Microsoft made $167m a day in profit, every day, over the past 12 months

Robust cloud, business not enough to overcome concerns about decline in Windows hardware maker revenue

Microsoft's $46.2bn in revenue for its fourth quarter of 2021, and profits rising 47 per cent to $16.5bn, shows the continued strength in its cloud business, investors were told on Tuesday.

Analysts on average anticipated results more along the lines of $44.1bn, though company stock nonetheless slipped in after-hours trading, possibly due to declines in revenue from Windows hardware makers or perhaps just that the market is just down at the moment.

In a statement, Microsoft CEO Satya Nadella credited the mega-corp's performance in part to its cloud business, along with other business units.

“We are innovating across the technology stack to help organizations drive new levels of tech intensity across their business,” he said.

“Our results show that when we execute well and meet customers’ needs in differentiated ways in large and growing markets, we generate growth, as we’ve seen in our commercial cloud – and in new franchises we’ve built, including gaming, security, and LinkedIn, all of which surpassed $10bn in annual revenue over the past three years.”

The respectable results may serve as some consolation following the US government's cancellation of its 10-year, $10bn Joint Enterprise Defense Initiative contract, awarded to the company in 2019 and then fiercely fought over in court.

Microsoft's salient stats for the final quarter of its financial year, which ended on June 30, were as follows:

  • Operating income hit $19.1bn, up 42 per cent year-on-year
  • Net income landed at $16.5bn, up 47 per cent
  • Diluted earnings per share came in at $2.17, up 49 per cent

For the company's full fiscal 2021:

  • Revenue topped out at $168.1bn, an increase of 18 per cent
  • Operating income came to $69.9bn, up 32 per cent
  • Net income arrived at $61.3bn GAAP and $60.7bn non-GAAP, up 38 per cent and 37 per cent, respectively. That's $168m a day in profit after taxes. (It set aside $9.8bn for tax on an annual pre-tax profit of $71.1bn)
  • Diluted earnings per share translated to $8.05 GAAP and $7.97 non-GAAP, representing increases of 40 per cent and 38 per cent respectively
  • Microsoft's GAAP results include $620m net income tax benefit. It reported a global tax rate of 15 per cent in its fiscal Q4

In terms of specific business units for this last quarter, software and services mostly posted gains. However, Xbox services, core Windows OEM revenue, and Surface revenue proved considerably less buoyant.

The company's Productivity and Business Processes group delivered revenues of $14.7bn, up 25 per cent (21 per cent in constant currency). That includes:

  • Office Commercial products and cloud services revenue rising 20 per cent (up 15 per cent in constant currency), led by Office 365 Commercial revenue growth of 25 per cent (20 per cent in constant currency). Microsoft Teams has almost 250 million monthly active users, and 124 organizations have more than 100,000 Teams users and about 3,000 have more than 10,000.
  • Office Consumer products and cloud services revenue grew 18 per cent (up 15 per cent in constant currency), thanks in part to Microsoft 365 Consumer subscribers increasing to 51.9 million.
  • LinkedIn revenue surged 46 per cent (42 per cent in constant currency) past $10bn, with Marketing Solutions seeing stellar growth of 97 per cent (91 per cent in constant currency).
  • Dynamics products and cloud services revenue rose 33 per cent (26 per cent in constant currency), much of it due to Dynamics 365 revenue growth of 49 per cent (42 per cent in constant currency).
  • Microsoft's Intelligent Cloud group managed $17.4bn, up 30 per cent (26 per cent in constant currency).
  • Server products and cloud services revenue grew 34 per cent (29 per cent in constant currency), on the back of Azure revenue gains on the order of 51 per cent (45 per cent in constant currency).

The company's More Personal Computing unit generated $14.1bn, about 9 per cent (6 per cent in constant currency) more than the year-ago quarter. More specifically:

  • Windows OEM revenue slipped 3 per cent, possibly a reflection of tight semiconductor supplies.
  • Windows Commercial products and cloud services revenue grew 20 per cent (14 per cent in constant currency).
  • Xbox content and services revenue retreated 4 per cent (7 per cent in constant currency).
  • Search advertising revenue rose 53 per cent, excluding traffic acquisition costs
  • Surface revenue fell 20 per cent (23 per cent in constant currency).

“As we closed out the fiscal year, our sales teams and partners delivered a strong quarter with over 20 per cemt top and bottom-line growth, highlighted by commercial bookings growth of 30 per cent year over year,” said Amy Hood, EVP and CFO of Microsoft in a statement. “Our commercial cloud revenue grew 36 per cent year over year to $19.5bn.” ®

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