10-QPeriod: Q1 FY2022

MICROSOFT CORP Quarterly Report for Q1 Ended Sep 30, 2021

Filed October 26, 2021For Securities:MSFT

Summary

Microsoft Corporation reported strong financial results for the fiscal first quarter ending September 29, 2021. Total revenue increased by 22% year-over-year to $45.3 billion, driven by robust growth across all its segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Net income saw a significant surge of 48% to $20.5 billion, partly aided by a substantial tax benefit related to intangible property transfers. Diluted earnings per share also increased by 49% to $2.71. The company's cloud offerings continue to be a major growth driver, with Microsoft Cloud revenue up 36% to $20.7 billion. The Intelligent Cloud segment, which includes Azure, experienced revenue growth of 31% to $17.0 billion, while Productivity and Business Processes saw a 22% revenue increase, benefiting from Office 365 and LinkedIn. More Personal Computing also contributed positively with a 12% revenue increase, primarily from Windows and search advertising. Microsoft demonstrated strong cash flow generation, with net cash from operations at $24.5 billion. The company continued its commitment to shareholder returns through significant share repurchases and dividend payments. Overall, the quarter showcased broad-based strength and continued execution on its cloud-first strategy.

Financial Highlights

53 data points
Beta

Revenue

$45.32B

69.9% Gross Margin

Net Income

$20.50B

45.2% Net Margin

EPS (Diluted)

$2.71

Total Assets

$335.42B

Cash & Equivalents

$19.16B

Free Cash Flow

$18.73B

Financial Statements
Beta
Revenue$45.32B
Cost of Revenue$13.65B
Gross Profit$31.67B
R&D Expenses$5.60B
Operating Income$20.24B
Interest Expense$539.00M
Net Income$20.50B
EPS (Basic)$2.73
EPS (Diluted)$2.71
Shares Outstanding (Basic)7.51B
Shares Outstanding (Diluted)7.57B

Key Highlights

  • 1Total revenue for the quarter grew 22% year-over-year to $45.3 billion.
  • 2Net income increased significantly by 48% to $20.5 billion, aided by a $3.3 billion tax benefit.
  • 3Diluted earnings per share rose 49% to $2.71.
  • 4Microsoft Cloud revenue surged 36% to $20.7 billion.
  • 5Intelligent Cloud segment revenue grew 31% to $17.0 billion, with Azure and other cloud services up 50%.
  • 6Productivity and Business Processes segment revenue increased 22% to $15.0 billion, driven by Office 365 and LinkedIn.
  • 7Net cash from operations was strong at $24.5 billion.

Frequently Asked Questions

Revenue growth was driven by broad-based increases across all three of Microsoft's operating segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The company's cloud offerings, particularly Azure and Office 365, were significant contributors to this growth.

The substantial increase in net income and diluted earnings per share was driven by strong operational performance, as evidenced by revenue growth across segments. Additionally, a one-time net income tax benefit of $3.3 billion related to the transfer of intangible properties significantly boosted net income.

Microsoft's cloud business, categorized as 'Microsoft Cloud' (including Azure, Office 365 Commercial, Dynamics 365, and LinkedIn commercial), showed robust performance with revenue increasing 36% year-over-year to $20.7 billion. Azure and other cloud services, specifically, saw a 50% increase in revenue.

Microsoft returned $10.9 billion to shareholders in the first quarter of fiscal year 2022 through $6.2 billion in share repurchases and $4.7 billion in dividends paid. The company has significant ongoing share repurchase programs authorized.