Microsoft (MSFT) is set to report Q3 (Mar) results today after the close with a call to follow at 5:30pm ET.

The CapitalIQ consensus estimate for non-GAAP EPS is $1.27 and for revenue it's $33.70 bln.

It's important to note that MSFT typically guides on the call, although with the pandemic, MSFT may not provide guidance this time.

Microsoft operates in several areas and it's important to know the breakdown by segment: Productivity and Business Processes (Office 365, LinkedIn, Dynamics 365, which are cloud-based ERP and CRM apps), Intelligent Cloud (Azure, SQL Server, Windows Server), and More Personal Computing (Windows, Surface, Xbox).

In January, MSFT's guidance by segment was: PBP: $11.5-11.7 bln IC: $11.85-12.05 bln and MPC: $10.75-11.15 bln. In February, Microsoft said it was seeing strong Windows demand as expected.

Microsoft beats by $0.15, beats on revs, will guide on call; COVID had minimal impact on sales  

Reports Q3 (Mar) earnings of $1.40 per share, $0.15 better than the S&P Capital IQ Consensus of $1.25; revenues rose 14.6% year/year to $35.02 bln vs the $33.70 bln S&P Capital IQ Consensus.

Co will guide for Q4 (Jun) on the call today.

• Productivity and Business Processes segment revenue rose 15% yr/yr to $11.7 bln vs prior guidance of $11.5-11.7 bln.

• Intelligent Cloud segment revenue rose 27% to $12.3 bln vs prior guidance of $11.85-12.05 bln.

  • Server products and cloud services revenue increased 30%, driven by Azure revenue growth of 59% yr/yr. 

• More Personal Computing segment revenue rose 3% to $11.0 bln.

  • Windows OEM revenue was relatively unchanged yr/yr; Windows Commercial products and cloud services revenue increased 17%.

• Co says COVID-19 had minimal net impact on the total company revenue.

• In the PBP and IC segments, cloud usage increased, particularly in Microsoft 365 including Teams, Azure, Windows Virtual Desktop, advanced security solutions, and Power Platform, as customers shifted to work and learn from home.

  • In the final weeks of the quarter, there was a slowdown in transactional licensing, particularly in small and medium businesses, and a reduction in advertising spend in LinkedIn.

• In the More Personal Computing segment, Windows OEM and Surface benefited from increased demand to support remote work and learn scenarios, offset in part by supply chain constraints in China that improved late in the quarter.

  • Gaming benefited from increased engagement following stay-at-home guidelines.

  • Search was negatively impacted by reductions in advertising spend, particularly in the industries most impacted by COVID-19.

  • The effects of COVID-19 may not be fully reflected in the financial results until future periods.

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