Microsoft reports fiscal first-quarter results after the market close on Wednesday. Investors will watch its first dollar disclosure of Azure revenue, its job cuts and whether it keeps producing free cash flow while spending on AI.
Microsoft is set to report quarterly results after the market close on Wednesday, with job cuts and cash flow as investors focus on both. Analysts polled by LSEG expect adjusted earnings per share of $4.73 and revenue of $90.69 billion.
Azure revenue appears in dollars for the first time
For the quarter that ended on Sept. 30, Microsoft will report under two operating segments for the first time since 1998. For the past 11 years, it had three segments covering Azure, Office and Windows.
The company will also begin disclosing Azure cloud revenue in dollars. Analysts polled by StreetAccount expect $32.32 billion, which would represent growth of more than 44%.
Cash flow sets Microsoft apart from rivals
Microsoft has been working to become a bigger force in artificial intelligence through infrastructure expansion and product enhancements, while continuing to produce free cash flow, unlike its fellow hyperscalers. Alphabet and Amazon both showed negative free cash flow in the June quarter, and Meta said last week that it went free cash flow negative in the third quarter.
As of Tuesday's close, Microsoft shares were up almost 10% year to date. The S&P 500 index, by comparison, has gained about 13% over the same period.
Buyouts follow job cuts as AI spending continues
During the quarter, Microsoft said it would cut 4,800 jobs. On Monday, it followed up by announcing buyouts for up to 60,000 employees, as it tries to balance a costly AI build-out with capital efficiency.
Analysts surveyed by StreetAccount projected $50.67 billion in capital expenditures and finance leases for the quarter. Executives will discuss the results with analysts and issue guidance on a conference call starting at 5:30 p.m. ET.
Source: CNBC
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