Microsoft The shares fell 1% in extended trading on Tuesday after the software maker posted earnings for the fiscal fourth quarter.

Here’s how the company did it:

• Profits: $2.69 per share, versus $2.55 per share as Refinitiv expected.
• Revenue: $56.19 billion, versus $55.47 billion as Refinitiv expected.

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Revenue rose 8% year-over-year in the quarter, which ended June 30, according to a statement. Growth has been below 10% for three consecutive quarters for the first time since 2017. Net revenue totaled $20.08 billion, compared to $16.74 billion in the prior-year quarter.

Microsoft’s Intelligent Cloud segment contributed $23.99 billion in revenue, up 15% and above the consensus of $23.79 billion among analysts surveyed by StreetAccount. The unit comprises Azure Public Cloud, SQL Server, Windows Server, Visual Studio, Nuance, GitHub, and Enterprise Services.

Azure revenue grew 26% during the quarter, compared to 27% growth in the prior quarter. Analysts polled by CNBC and StreetAccount expected 25% growth from Azure, which competes with Amazon web services and Google Cloud platform. Microsoft does not report revenue from Azure in dollars. Google parent Alphabet said on Tuesday that revenue from its cloud products, which include Google Workspace productivity apps as well as Google Cloud Platform, rose 28%.

Driven by concerns about the worsening economy, organizations using cloud services from Microsoft, Amazon and Google have taken the time to adjust their existing workloads to reduce costs in recent months. At the same time, these three leading US cloud providers have cut their own spending.

For the first time since 2016, Microsoft’s research and development costs decreased year-over-year. In May, Microsoft CEO Satya Nadella told employees that the company will not raise salaries this year. On July 10, Nadella issued a memo about a new round of job cuts on top of the round of layoffs that affected 10,000 workers that began in January.

Microsoft’s Business Process and Productivity segment containing Office, LinkedIn and Dynamics productivity software generated $18.29 billion in revenue, up 10% and above the StreetAccount consensus of $18.06 billion.

The company’s More Personal Computing business, which includes the Windows operating system, devices, games and search advertising, posted $13.91 billion in revenue. That figure indicates a decline of around 4%, but it still beat the StreetAccount consensus of $13.58 billion.

Windows license sales to device manufacturers decreased by 12%. Consumers and businesses rushed to buy PCs after the onset of Covid, making comparisons with last year difficult. Gartner Technology Industry Researcher My dear than PC shipments including of Apple MacBooks, fell about 17% during the quarter.

Microsoft and Alphabet kicked off earnings season for large-cap tech companies. Investors will look to big tech companies for updates on cost-cutting measures implemented earlier in the year and the impact of AI investments on profitability. On Tuesday, Alphabet beat estimates, lifting shares in after-hours trading. Goal reports the results on Wednesday, followed by Amazon and Apple next week.

Investors are eager for Microsoft’s deal to buy Activision Blizzard for nearly $69 billion, which was agreed to in January 2022, to be settled. Earlier this month, an appeals court rejected the Federal Trade Commission’s motion to halt the transaction. Activision shares have risen past $92.50, close to the $95 Microsoft agreed to pay, reflecting optimism that the deal is on track to close.

Despite the after-hours move, Microsoft shares have gained 44% year-to-date, while the S&P 500 is up 19%.

The company said its operating expenses rose about 2% in the quarter, partly due to a charge to pay a fine from the Irish Data Protection Commission after the authority looked into whether the company’s LinkedIn unit breached the European Union’s General Data Protection Regulation.

During the quarter, Microsoft built on its broad partnership with OpenAI to capitalize on new interest in artificial intelligence, following the November launch of the startup’s ChatGPT chatbot. Microsoft unveiled a chatbot powered in part by OpenAI language models to help workers understand their employers’ data, telling developers they will be able to create plugins that people can access through ChatGPT, the Bing search engine chatbot and other tools.

Excluding the after-hours move, Microsoft shares have gained 46% year-to-date, while the S&P 500 is up 19%.

Executives will discuss the results with analysts and issue guidance on a conference call beginning at 5:30 pm ET.

This is breaking news. Please check for updates.

— CNBC’s Todd Haselton contributed to this report.