Microsoft reports beat on top and bottom line

Josh Lipton reports Microsoft's third quarter earnings results. He joins 'Closing Bell' to discuss. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

Microsoft shares moved 3% lower in extended trading Tuesday after the software maker announced fiscal third-quarter earnings and quarterly revenue guidance that came in stronger than analysts had expected. The company’s operating margin narrowed somewhat as cloud became a larger part of its business.

Here’s how the company did:

Earnings: $1.95 per share, adjusted, vs. $1.78 per share as expected by analysts, according to Refinitiv.
Revenue: $41.71 billion, vs. $41.03 billion as expected by analysts, according to Refinitiv.
The software and hardware maker posted 19% annualized revenue growth for the quarter, which ended March 31, according to a statement. That’s the biggest quarterly increase the company has posted since 2018, thanks in part to gains in PC sales resulting from coronavirus-driven shortages last year.

The company said its Azure public cloud, which competes with market leader Amazon Web Services, grew 50%, faster than the 46% growth analysts had expected, according to a CNBC review of 14 equity research notes. In the prior quarter Azure revenue grew 50%. Microsoft does not disclose Azure revenue in dollars.

With respect to guidance, Microsoft is expecting $43.6 billion to $44.5 billion in revenue in the fiscal fourth quarter, said Amy Hood, Microsoft’s finance chief. At the middle of the range that would represent 16% growth, more than the $42.98 billion consensus estimate among analysts polled by Refinitiv.

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