Microsoft (MSFT) is set to report Q2 (December) results after the close with a call scheduled for 5:30pm ET.

The Capital IQ consensus estimate for non-GAAP EPS is to grow 14% yr/yr to $2.32 and for revenue to grow 18% yr/yr to $50.79 bln. MSFT releases its results on its website, last time it was at 16:12 ET.

Microsoft 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),

• Personal Computing (Windows, Surface, Xbox)

MSFT's recent announcement to acquire Activision Blizzard (ATVI) will be a talking point. This would make Microsoft the world's third-largest gaming company by revenue, behind Tencent and Sony.

Microsoft's most prized posession is their Azure cloud computing business which primarily competes Amazon's (AMZN) AWS service. Azure revenue grew at 50% yr/yr in SepQ (in-line with recent quarters: 51% in Jun Quarter and 50% in Mar Quarter) MSFT expects Azure to remain healthy in Dec Quarter.

TECHS:

MSFT tends to be very consistent in terms of beating consensus estimates with 22 EPS beats in a row, including double digit EPS beats in each of the past five quarters. Last quarter, the software giant reported another large EPS beat with its Q1 (Sep) earnings report with $0.19 upside.

The stock has seen a big pullback in January as part of the tech sell-off. We do not think the move is company-specific or due to any concerns about the DecQ report.

RESULTS:

Microsoft beats by $0.16, beats on revs; Azure growth of 46% yr/yr vs 50% growth in SepQ

• Reports Q2 (Dec) earnings of $2.48 per share, $0.16 better than the S&P Capital IQ Consensus of $2.32; revenues rose 20.1% year/year to $51.73 bln vs the $50.80 bln S&P Capital IQ Consensus.

• Co will guide for Q3 (Mar) on the call today, be sure to monitor Briefing.com InPlay for updates.

• "Solid commercial execution, represented by strong bookings growth driven by long-term Azure commitments, increased Microsoft Cloud revenue to $22.1 billion, up 32% year over year"
  

  • Productivity and Business Processes segment revenue rose 19% yr/yr to $15.90 bln vs prior guidance of $15.70-15.95 bln and vs 22% growth in SepQ.

    • Office Commercial products and cloud services revenue increased 14% vs 18% in SepQ;

    • Office Consumer products and cloud services revenue increased 15%.

    • LinkedIn revenue rose 37% yr/yr vs 42% growth in SepQ; Dynamics products and cloud services rose 29% yr/yr vs 31% in SepQ; Dyanmics 365 revenue rose 45% yr/yr vs 48% growth in SepQ.

  • Intelligent Cloud segment revenue rose 26% to $18.30 bln vs prior guidance of $18.10-18.35 bln and vs 31% growth in SepQ.

    • Server products and cloud services revenue increased 29% yr/yr vs 35% growth in SepQ, driven by Azure revenue growth of 46% yr/yr vs 50% growth in SepQ, 51% growth in JunQ and 50% growth in MarQ.

  • Personal Computing segment revenue rose 15% to $17.50 bln vs prior guidance of $16.35-16.75 bln and vs 12% growth in SepQ.

    • Windows OEM revenue rose 25% yr/yr vs 10% in SepQ; Windows Commercial products and cloud services revenue increased 13% yr/yr vs 12% growth in SepQ.

    • Xbox content and services revenue rose 10% yr/yr vs 2% growth in SepQ.

    • Search advertising revenue excluding traffic acquisition costs rose 32% yr/yr vs 40% in SepQ.

    • Surface revenue rose 8% yr/yr vs -17% in SepQ.

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