Softchoice Corp T.SFTC

Alternate Symbol(s): SFTCF

Technology

Softchoice Corporation is a Canada-based software-focused information technology (IT) solutions provider. The Company designs, procures, implements, and manages complex multi-vendor IT solutions. Its solutions include Cloud and Data Center, Collaboration and Digital Workplace, IT Asset Management, Network, and Security. Its Cloud and Data Center solutions include data center modernization; cloud migration, adoption and management; and application modernization. It helps organizations manage their IT assets, including software asset management (SAM) managed services for software used on-premises or in the cloud in line with IT asset management best practices. It offers a range of IT lifecycle services, professional services, and managed services. Its services include cloud migration services, cloud readiness review, cloud managed services, security technology review, and digital workplace solutions. Its subsidiaries include Softchoice LP, Softchoice EmployeeCo Inc., and others.

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Post by retiredcfon Apr 27, 2022 8:44am

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Post# 34634960

TD

Cloud Strength Helps Deliver Beat for Microsoft Event

Yesterday after market close, Microsoft reported its Q3/F22 results and provided its Q4/F22 outlook.

Impact: SLIGHTLY POSITIVE read-throughs for Softchoice and Converge

Another beat. Microsoft reported Q3/F22 revenue of US$49.4B, operating income of US$20.4B, and Adj. EPS of US$2.22, above consensus at US$49.1B, US$20.1B, and US$2.20, respectively.

Key highlights include:

Server products and cloud services revenue increased 32% y/y in cc, up from 29% growth last quarter. Azure revenues grew 49% y/y in cc, up from 46% growth last quarter.
Office Commercial products and cloud services revenue grew 14% y/y in cc, same as last quarter. Office 365 Commercial revenues grew 20% y/y in cc vs. 19% growth last quarter, while Dynamics 365 revenue grew 38% y/y in cc vs. 44% last quarter.
The Q4/F22 outlook for Intelligent Cloud (includes Azure) and Productivity and Business Processes (includes Office 365) implies strong but moderating growth. In particular, Azure revenue growth is expected to be ~200bps lower in cc vs. Q3/ F22 due primarily to workload optimization.
In response to potential macro concerns, CEO Satya Nadella stated customer conversations indicate IT budgets/digital transformation projects are not places for cuts with some projects key to accelerating plans.

Strong Google Cloud growth. Also yesterday, Google reported its Q1/F22 results. Google Cloud revenue (includes GCP) was US$5.8B (up 44% y/y).

Softchoice read-through: Slightly positive. We believe Softchoice could benefit from the pickup in Azure growth, as Microsoft's largest N.A. Azure partner. Although Azure growth is expected to moderate slightly in Q4/F22, it could be temporary (workload optimization) and the implied growth is still in-line with F2021/22 levels.

Converge read-through: Slightly positive. Like Softchoice, we believe Converge should also benefit from the continued strong cloud growth, albeit to a lesser extent given its (more hardware-centric) revenue mix.

We believe the strong Q1/F22 results and outlook from IBM last week is likely to have a bigger impact, with Software up 15% in cc (Red Hat up 21% in cc), although Infrastructure remains soft (flat y/y in cc). The improved F2022 outlook (cc growth expected at the high-end of its mid-single digit guidance range) also bodes well for Converge, in our view.