Software giant Microsoft (NASDAQ: MSFT) just put a date to its fiscal third-quarter earnings report; the company will release results for the period on April 24.
Given the stock's 18% year-to-date rise, investors will undoubtedly be watching the update closely. The company has been seeing strong top- and bottom-line growth recently, helped by impressive momentum in its commercial cloud revenue -- a revenue category composed of three of the company's most powerful catalysts. Can Microsoft keep up its strong growth?
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Ahead of Microsoft's earnings release later this month, here's a preview of some key areas for investors to watch.
Microsoft's fiscal second-quarter revenue of $32.47 billion was up 12% year over year but was slightly below analysts' consensus forecast for revenue of $32.51 billion. The top-line miss may have investors watching the company's revenue growth more closely when the tech giant reports its fiscal third-quarter results.
In constant currency, Microsoft's fiscal second-quarter revenue increased 13% year over year.
On average, analysts are expecting Microsoft to post fiscal third-quarter revenue of $29.8 billion, up 11.3% year over year.
Microsoft's non-GAAP earnings per share (EPS) managed to barely beat analysts' average estimate in fiscal Q2. Non-GAAP EPS for the period was $1.10, up from $0.96 in the year-ago quarter. On average, analysts expected non-GAAP EPS of $1.09.
Notably, Microsoft's profitability is trending better than it appears on the surface. In constant currency, non-GAAP earnings per share in fiscal Q2 increased 15% year over year.
For Microsoft's fiscal third quarter, analysts expect non-GAAP EPS of $1.00, up from $0.95 in the year-ago quarter.
Commercial cloud revenue growth
A key driver for Microsoft's revenue growth in fiscal Q2 was the company's commercial cloud revenue, composed of revenue from Office 365 commercial, Azure, and Dynamics 365 -- products that are central to Microsoft's ongoing transition to a cloud-based business model.
Commercial cloud revenue increased 48% year over year in fiscal Q2 to $9 billion. This marked an acceleration over Microsoft's 47% year-over-year growth in commercial cloud revenue in the first quarter of fiscal 2019. The segment's growth during fiscal Q2 was "anchored by Azure [year-over-year] revenue growth of 76%," said Microsoft CEO Satya Nadella in the company's fiscal second-quarter earnings call.
Investors should look for similar growth in commercial cloud revenue in fiscal Q3, as Microsoft CFO Amy Hood noted in the company's fiscal second-quarter earnings call that she expects "continued strong performance in our commercial cloud business."
Microsoft will report its fiscal third-quarter results after market close on Wednesday, April 24.
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Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Microsoft. The Motley Fool has a disclosure policy.