Microsoft Financial Results: FY22

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Microsoft announced their results for FY22 Q4 and the full year and, as expected, the numbers are big and the percentage increases are (mostly) double digits. For the full year, revenue was $198.3 billion (an increase of 18%) and operating income was $83.4 billion (up 19%).

There were a few different things that negatively impacted the numbers in Q4 including:

  • Exchange rate changes – many of the “constant currency” growth figures are 5 or 6% higher than actual
  • COVID shutdowns in China cost over $300 million of Windows OEM revenue
  • Scaling back in Russia cost $126 million
  • An interesting one this – due to a “strategic realignment of…business groups”, Microsoft spent $113 million on employee severances.

but let’s take a look at some of the highlights for Q4:

FY 22 Q4

  • Revenue for the final 3 months was $51.9 billion, an increase of 12%.
  • Operating income was $20.5 billion, up 8%

Productivity & Business Processes

  • Revenue = $16.6 billion (up 13%)
  • Office 365 Commercial up 15%
  • LinkedIn up 26%
  • Dynamics 365 up 31%

Intelligent Cloud

  • Revenue = $20.9 billion (up 20%)
  • Azure up 40%

Earnings call highlights

  • Cosmos DB grew 100%+ YoY each quarter in FY22
  • 25 million Monthly Active Users (MAU) for Power Platform
  • Office 365 E5 is now 12% of the installed base (up from 8%)
  • Security revenue up 40%
  • Azure Virtual Desktop MAU almost 60% YoY increase
  • Office on-premises down over 30%
  • 25% of Fortune 500 using Viva

All these product areas are doing what Microsoft want them to do. As well as them innovating and creating products in the right areas, it also shows that their sales activities – direct and through partners – are paying off.

They said that E5 was strong both for renewals and new additions and Amy Hood mentioned they’re focusing on deployment and increasing usage of the suite. This makes sense as there are so many components of E5 these days that even customers getting value from E5 – typically via Office, Power BI, and a bit of security/telephony – have got some much more they could be using. I’d expect partners will be incentivized to get their customers utilising more of the E5 suite and it may mean that customers can use it to their advantage to extract concessions, POC funding etc. from partners and/or Microsoft.

On a similar note, Satya Nadella mentioned that Microsoft are now incentivizing their field sales teams to ensure that customer’s Azure bills “come down” through optimization efforts. This is a good thing to see from a cloud vendor and will hopefully lead to some legitimate savings for customers.

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