Microsoft financial results: Q2 FY22

Microsoft’s financial results are, once again, fantastic. For Q2 FY22 (Oct – Dec 21) their headline results are:

• Revenue = $51.7 billion, an increase of 20%
• Operating Income = $22.2 billion, an increase of 24%
• Net Income = $18.8 billion, an increase of 21%

That’s over $51 billion in 3 months – a single quarter bigger than recent annual revenues for companies like Oracle, Nike, and Coca Cola.

Looking at the separate business units we see the following…

Productivity & Business Processes

• Revenue = $15.9 billion, up 19%
• Office 365 Commercial up 19%
  • “Continued momentum” for E5
• LinkedIn up 37%
• Dynamics 365 up 45%
• Power Apps up 161%
• Office Commercial (i.e on-premises) down 17%

Intelligent Cloud

• Revenue = $18.3 billion
• Azure up 46%
  • “Significant growth” in long-term contracts (again)
• Enterprise Mobility up to 209 million+ seats

Yet more strong double digit growth across all these product divisions, as we’ve seen so many times before over the last few years. Although the growth is still very strong with Azure, it’s perhaps worth noting that the % increase is dropping slightly over time…from 50 in Q1 to now 46…although this makes sense – as the base grows, maintaining the same % increase becomes more difficult.

We also saw that the security business surpassed $15 billion in revenue, up almost 45% YoY.

“Digital technology is the most malleable resource at the world’s disposal to overcome constraints and reimagine everyday work and life.”

Earnings Call

There is always plenty of great info in the earnings call and this quarter was no different.

• Azure Arc has tripled its user base YoY as organisations expand hybrid environments.
• New Azure customers include:
  • CVS Health
  • Johnson & Johnson Medical Devices
  • Kyndryl
  • Wells Fargo
• Cosmos DB transactions increased 100% YoY
• Industry Clouds are driving “significant usage” across Microsoft Cloud
• Teams has 270 million+ monthly active users
• Microsoft Viva has over 1,000 paying customers already
• Microsoft Sentinel has over 15,000 customers – a 70% increase YoY

Satya Nadella also discussed “Dynamics 365 Connected Spaces” (currently in preview) which is focused on automating and managing physical processes. This is part of their “Metaverse” play for business.

Note that many of the new “exotic” products are being name checked here:

• Azure Arc
• Cosmos DB
• Industry Clouds
• Power Apps
• Microsoft Sentinel

This really helps to highlight Microsoft’s future plans and the successful growth they’re seeing there already. It also seems that there’s plenty of room for growth over the next few years so it doesn’t seem that Microsoft’s growth will be slowing any time soon.

Further Reading

Microsoft Earnings Press Release & documents