Microsoft is the first US tech giant to unveil its balance sheet for the last quarter of 2021 and second quarter of fiscal year 2022, which ran from September to December. As in the previous year, the Redmond firm saw its revenues boosted by its cloud business.
Microsoft takes advantage of the pandemic
In total, Microsoft beat analysts’ predictions and recorded a turnover of 51.7 billion dollars, an increase of 20% compared to the previous year. Its net profits rose 21% to $18.8 billion.
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Once again, the company’s cloud services, which include Azure and Office 365, are a resounding success as they generated $22.1 billion for Microsoft and grew 32% over the same period of 2020. The firm benefits greatly from the Covid-19 pandemic and the containment measures that followed. With telework, the demand for cloud infrastructure has exploded, so much so that this market could grow from 385 billion dollars in 2021 to 809 billion dollars in 2025, according to the research firm International Data Corp taken over by the wall street journal. Microsoft is the second largest cloud service provider with nearly 20% market share behind Amazon Web Services, which has more than 40%.
Telecommuting has also increased the demand for electronic devices. Windows licensing revenue from PC makers increased 25% in the last quarter of 2021, while the company’s Surface PC sales increased 8%. Same story for LinkedIn, which saw its revenues grow by 37%.
” Digital technology is the world’s most malleable resource for overcoming constraints and reimagining everyday work and life. As technology’s share of global GDP continues to grow, we innovate and invest in diverse and growing markets, with a common underlying technology stack and operating model that reinforces a strategy, culture and a common sense of purpose says Satya Nadella, CEO of Microsoft.
Microsoft has huge ambitions when it comes to gaming
Despite semiconductor shortages impacting many industries, including a drag on Xbox sales, Microsoft’s gaming revenue grew 8% year-on-year, hardware sales growing by 4%. Separately, Microsoft’s subscription gaming service, Game Pass, recently hit 25 million subscribers, up about 39% from last year.
Despite the shortage, Xbox Series S sales have increased. Photography: Billy Freeman / Unsplash
Last week, Redmond demonstrated its immense ambition in this sector by announcing the acquisition of Activision Blizzard for 68.7 billion dollars. If validated, this acquisition will be the largest in Microsoft’s history, allowing very popular franchises such as Call of Duty, Candy Crush, Overwatch and World of Warcraft to enter the catalog of the firm.
“ With our proposed acquisition of Activision Blizzard announced last week, we’re investing to make it easier for people to play great games where, when and how they want. And also to shape the future of games as platforms such as the metaverse develop “, explains Satya Nadella. Microsoft has understood that video games are no longer reserved for consoles and computers, and is absolutely looking to develop a high quality cross-platform streaming service.
A few clouds on the horizon
Despite a good performance in the quarter, Microsoft shares on the stock market fell slightly on the announcement of the results. This can be explained in particular by the results of Azure: the service recorded an increase of 46% against 48% for the previous quarter. “ Their reporting of a deceleration in revenue from their fastest-growing segment is raising concerns among some investors, who fear that the pace of growth in this division has already peaked. said David Wagner, a portfolio manager at investment firm Aptus Capital Advisors, which owns shares of Microsoft.
It remains to be seen whether the firm continues to see its revenues increase as much in the next quarter and manages to reverse the trend. However, it seems complicated with a return to normal looming in the coming months.