10-QPeriod: Q2 FY2022

MICROSOFT CORP Quarterly Report for Q2 Ended Dec 31, 2021

Filed January 25, 2022For Securities:MSFT

Summary

Microsoft Corporation (MSFT) reported strong financial results for the quarter and six months ending December 31, 2021, demonstrating robust revenue and profit growth across its key segments. Total revenue reached $51.7 billion for the quarter, a 20% increase year-over-year, and $97.0 billion for the six-month period, up 21% year-over-year. This growth was primarily driven by strong performance in the Intelligent Cloud segment, particularly Azure and other cloud services, as well as continued momentum in Productivity and Business Processes, highlighted by Office 365 Commercial and LinkedIn. The company also showcased significant operating income growth, increasing by 24% for the quarter and 26% for the six-month period, underscoring effective cost management alongside revenue expansion. Diluted earnings per share also saw substantial increases, reflecting strong profitability. Microsoft's strategic investments in cloud infrastructure and gaming appear to be yielding positive results, positioning the company well for continued expansion in these key areas.

Financial Highlights

53 data points
Beta

Revenue

$51.73B

67.2% Gross Margin

Net Income

$18.77B

36.3% Net Margin

EPS (Diluted)

$2.48

Total Assets

$340.39B

Cash & Equivalents

$20.60B

Free Cash Flow

$8.62B

Financial Statements
Beta
Revenue$51.73B
Cost of Revenue$16.96B
Gross Profit$34.77B
R&D Expenses$5.76B
Operating Income$22.25B
Interest Expense$525.00M
Net Income$18.77B
EPS (Basic)$2.50
EPS (Diluted)$2.48
Shares Outstanding (Basic)7.50B
Shares Outstanding (Diluted)7.55B

Key Highlights

  • 1Total revenue for the quarter ending December 31, 2021, was $51.7 billion, a 20% increase year-over-year.
  • 2Net income for the quarter was $18.8 billion, a 21% increase year-over-year.
  • 3Diluted earnings per share for the quarter was $2.48, up 22% year-over-year.
  • 4Intelligent Cloud segment revenue grew 26% year-over-year, driven by Azure and other cloud services, which saw a 46% increase.
  • 5Productivity and Business Processes segment revenue increased by 19%, propelled by Office 365 Commercial (19% growth) and LinkedIn (37% growth).
  • 6More Personal Computing segment revenue rose 15%, with notable growth in Windows OEM licensing (25%) and search and news advertising (28%).
  • 7Microsoft continued its strong share repurchase program and dividend payouts, returning significant capital to shareholders.

Frequently Asked Questions

For the three months ended December 31, 2021, Microsoft reported total revenue of $51.7 billion, a 20% increase compared to the same period last year. Net income was $18.8 billion, representing a 21% year-over-year increase. Diluted earnings per share also grew by 22% to $2.48.

All segments contributed to the revenue growth. The Intelligent Cloud segment saw a robust 26% increase, largely driven by Azure and other cloud services (up 46%). The Productivity and Business Processes segment grew 19%, boosted by Office 365 Commercial and LinkedIn. The More Personal Computing segment increased by 15%, with strong performance from Windows OEM licensing and search and news advertising.

Microsoft continues to actively return capital to shareholders through its share repurchase programs and dividend payments. During the reported period, the company repurchased shares and paid dividends, indicating a commitment to shareholder value. The company also announced a new $60 billion share repurchase authorization in September 2021.

Yes, Microsoft announced a definitive agreement to acquire Activision Blizzard, Inc. for $68.7 billion in an all-cash transaction, expected to close in fiscal year 2023, subject to approvals. Additionally, the acquisition of Nuance Communications, Inc. for $19.7 billion is expected to close in the third quarter of fiscal year 2022.