News

Microsoft's Q2 Financials: Cloud Up, Windows Down

Microsoft posted growth in its cloud business, mixed results on the productivity and business processes business, and declines in the unit that includes Windows OEM revenues and devices in its second-quarter results reported Thursday.

For a second straight quarter, after-hours markets responded positively to Microsoft financial results that seemed to miss analyst expectations using generally accepted accounting practices (GAAP) but looked stronger on an adjusted basis.

After accounting for nearly $2 billion in deferred revenue and a few hundred million more in restructuring and integration charges among other adjustments, Microsoft reported non-GAAP earnings per share of $0.78 and revenues of $25.69 billion.

Analysts polled by Thomson Reuters expected earnings per share of $0.71 and revenues of $25.3 billion. On a non-adjusted basis, Microsoft reported earnings per share of $0.62 and revenues of $23.79 billion. Microsoft shares were up more than 5 percent in after-hours trading.

"We delivered double-digit operating income growth in non-GAAP constant currency while investing in key strategic areas that position Microsoft for continued long-term growth," said Amy Hood, executive vice president and chief financial officer of Microsoft, in a statement.

By business unit, revenues were $6.7 billion for Productivity and Business Processes, $6.3 billion for Intelligent Cloud and $12.7 billion for More Personal Computing.

Among the highlights:

  • Microsoft's commercial cloud annualized run rate now exceeds $9.4 billion.

  • Office 365 revenue growth was nearly 70 percent in constant currency.

  • Office 365 now has 20.6 million consumer subscribers.

  • Dynamics was a high point with 11 percent revenue growth in constant currency and a year-over-year doubling of Dynamics CRM Online seat adds.

  • Server products and cloud services revenue grew 10 percent in constant currency.

  • Azure revenues were up 140 percent in constant currency.

  • Windows OEM revenue fell 5 percent in constant currency.

  • Surface revenues increased 29 percent in constant currency.

  • Phone revenues declined 49 percent in constant currency.

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.

Featured

  • Microsoft Releases Dev Box Preview

    Microsoft Dev Box, which lets developers create provisioned workspaces for specific projects, has now hit the preview stage, according to an announcement made this week.

  • The 2022 Microsoft Product Roadmap

    Microsoft has a lot in the docket for 2022, including new products like SQL Server 2022, Exchange Subscription Edition and Visual Studio 2022 for Mac.

  • .NET 6 Support Comes to Linux

    Canonical and Microsoft announced on Tuesday that devs using Ubuntu 22.04 ("Jammy") operating system can now install .NET 6,

  • Microsoft Releases Entra Verified ID Service

    Microsoft announced on Monday the "general availability" of Microsoft Entra Verified ID, a new service that promises a more deliberate way for individuals and organizations to share identity information.