Microsoft (MSFT) will report its Q4 (June) results today after the market closes, with a follow-up call at 5:30 pm ET.

Analysts expect non-GAAP EPS to grow 9% year-over-year to $2.94 and revenue to increase by 15% year-over-year to $64.38 billion. MSFT usually releases its 8-K filing with results around 4:03-4:04 pm ET, first in the filing and then on their website. They also provide guidance for the next quarter's revenue during the call, so keep an eye on InPlay.

Microsoft's operations are divided into three main segments:

  1. Productivity and Business Processes: Includes Office 365, LinkedIn, and Dynamics 365 (cloud-based ERP and CRM apps).

  2. Intelligent Cloud: Comprises Azure, SQL Server, Windows Server, and Nuance.

  3. More Personal Computing: Covers Activision, Windows, Surface, and Xbox.

Azure, Microsoft's cloud platform, is closely watched. In Q3 (March), Azure grew by 31% in constant currency (CC), exceeding its guidance of 28% CC. This was notable as Azure had been growing in the high-20% range in recent quarters. The Q4 (June) guidance was also strong at 30-31% CC growth.

Microsoft has seen an increase in large Azure deals, including multi-year commitments over $1 billion. The number of $100+ million Azure deals grew by over 80% year-over-year, and $10+ million deals more than doubled, driven by AI adoption. Customers use Azure to build their own AI systems, leveraging a variety of AI accelerators from NVIDIA, AMD, and Microsoft's own silicon.

TECHS:

Historically, Microsoft has reported EPS above expectations in 20 of the past 21 quarters, including five consecutive quarters with double-digit EPS beats. However, the Q3 EPS beat was the smallest in the last five quarters. While Microsoft typically reports revenue above expectations, this is not always the case. It has exceeded revenue expectations for five consecutive quarters.

Recently, Microsoft's stock has pulled back, down 11% from its early July highs. This decline appears to be part of a broader rotation away from mega-cap tech stocks rather than an issue specific to Microsoft.

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