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Summary:Microsoft Corp's performance exceeded market expectations and remained optimistic in the next quarter, with strong growth of cloud computing services, continued positive prospects, and strong pricing power on important software products such as Office. Barclays Bank: Microsoft Corp's share price will fluctuate between $235 and $454, with a benchmark valuation of $363.

1.FY2022Q3 results exceed market expectations, guidance for next quarter remains optimistic
Microsoft Corp's revenue for the quarter was $49.4 billion, an increase of 18% over the same period last year.It was higher than Bloomberg's consensus estimate of $49 billion.Of this total, product revenue was US $17.4 billion, up 3% from the same period last year, and service and other income was US $32 billion, up 29% from the same period last year. The gross profit margin was 68.4%, down 30bps from the same period last year. The operating profit margin was 41.3%, an increase of 40bps over the same period last year. GAAP's net profit was $16.7 billion, up 8% from a year earlier, with a net profit margin of 33.9%. GAAP's diluted earnings per share were $2.22, higher than Bloomberg's consensus forecast of $2.19, compared with $2.03 a year earlier.

The company expects FY2022Q4 revenue to range from $52.4 billion to $53.2 billion, up 13.5% to 15.3% from a year earlier, in line with Bloomberg's consensus expectations.

two。 Cloud computing is growing strongly and the outlook continues to improve.
Microsoft Corp's cloud revenue rose 32 per cent year-on-year to $23.4 billion.Among them, Azure revenue growth is still strong, up 48% year-on-year, estimated to be about $11.6 billion, higher than the growth rate of AWS and GCP. Cloud service orders from large enterprises will continue to drive smart cloud revenue growth in the future, with the number of Azure contracts exceeding $100 million more than doubling year-on-year. Large enterprises, including Boeing Co, Kraft Heinz, Bank of America Corporation and Westpac Bank, chose Azure as the cloud service provider this quarter. Microsoft Corp Cloud's gross margin percentage remained at 70%, mainly due to changes in accounting estimates for the service life of server and network equipment assets.If the accountant excludes the impact, the gross profit margin of Microsoft Corp Business Cloud will increase by about 3 percentage points.

Gartner predictsIn 2022, the global cloud computing market will grow from $408 billion in 2021 to $474 billion, an increase of more than 16%. In this context, the company's full layout of IaaS, PaaS and SaaS cloud computing is expected to continue to benefit.

Barclays saidOur recent CIO survey confirmed Microsoft Corp's market position. In the survey, when asked about cloud computing expenditure plans, Microsoft Corp once again saw the largest amount of expenditure. And there is an increase over previous surveys.We believe that the long-term trend of share growth will continue, especially if corporate IT spending remains stable in the second half of the year.

Tianfeng Securities believes thatIncluding SAP, Lufthansa and other customers continue to increase. We believe that super customers will not reduce digital cloud computing spending in an inflationary economy, but will continue to switch to the cloud to reduce costs and increase efficiency. Microsoft Corp benefits from a comprehensive product line and perfect industry service capabilities, and is expected to continue to benefit from the cloud conversion process of major customers.

Show strong pricing power on 3.Office
Compared with any "super" market capitalization technology company, some of Microsoft Corp's sales are less likely to suffer a significant slowdown in sales growth. Even if the IT of corporate households falls sharply in the second half of this year, Microsoft Corp's income of more than 70 per cent is still expected to increase steadily, according to Bloomberg calculations.Microsoft Corp's cloud-based software products, which account for nearly 36 per cent of total revenue, may increase by 23-26 per cent, although this is slower than the 28 per cent growth over the past 12 years.

Bloomberg thinksCorporate customers are at risk of cutting back on important products such as Office, personal computers and server operating systems. Gaming, LinkedIn and search businesses are most likely to experience a slowdown in growth. In addition, Microsoft Corp has strong pricing power on the above important software products.It may help the company fend off any inflationary pressures related to the cost of inflation.

4. Valuation of Microsoft Corp Company
Microsoft Corp's all-time high price is US $334.84, which will reach an all-time high if it reaches the expected level of US $363 at Barclays. Barclays' expected price ($363) is still $109 higher than the closing price of 2022.5.18 ($254).

Barclays Bank:Microsoft Corp's share price will fluctuate between $235 and $454.The benchmark market is valued at $363.

Bull market

Valuation: $454

Premise assumption: the adoption of Office 365 and Azure may be faster than we expected, pushing up the multiples. Equipment sales may exceed expectations, resulting in an increase in revenue.

Benchmark market

Valuation: $363

Premise: with Windows Azure and Office 365, Microsoft Corp can be said to be the leader in the cloud services market. It can drive better earnings growth because it transitions its internal installation base (Office and Windows servers) to its cloud platform.

Bear market

Valuation: $235

Premise assumption: the transition to cloud services may not be fast enough because of the impact of internal franchising (Windows, Office, Windows servers), resulting in lower-than-expected revenue.

Risk factors:Cloud computing market competition risk, PC shipments decline risk, Arm impact PC ecological risk, international situation risk, exchange rate risk.

Reference:

Tianfeng Securities "Microsoft Corp Company-- this quarter results continue to be solid, Tier 1 super customers cloud computing business expansion accelerated"

Unified investment "the business statement is outstanding, and the FY4Q22 guidelines are not expected"

BarclaysCQ1 Public Cloud Update; Continued Robust Growth All around

BarclaysSolid Q3 And Guidance Should Calm MSFT and Software Investors