Microsoft expects revenue growth of 12% this quarter
Microsoft (MSFT) expects to clock double-digit revenue growth in the holiday quarter this year. As per the company’s outlook, it expects overall revenue of $32.3 billion in the second quarter of fiscal 2019, a rise of 12% year-over-year. Microsoft reports results for three segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Let’s consider Microsoft’s expectations for growth in each segment.
Microsoft doesn’t expect any material impact from currency exchange fluctuations. The company also expects its capex in the second quarter of fiscal 2019 to be similar to its capex in the first quarter.
Break-up of Microsoft’s segments
The Productivity and Business Processes segment consists of the company’s flagship software products, including Office 365, Dynamics 365, and LinkedIn. The company expects revenue growth of 12% in this segment.
The Intelligent Cloud segment consists of the Azure cloud platform and Microsoft’s server products. The segment now also includes the company’s GitHub acquisition, which it recently completed. Microsoft expects healthy revenue growth of ~19% in this segment.
The More Personal Computing segment consists of the Windows 10, gaming, Surface, and Search subsegments. The company expects revenue growth of 7% in this segment. The main drivers of this growth are expected to be the release of the Surface Pro 6 and Surface Laptop 2, which we discussed earlier in the series.
Microsoft also expects growth in its gaming subsegment driven by third-party games. For Search, the company expects similar numbers in the second quarter of fiscal 2019 to the ones it saw in the first quarter of fiscal 2019.