With the PC industry reporting decent growth numbers, Microsoft reported its earnings and revenue for the fiscal second quarter of 2022 today. The numbers are better than what was expected, and Microsoft’s stock rose after initially dropping in extended trading.
For the quarter ended December 31, 2021, Microsoft clocked $51.7 billion in revenue, an increase of 20%. This is better than the $50.88 billion which had been expected by analysts. The operating income increased by 24% to amount to $22.2 billion, while its net income increased by 21% to clock $18.8 billion. Its diluted earnings per share (EPS) exceeded expectations of $2.31 per share to come to $2.48 per share.
However, the unearned revenue of Microsoft amounted to $36.77 billion at the end of the year, which was below the estimate of $36.90 billion. The company expects to recognise 45% of its $152 billion in remaining performance obligations over 2022. Going forward, it eyes revenue of $48.5 billion to 49.3 billion in the fiscal third quarter and expects full-year operating margins to widen slightly.
Let us talk numbers again. Revenue from Microsoft Cloud clocked a year-over-year growth of 32% to reach $22.1 billion, due to solid commercial execution. That, in turn, was represented by strong bookings growth which was driven by long-term Azure commitments.
Microsoft’s revenue in Productivity and Business Processes amounted to $15.9 billion, an increase of 19%. This includes Office, LinkedIn, and Dynamics. LinkedIn’s revenue rose by 37% year-over-year, driven by strong advertising demand, and LinkedIn sessions grew by 22%, according to Microsoft.
Similarly, revenue from Dynamics products and cloud services revenue increased by 29%, mainly due to the 45% growth in Dynamic 365 revenue.
Revenue earned by Office 365 Commerce grew by 19%, driving the growth of revenue earned by Office Commercial products and cloud services by 14%. Revenue from Office Consumer products and cloud services rose by 15% while the number of subscribers of Microsoft 365 came at 56.4 million.
Revenue from Microsoft’s Intelligent Cloud sector amounted to $18.3 billion (an increase of 29%), while revenue from server products and cloud services increased by 29%. This was fuelled by Azure and other cloud services, whose revenue clocked a growth of 46%.
Finally, we come to the More Personal Computing segment, whose revenue grew by 15% to reach $17.5 billion. While revenue from Windows OEM and Windows Commercial products and cloud services increased by 25% and 13% respectively, revenue from Microsoft Surface rose by 8%. Revenue from search and news advertising revenue (excluding traffic acquisition costs increased by 32%). Revenue from Xbox content and services rose by 10%.
“With our planned acquisition of Activision Blizzard announced last week, we’re investing to make it easier for people to play great games wherever, whenever and however they want. And also shape what comes next for gaming as platforms like the metaverse develop,” Nadella said after earnings were announced on Tuesday, while the company’s gaming revenue in the quarter grew by 8%. Its hardware sales rose by 4%, driven by demand for the latest Xbox consoles.