Microsoft Q4 FY2022 Earnings Report Recap

MSFT missed on earnings and revenue

Key Takeaways

  • Azure and cloud services revenue increased by 40%, less than analyst predictions.
  • Cloud computing is one of Microsoft's fastest-growing businesses, although it faces stiff competition from rivals including Inc. and Alphabet Inc.
  • Microsoft also missed analyst predictions for both earnings per share and revenue.
Microsoft Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Adjusted EPS Miss $2.23 $2.29
Revenue Miss $51.9B $52.3B
Azure and Other Cloud Services Revenue Growth Miss 40.0% 43.1%

Source: Predictions based on analysts' consensus from Visible Alpha

Microsoft (MSFT) Financial Results: Analysis

Microsoft Corp. (MSFT) reported Q4 FY 2022 earnings results that missed analyst expectations. Earnings per share (EPS) came in at $2.23, short of analyst predictions. Revenue grew 12% YOY to $51.9 billion, also missing expectations. Microsoft Cloud revenue climbed by 28% YOY, fueling the company's overall revenue gains. Microsoft's Azure and other cloud services revenue grew by 40%, but still also fell short of predictions.

Note that Microsoft's 2022 fiscal year (FY) ended June 30, 2022. Its current earnings report is thus for its fiscal fourth quarter, which coincides with the second quarter of the calendar year.

MSFT Azure and Other Cloud Services Revenue

Microsoft's Azure and other cloud services revenue climbed by 40%, the slowest pace of growth in this area in at least 15 quarters. Azure is a cloud platform that offers developers, IT professionals, and enterprises a suite of tools and services that can be used for networking, storage, mobile, and web application services, artificial intelligence (AI), Internet of Things (IoT), and a range of other computing needs. It is among Microsoft's fastest-growing businesses, with revenue more than tripling in the past three years.

Competition in the cloud computing market is strong, as Microsoft and a growing list of rivals vie for the business of companies maintaining work from home or hybrid work models following the early stages of the pandemic.

MSFT Outlook and Stock Performance

Microsoft did not provide forward guidance at the time of its earnings release.

MSFT Conference Call Recap

Despite the weak quarter, Chief Financial Officer (CFO) Amy Hood was optimistic about the rest of the fiscal year in a conference call with analysts after earnings were released, “We continue to expect double digit revenue and operating income growth in constant currency and U.S. dollars,” she said. Hood also said that Microsoft also will add value by increasing the useful life of server and networking equipment to six years from the current four years.

Shares of Microsoft stock fell by about 1.2% in after-market trading hours immediately following the release of the company's earnings data. Microsoft has slightly underperformed the broader market in the last year, with 1-year trailing total returns of -12.1% compared with -10.3% for the S&P 500.

Microsoft's next earnings report (for Q1 FY 2023) is expected to be released on Oct. 26, 2022.

Article Sources
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  4. CNBC. "Microsoft Misses Estimates But Stock up 5% on Rosy Guidance."

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