Microsoft (MSFT) released fiscal Q1 2022 earnings after the bell on Tuesday. The company easily beat analysts’ forecasts on the top and bottom line. Cloud revenue was up 36 percent from last year. The stock was flat in trading.
Microsoft earnings, by the numbers:
- Revenue: $45.3 billion vs. $43.93 billion forecast
- EPS: $2.71 vs. $2.07 forecast
- Intelligent Cloud: $16.98 vs. $16.58 billion forecast
- Productivity & Business processes: $15.04 vs. $14.70 billion forecast
- Personal computing: $13.31 vs. $12.68 billion forecast
“Digital technology is a deflationary force in an inflationary economy,” said Microsoft CEO Satya Nadella in a statement. “The Microsoft Cloud delivers the end-to-end platforms and tools organizations need to navigate this time of transition and change.”
Microsoft’s cloud business is the company’s most vital unit, contributing to Microsoft’s market cap of more than $2 trillion, and it continues to expand.
Microsoft started distributing the newest version of Windows, known as Windows 11, but the worldwide chip deficit, which is expected to continue at least until late 2022, is restricting new computer purchases.
However, despite this, the company was able to beat expectations in the sector, and Windows OEM revenue increased 10% in the quarter.
While business demand for desktop PCs is high, the chip crisis is restricting the availability of laptops, according to Gartner. In addition, as consumers are returning out into the world and seeking to spend on other products beyond computers, such as meals out, COVID-19 immunizations are driving customers to purchase other goods.
“Worldwide PC shipments totaled 84.1 million units in the third quarter of 2021, an increase of 1% from the third quarter of 2020, according to preliminary results by Gartner, Inc. As COVID-19 vaccines become more widely available, consumer and educational spending began to shift away from PCs to other priorities, slowing momentum in the market.”
Microsoft’s gaming sector has also been impacted by the silicon shortage. The high demand for Microsoft’s Xbox X and S consoles has far outpaced supply, leaving customers to search for systems on the secondary market where they may be sold for hundreds above their asking prices of $499 and $299, respectively.
That segment’s revenues increased by just 2%.