Microsoft Corporation (NASDAQ:MSFT) forecast revenues in the range of US$48.5bn-US$49.3bn for its fiscal third quarter, above market estimates of US$48.23bn.
The guidance followed the software giant's earnings release for the second quarter ended 31 December 2021, which showed revenues of US$51.73bn, up 20% year-on-year and exceeding the US$50.88 predicted by analysts.
EPS of US$2.48 per share, up 22%, also beat market forecasts of US$2.31.
Net income grew by 21% to US$18.77bn.
Revenue from Microsoft's Intelligent Cloud business was 26% higher at US$18.3bn in the second quarter. The figure included 46% growth in revenue from Azure and other cloud services, which was in line with analysts' expectations.
Market concerns about growth in Azure, which saw revenue rises above 50% in the previous four quarters, were eased after Microsoft in an earnings call forecast sequential growth acceleration for Azure in the current quarter.
The company forecast Intelligent Cloud revenue of US$18.75bn-US$19bn for the third quarter, above the Wall Street consensus of US$18.15bn.
Xbox hardware revenue rose 4% in the second quarter, a year after the company launched the Xbox Series X and Series S consoles. In the previous quarter, Xbox hardware revenue surged166%.
The gaming business, which represents almost 11% of total group revenue, has been in focus since Microsoft last week announced that it is buying Activision Blizzard Inc (NASDAQ:ATVI). in a US$68.7bn deal.
Microsoft shares were 2.66% lower at US$288.49 in pre-market trade.