Microsoft Beats Expectations with Profits up 47%

The end of June marks the end of Microsoft’s fiscal year and the company has released its earnings for FYQ4, CY2. Once again, the company beat expectations with a significant rise in profits and revenue.

For the quarter, Microsoft posted revenue of $46.2 billion, net income of $16.5 billion, and an operating income of $19.1 billion. Overall, net income was up 47% year over year, highlighting the company’s continued dominance in the productivity space along with growth in many different segments.

At a high level, the company’s business units reported the following earnings:

  • Revenue in Productivity and Business Processes was $14.7 billion and increased 25%
  • Revenue in Intelligent Cloud was $17.4 billion and increased 30%
  • Revenue in More Personal Computing was $14.1 billion

Other notable highlights from the earnings statements are that Office Commercial products and cloud services revenue increased 20% driven by strong seat license growth, Microsoft 365 consumer seats are now at 51.9 million, and LinkedIn revenue jumped 46% during the quarter.

For the company’s “More Personal Computing” org, the results are a bit more muted as the company was impacted by supply constraints in the PC segment. As a result, OEM revenue dropped 3%, Surface plunged 20% year over year, and Xbox also took a hit with a 4% decrease in services revenue – the company blamed this on third-party titles not driving as much revenue (Fortnite).

As this is the year-end for the company’s fiscal calendar, overall, it was a blockbuster year for the organization. Microsoft says that for the year, they hauled in $168.1 billion in revenue with net income for the year of $61.3 billion.

Another staggering number is that Microsoft says there are now 250m monthly active Teams users, this is up from 145 million daily users. The company is switching metrics to monthly, likely because it is more favorable for reporting purposes. It does also match the Windows desktop metric that is also reported in monthly usage.

While the pandemic is far from over, it’s clear that Microsoft was one of the primary benefactors from the massive migration to remote work. As the company looks ahead to the new fiscal year, this past year will be hard to beat in terms of growth but much of Microsoft’s revenue is from subscriptions which means they should be well-positioned for another healthy year.