Microsoft Corp has weathered the COVID-19 pandemic exceptionally well, generating strong earnings and revenue growth during the past two fiscal years.
Sales of cloud services and software were two key drivers. But the seeds of Microsoft's future growth may lie in a very different skill: its success in navigating a hostile regulatory environment.
While other big tech companies have become targets of aggressive antitrust investigations, Microsoft has largely avoided these conflicts.
This may be critical to Microsoft's proposed $69-billion acquisition of video game developer Activision Blizzard Inc.
The deal, Microsoft's largest-ever acquisition attempt, still must be approved by regulators.
Investors will watch closely whether Microsoft can continue its strong financial performance - including the latest news on Activision Blizzard's scrutiny by regulators
When the company reports earnings on April 26, 2022 for Q3 FY 2022. Microsoft's fiscal year (FY) ends on June 30.
Analysts predict that adjusted earnings per share (EPS) will climb, but at the slowest pace in seven quarters. Revenue growth is expected to be solid but slightly behind the last four quarters.
Microsoft has posted at least 16 consecutive quarters of YOY earnings growth since Q3 FY 2018.
Save for three of these 16 quarters, that YOY growth has ranged between roughly 20% and 35% a quarter.
Some of the most robust earnings growth has been in the last year, with quarterly EPS growth reaching as high as 48.3% in Q4 FY 2021.
Growth has decelerated in the first two quarters of FY 2022, and analysts predict that Q3 FY 2022 growth will be substantially slower, at just 11.8%.
While this is still solid performance, it nonetheless is at the lower end of Microsoft's quarterly EPS growth range in recent years.
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