Microsoft Corp on Tuesday forecast double-digit revenue growth for the next fiscal year, driven by demand for its cloud computing services.
Microsoft forecast Intelligent Cloud revenue of $21.1 billion to $21.35 billion for its fiscal fourth quarter, driven by strong growth in its Azure platform in the booming cloud computing space. That compared with a Wall Street consensus of $20.933 billion, according to Refinitiv data.
The upbeat forecast sent shares 6% higher in after-hours trade.
Microsoft beat Wall Street profit and revenue expectations on Tuesday, benefiting from demand for the software giant's cloud-based services from the pandemic-triggered shift to hybrid work models.
Microsoft results indicate it can keep its pandemic-fueled sales growing as economies reopen and businesses shift to a hybrid model of allowing staff to alternatively work from office and home.
That's also helping drive up revenue of Windows products, said Brett Iversen, general manager of investor relations. "Strength in the commercial PC market drove Windows OEM revenue up 11%," he told Reuters. The hybrid work trend is resulting in a continued strength for Microsoft's cloud services, including its flagship cloud offering Azure.
Third-quarter Azure annual growth of 46.0% was steady from the previous quarter and in line with estimates of 45.6% growth compiled by Visible Alpha. Still, Azure growth has showed a steady drop from fiscal 2020 when growth was in the 60% range.
Iversen said that Azure Microsoft had better-than-expected growth in long-term Azure contracts, although he did not provide specific numbers.
"These numbers show that customers continue to turn to Microsoft as they accelerate their shift to cloud computing and the current unsettling economic environment has not yet impacted the company's main growth driver," said Haris Anwar, senior analyst at Investing.com.
The company reported revenue of $49.36 billion in the third quarter, compared with $41.7 billion a year earlier. Analysts on average had expected revenue of $49.05 billion, according to Refinitiv IBES data.Net income rose to $16.73 billion, or $2.22 per share, in the quarter ended March 31, from $15.46 billion, or $2.03 per share, a year earlier. That topped analyst targets of $2.19.