.
Price History
Microsoft was one of the big winners of the 90s during the software and PC revolution, as it gained 60x during that decade until the top of the technology bubble. For the next 14 years, Microsoft traded in a range between $30 and $20 with a few, short excursions outside of this range.
Since 2014, the stock has exploded higher, largely due to the growth of its cloud division. It has essentially turned Microsoft into a growth stock as its price to sales has expanded from 3 to 10 despite its already, large size.
