What you need to know
- Microsoft just announced its results for FY22 Q4, which ended on June 30, 2022.
- The company brought in $51.9 billion in revenue, which is an increase of 12%.
- Microsoft's net income increased by 2%, making it $16.7 billion.
- The results fall short of industry expectations in several key areas.
Microsoft fell short of industry expectations in several key areas, as revealed by the company's FY22 Q4 report. Total revenue and earnings per share both fell short of projections. Microsoft's Productivity and Business Processes, Intelligent Cloud, and More Personal Computing sectors all fell short of what Wall Street experts expected, according to Bloomberg.
Microsoft adjusted its expectations back in April 2022, but the company stated that "unforeseen items" had a larger impact than expected. The quarterly report pointed to an unfavorable exchange rate, extended production shutdowns in China that went into May, reduced spending on advertising, and the ongoing war in Ukraine as factors that affected earnings and revenue. Severance expenses of $113 million also played a role.
| Segment | Expectation | Reported figure |
|---|---|---|
| Revenue | $52.4 billion | $51.9 billion |
| Earnings per share | $2.29 | $2.23 |
| Productivity and Business Processes | $16.7 billion | $14.4 billion |
| Intelligent Cloud | $21.1 billion | $20.9 billion |
| More Personal Computing | $14.7 billion | $14.4 billion |
Personal Computing (up 2%) had $14.4 billion in revenue. Microsoft highlighted the following figures in its earnings report:
- Windows OEM revenue decreased 2%
- Windows Commercial products and cloud services revenue increased 6% (up 12% in constant currency)
- Xbox content and services revenue decreased 6% (down 4% in constant currency)
- Search and news advertising revenue excluding traffic acquisition costs increased 18% (up 21% in constant currency)
- Surface revenue increased 10% (up 15% in constant currency)
The dip in Microsoft's OEM revenue was somewhat offset by growth in the Windows Commercial segment. Microsoft pointed to "production shutdowns and a deteriorating PC market" when discussing its OEM revenue.
Microsoft's Surface and Windows results delivered positive news while Xbox gaming revenue fell 6% year-over-year.
The tech giant's revenue from Productivity and Business Processes was $16.6 billion in the quarter (up 13%). Office Commercial products and cloud services revenue increasing 9%, Office Consumer products and cloud services revenue going up 9%, and LinkedIn revenue increasing 26% were among the company's highlights.
Intelligent Cloud increased 20% and brought in $20.9 billion, largely driven by Azure and other cloud services seeing revenue growth of 40%.
“We see real opportunity to help every customer in every industry use digital technology to overcome today’s challenges and emerge stronger,” said Satya Nadella, chairman and chief executive officer of Microsoft. “No company is better positioned than Microsoft to help organizations deliver on their digital imperative – so they can do more with less.”
“In a dynamic environment we saw strong demand, took share, and increased customer commitment to our cloud platform. Commercial bookings grew 25% and Microsoft Cloud revenue was $25 billion, up 28% year over year,” said Amy Hood, executive vice president and chief financial officer of Microsoft. “As we begin a new fiscal year, we remain committed to balancing operational discipline with continued investments in key strategic areas to drive future growth.”
Microsoft also announced results for its fiscal year that ended on June 30, 2022. Here are the highlights:
- Revenue was $198.3 billion and increased 18% (up 19% in constant currency)
- Operating income was $83.4 billion and increased 19% (up 21% in constant currency)
- Net income was $72.7 billion GAAP and increased 19%, and $69.4 billion non-GAAP and increased 15% (up 16% in constant currency)
- Diluted earnings per share was $9.65 GAAP and increased 20%, and $9.21 non-GAAP and increased 16% (up 17% in constant currency)
- GAAP results include a $3.3 billion net income tax benefit explained in the Non-GAAP Definition section below
Coming up
Microsoft CEO Satya Nadella will be part of a webcast at 2:30 PM Pacific time (5:30 PM Eastern time). During the call, company higher-ups will discuss predictions for the upcoming quarter.
