Microsoft Corporation ($MSFT) Earnings (Q1 FY23)

 Microsoft Corporation ($MSFT) Earnings and Opinion:


Microsoft is a company in the Technology sector and operates in the Software-Infrastructure industry. The company develops, licenses, and supports software, services, devices, and solutions worldwide. Microsoft was founded in 1975 and is currently headquartered in Redmond, Washington. The company made its debut on the stock market in 1986.

Microsoft Earnings and Opinion:

  • Revenue of $50.12B beating expectations of $49.59B
  • Adj Gross Margin of 69.17% missing expectations of 69.78%
  • Adj Operating Income of $21.52B beating expectations of $21.29B
  • Adj Operating Margin of 42.93% beating expectations of 42.62%
  • Free Cash Flow of $16.92B missing expectations of $17.6B
  • Adj Diluted EPS of $2.35 beating expectations of $2.29
Opinion:
Microsoft is currently moving lower in the after market. The company reported earnings after the market closed this afternoon. The company posted some solid beats on expectations, but there are some other things we need to worry about here. Microsoft posted its weakest revenue growth in 5 years, with credit to the strong US dollar. They also saw a miss on their cloud growth expectations, even though it still posted growth of 35%. The economic uncertainty is impacting the company drastically. The company is seeing economic challenges hurt PC sales and advertising revenue going down. They are being surprised with the cost they are facing to deliver cloud services in Europe. Microsoft is not immune from the macroeconomic challenges, but the sentiment within the company seems strong and they feel good about their position in the market. Overall valuation for Microsoft shows that they are right around fair value. The P/E ratio is at 27.01, slightly below the median. The P/S ratio is a little high at 9.24. EV/EBITDA is at 18.85, which is right in line with the median. In my opinion, Microsoft is a wonderful company. I loved them for their PC business, but they have done a wonderful job in the cloud business. They have to make it through these tough times, but they have the business in check to continue some growth. I liked where the Azure growth was, even though it did not meet the expectations Wall St. had for them. It may be a tough couple of quarters in the near future with the dollar being so high in strength right now. These super big international businesses are going to have to hedge currencies to get some of their profit back from weaker currencies. I love Microsoft in the long horizon though. There is no doubt in my mind that this company doesn't deserve a spot in your portfolio. The future and growth of Microsoft is still plentiful. 


*Information from Bloomberg and Yahoo Finance

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