Microsoft Q2 FY2022 Earnings Report Recap

MSFT beat on earnings and revenue

Key Takeaways

  • Microsoft's gaming revenue rose 8% year over year, matching analysts' expectations.
  • Gaming revenue is a key metric gauging the amount of sales Microsoft generates from its video game hardware, software, and related services.
  • Microsoft recently announced plans to acquire popular video game company Activision Blizzard for $68.7 billion.
Microsoft Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
EPS Beat $2.48 $2.31
Revenue Beat $51.7B $50.8B
Gaming Revenue Match $5.4B $5.4B

Source: Predictions based on analysts' consensus from Visible Alpha

Microsoft (MSFT) Financial Results: Analysis

Microsoft Corporation (MSFT) reported Q2 FY 2022 earnings that beat analyst expectations. Earnings per share (EPS) came in above what analysts had forecast, rising 22.2% year over year (YOY). Revenue also surpassed analyst estimates, up 20.1% compared to the year-ago quarter. The company's Intelligent Cloud segment continued to lead revenue growth, up 25.5% compared to the year-ago quarter. Microsoft's gaming revenue matched analysts' forecasts.

The company's shares fell as much as 5% in post-market trading. Over the past year, Microsoft's shares have provided a total return of 26.7%, above the S&P 500's total return of 13.0%.

Note that Microsoft's 2021 fiscal year (FY) ended June 30, 2021. Its current earnings report is thus for its fiscal second quarter, which coincides with the fourth quarter of the calendar year.

MSFT Gaming Revenue

Microsoft's gaming revenue rose 8% YOY, the slowest pace of growth since the company reported a decline of gaming revenue in Q3 FY 2020. Gaming revenue measures the amount of sales generated by the gaming component of Microsoft's More Personal Computing segment. It includes sales of Xbox hardware and Xbox content and services, Xbox Game Pass and other subscriptions, video games, third-party video game royalties, cloud services, advertising, and more.

Microsoft is seeking to expand its video game offerings, as its recent announcement to acquire Activision Blizzard, Inc. (ATVI)—maker of popular games like Call of Duty and World of Warcraft—makes abundantly clear. Microsoft agreed to acquire Activision Blizzard for $68.7 billion. When completed, this will be the company's largest acquisition ever, and Microsoft said that the deal would make it the third-largest gaming company by revenue.

Microsoft Earnings Call Recap

Microsoft Chief Executive Officer (CEO) Satya Nadella outlined the growth potential of the company's gaming business in a conference call with analysts after earnings were released. “With our planned acquisition of Activision Blizzard announced last week, we’re investing to make it easier for people to play great games wherever, whenever and however they want. And also shape what comes next for gaming as platforms like the metaverse develop,” he said.

Microsoft's next earnings report (for Q3 FY 2022) is expected to be released on April 28, 2022.

Article Sources
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  2. Microsoft Corp. "Second Quarter Fiscal Year 2022 Results: Slides," Page 13. Accessed Jan. 25, 2022.

  3. Visible Alpha. "Financial Data." Accessed Jan. 25, 2022.

  4. TradingView. "Price Chart: MSFT and S&P 500." Accessed Jan. 25, 2022.

  5. Microsoft Corp. "Form 10-Q for the Quarterly Period Ended September 30, 2021," Page 27. Accessed Jan. 25, 2022.

  6. The Wall Street Journal. "Microsoft to Buy Activision Blizzard in All-Cash Deal Valued at $75 Billion." Accessed Jan. 25, 2022.

  7. Microsoft Corp. "Microsoft to Acquire Activision Blizzard to Bring the Joy and Community of Gaming to Everyone, Across Every Device." Accessed Jan. 25, 2022.

  8. "Microsoft Corporation (MSFT): Financials—Earnings." Accessed Jan. 25, 2022.

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