Pay As You Go Impacts Microsoft (MSFT) Azure Growth - Deutsche Bank

Deutsche Bank analyst, Karl Keirstead, reiterated his Hold rating on shares of Microsoft (NASDAQ: MSFT) after speaking with MSFT’s IR team to tighten his financial model. The company printed strong 1QF19/September 2018 results, including an EPS beat and Azure revenue growth of 76%. However the Azure growth was below expectations.

The analyst stated "MSFT cited a rising popularity of “commit to consume” (similar to pay-as-you-go) Azure deals, in contrast to deals accompanied by large up-front payments prior to actual usage. This mix shift to more back-end loaded payment terms (more closely
tracking the ramp in actual spend) may imply a slower backlog-to-UR conversion but shouldn’t impact Azure revs growth".

No changes to the price target of $130 or a reduction in EPS were mentioned in the note.

For an analyst ratings summary and ratings history on Microsoft click here. For more ratings news on Microsoft click here.

Shares of Microsoft closed at $103.07 yesterday.

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