Microsoft is again the most-valuable U.S. company — holding a slight lead over Amazon, at least for now — and the company is set to report its most recent quarterly financials Wednesday afternoon, providing the latest glimpse of the company’s evolution under CEO Satya Nadella.
For the big companywide metrics, analysts expect the tech giant to post profits of $1.09 per share, up 9 percent, on $32.5 billion in revenue, up 12.5 percent.
Here are the other themes and numbers we’re looking out for this afternoon:
Holiday season: The last quarter of the calendar year — the second of Microsoft’s fiscal year — is a huge deal for the Surface and gaming divisions.
- Surface revenue has been essentially flat over the last few holiday quarters, but a lineup of new and refreshed devices introduced in October could provide a jolt.
- On the gaming side, which includes everything from Xbox hardware to Xbox Live subscriptions to revenue from games made by Microsoft and other studios, the company reported revenue growth of a whopping 44 percent last quarter. Microsoft would certainly like to see a figure closer to that rather than the 8 percent gaming revenue growth it reported last holiday season.
Less LinkedIn info: Last quarter, Microsoft stopped reporting LinkedIn revenue and profits/losses as it continued to fold the business social network into its organization more than two years after completing the $26 billion acquisition. It still discloses the revenue growth figure, allowing for some back-of-the-napkin math to figure out revenue for the quarter. In the September quarter, LinkedIn’s revenue rose 33 percent, to slightly less than $1.95 billion.
Cloudy with a chance of cash: The financial success of Microsoft’s cloud businesses has provided the fuel for the company’s resurgence in recent years.
A couple key areas to watch are Microsoft’s Intelligent Cloud Division — which includes sales of products like Windows Server, Azure, and enterprise services — and commercial cloud, a slightly different key metric for Microsoft over the past few years that also includes the commercial version of Office 365, Dynamics 365 and now commercial LinkedIn services. Those areas boasted annual growth of 24 percent and 47 percent, respectively, last quarter.
Revenue growth from the Azure public cloud computing service slowed last quarter — coming at a heady 76 percent last quarter, but still down from previous quarters where revenue growth ranged from 89 to 99 percent.
- Microsoft claimed the title of the most-valuable U.S. company in November — beating out Apple — and it has been volleying the honor back and forth with Amazon in recent weeks.
- Microsoft secured a huge win for the Surface division with a deal in December to supply the Law School Admission Council with thousands of Surface Go devices to use for the Law School Admissions Test (LSAT).
- In November, Microsoft won a $480 million contract to provide the U.S. Army with 100,000 HoloLens headsets, a major boon for the company’s “mixed reality” division.
- Microsoft’s cloud division continued to woo retailers weary of using Amazon Web Services while also competing with Amazon on the retail front, landing a deal with Gap and furthering its partnership with Walmart.
More tech earnings: Amazon reports its quarterly results Thursday afternoon, including the outcome of its peak holiday shopping season. Apple stock is up more than 5 percent in trading today after its earnings report revealed record profits Tuesday afternoon.