The Redmond, Washington software giant reported fiscal third-quarter earnings of $1.95 per share on revenue of $41.7 billion. Analysts were expecting earnings of $1.77 per share on revenue of $40.83 billion.
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However, Microsoft shares were down 3.4% to $252.96 after hours on Tuesday. They are up 13.7% year to date, versus a gain of 11.5% for the S&P 500 over the same time period.
"In a nutshell, these were strong numbers that will be another feather in the cap for MSFT with the stock selling off after hours in knee-jerk fashion as the Street was hoping for a bigger top-line beat," Wedbush Securities analyst Dan Ives wrote in a note issued after the earnings release. "Looking at the numbers, cloud remains the core of the bull story going forward."
Microsoft CEO Satya Nadella said in a statement that “Over a year into the pandemic, digital adoption curves aren’t slowing down. They’re accelerating, and it’s just the beginning. We are building the cloud for the next decade, expanding our addressable market and innovating across every layer of the tech stack to help our customers be resilient and transform.”
The company's cloud computing segment generated $17.7 billion in revenue, a 33% year over year increase.
As for hardware, revenue from Microsoft's Xbox gaming segment jumped 34% year-over-year, while its Surface Tablet revenue rose 12% year-over-year.
Last week, online-chat app Discord ended buyout talks with Microsoft, opting instead for a public offering, sources told the Wall Street Journal.
Microsoft was reportedly set to pay more than $10 billion for Discord, which had been talking to other potential buyers, too.
Microsoft has been looking to expand its offerings in ways that will enhance its game- and subscription-focused businesses. Earlier this month, Microsoft agreed to buy AI voice technology firm Nuance for $20 billion.
The Redmond, Wash., software giant last year sought to buy social-media app TikTok, and more recently expressed interest in acquiring Pinterest (PINS) - Get Pinterest Inc. Class A Report.