Tencent Technology News April 27 news, Microsoft on Tuesday after hours released its third fiscal quarter ended March 31, 2022. According to the earnings report, Microsoft's total revenue in the third fiscal quarter was $49.36 billion, up 18% year-on-year, exceeding the average estimate of $49.05 billion for Wall Street analysts; net profit was $16.73 billion, up 8% year-on-year; diluted earnings per share were $2.22, up 9% year-on-year, exceeding the average Estimate of $2.19 for Wall Street analysts
Earnings highlights
1. Total revenue exceeded expectations
- Microsoft's fiscal third quarter total revenue was $49.36 billion, up 18% year-over-year and 21% year-over-year in constant currency terms (not in accordance with U.S. GAAP).
-Microsoft's fiscal third quarter operating profit was $20.36 billion, up 19% year-over-year and 23% year-over-year at constant exchange rates (not in accordance with U.S. GAAP).
-Microsoft's fiscal third quarter net income was $16.73 billion, an increase of 8% year-over-year and a 17% increase in constant currency terms (not in accordance with U.S. GAAP).
Microsoft's diluted earnings per share for the fiscal third quarter were $2.22, up 9% year-over-year and 18% year-over-year on a constant currency basis (not in accordance with U.S. GAAP).
2. Core products and services: toB business to maintain rapid growth
- Office Commercial Products and Cloud Services revenue increased 12% year-over-year and 14% year-over-year on a constant currency basis.
Office 365 commercial product revenue increased 17% year-over-year and 20% year-over-year in constant currency terms.
- Office consumer products and cloud services revenue increased 11% year-over-year and 12% year-over-year on a constant currency basis.
- LinkedIn revenue increased 34% year-over-year and 35% year-over-year on a constant currency basis.
- Dynamics product and service revenue increased 22% year-over-year and 25% year-over-year in constant currency terms.
- Dynamics 365 revenue increased 29% year-over-year and 32% year-over-year on a constant currency basis.
- Server Products & Cloud Services revenue increased 29% year-over-year and 32% year-over-year on a constant currency basis.
Azure and other cloud services revenue increased 46% year-over-year and 49% year-over-year on a constant currency basis.
- Windows OEM revenue increased 11% year-over-year and 11% year-over-year on a constant currency basis.
Windows Business Products and Cloud Services revenue increased 14% year-over-year and 19% year-over-year on a constant currency basis.
Xbox Content and Services revenue increased 4% year-over-year and 6% year-over-year on a constant currency basis.
- Search ads revenue increased 23% year-over-year and 25% year-over-year on a constant currency basis.
- Surface revenue increased 13% year-over-year and 18% year-over-year in constant currency terms.
3. Cash, cash equivalents and total short-term investments decreased significantly compared with the same period last year
Microsoft returned $12.4 billion in cash to shareholders in the form of dividends and share repurchases in the fiscal third quarter, up 25 percent from the fiscal third quarter of fiscal 2021. Microsoft's cash, cash equivalents, and short-term investments totaled $104.69 billion as of March 31, 2022, compared to $130.33 billion as of June 30, 2021.
4. Satya Nadella: Microsoft is doing more with less
"Going forward, digital technologies will be a key input to drive world economic output," said Satya Nadella, Chairman and CEO of Microsoft. "Across the technology stack, we're expanding opportunities and shares to help customers stand out, build resiliency, and do more with less."
Amy Hood, Executive Vice President and Chief Financial Officer of Microsoft, said: "The continued commitment and strong sales execution of our cloud platform by our customers has driven a 28% increase in commercial bookings and Microsoft cloud revenue to $23.4 billion, up 32% year-over-year, exceeding expectations. ”
Financial summary
1. Revenue
Microsoft's fiscal third quarter total revenue was $49.36 billion, up 18 percent from $41.71 billion in the year-ago quarter and up 21 percent at constant exchange rates (not in accordance with U.S. GAAP). Microsoft's year-over-year growth in total revenue for the fiscal third quarter was impacted by the following factors:
Why: Microsoft's revenue grew across all businesses. Among them, product revenue reached $17.37 billion, an increase of 3% from $16.87 billion in the same period last year; services and other revenue reached $31.99 billion, an increase of 28.8% from $24.83 billion in the same period last year.
2. Profitability
Microsoft's fiscal third-quarter gross profit was $33.75 billion, up 17.8 percent from $28.66 billion in the year-ago quarter.
Microsoft's fiscal third-quarter operating profit was $20.36 billion, up 19 percent from $17.05 billion in the year-ago quarter and up 23 percent year-over-year at constant exchange rates that are not in accordance with U.S. GAAP.
Microsoft's fiscal third-quarter net income was $16.73 billion, up 8 percent from $15.46 billion in the year-ago quarter and up 17 percent year-over-year at constant exchange rates that don't follow U.S. GAAP.
Microsoft's diluted earnings per share for the fiscal third quarter were $2.22, up 9 percent from $2.03 in the year-ago quarter and up 18 percent year-over-year at constant exchange rates other than U.S. GAAP.
3. Cash
Microsoft returned $12.4 billion in cash to shareholders in the form of dividends and share repurchases in the fiscal third quarter, up 25 percent from the fiscal third quarter of fiscal 2021. Microsoft's cash, cash equivalents, and short-term investments totaled $104.69 billion as of March 31, 2022, compared to $130.33 billion as of June 30, 2021.
4. Divided by department
Microsoft's Productivity and Business Processes division reported fiscal third-quarter revenue of $15.79 billion, up from $13.55 billion in the year-ago quarter and slightly more than Wall Street analysts expected at $15.75 billion; operating profit was $7.18 billion, up from $6.02 billion in the year-ago quarter.
Intelligent Cloud revenue was $19.05 billion, up from $15.12 billion in the year-ago quarter and more than Wall Street analysts expected at $18.90 billion; operating profit was $8.28 billion, up from $6.43 billion in the year-ago quarter.
More Personal Computing had revenue of $14.52 billion, up from $13.04 billion in the year-ago quarter and more than Wall Street analysts had expected $14.27 billion; operating profit was $4.90 billion, up from $4.59 billion in the year-ago quarter.
Other highlights: R&D spending grew to $6.31 billion / sales and marketing spending grew the fastest in three years
Microsoft's total cost of revenue for the fiscal first quarter was $15.62 billion, up from $13.05 billion in the year-ago quarter. Among them, the cost of product revenue was $4.58 billion, up from $4.28 billion in the same period last year, and the cost of services and other revenue was $11.03 billion, up from $8.77 billion in the same period last year.
Microsoft spent $6.31 billion on research and development in the fiscal first quarter, up from $5.20 billion in the year-ago quarter; sales and marketing expenses of $5.60 billion, up 10 percent from $5.08 billion in the same period last year, the fastest increase in more than three years; and general and administrative expenses of $1.48 billion, up from $1.33 billion in the year-ago quarter.
Microsoft's total cost of revenue for the fiscal third quarter was $15.62 billion, up from $13.05 billion in the year-ago quarter. Among them, the cost of product revenue was $4.58 billion, up from $4.28 billion in the same period last year, and the cost of services and other revenue was $11.03 billion, up from $8.77 billion in the same period last year.
Microsoft's third-quarter R&D spending was $6.31 billion, up from $5.20 billion in the year-ago quarter; sales and marketing spending was $5.60 billion, up 10 percent from $5.08 billion in the year-ago quarter, the fastest increase in more than three years; and general and administrative expenses were $1.48 billion, up from $1.33 billion in the year-ago quarter.
Microsoft said revenue from selling Windows licenses to PC makers rose 11 percent in the fiscal third quarter. Microsoft had forecast 6-9% growth in January. Market research firm Gartner estimates that global PC shipments will decline 6.8 percent year-over-year in the first quarter after the market expansion driven by the pandemic, the biggest drop since the first quarter of 2020. Excluding PCs running Google's Chrome OS, which became more popular during Covid, shipments would grow by 3.9 percent.
In the fiscal third quarter, Microsoft announced plans to acquire video game publisher Activision Blizzard for $68.7 billion, the largest merger and acquisition transaction in Microsoft's 47 years of existence. Microsoft also completed the acquisition of Nuance Communications and developed a strategy for expansion in healthcare, an industry nuance focuses on. The consolidation of Nuance's business resulted in a decrease of $0.01 per diluted earnings per share in microsoft's fiscal third quarter, but an increase of $111 million in revenue.
Outlook: Microsoft expects revenue to reach $52.86 billion in fiscal fourth quarter, continuing to grow
Microsoft will provide forward-looking guidance related to this quarter's earnings announcements on its earnings conference calls and webcasts. Wall Street analysts currently expect Microsoft's fiscal fourth quarter diluted earnings per share to reach $2.35 and revenue to reach $52.86 billion.
Microsoft shares fell $10.50, or 3.74 percent, to close at $270.22 in regular trading on the Nasdaq stock market on Tuesday. In subsequent after-hours trading, driven by the performance exceeding market expectations, Microsoft shares rose by $15.78, or 5.84%, to $286.00 at press time. Over the past 52 weeks, Microsoft's lowest share price was $238.07 and the highest was $349.67. At Tuesday's closing price, Microsoft's market capitalization is about $2.03 trillion.
After-hours stock price increased by more than 4%
On Tuesday, local time in the United States, Microsoft's stock price closed at $270.22 per share, down 3.74%. After the earnings report, as of this writing, the stock is up more than 4% in after-hours trading, and the current U.S. stock is trading at $281.8. (Compiled by Tencent Technology/No Taboo)