Microsoft Earnings Miss a Beat

Posted on July 26, 2022 by Paul Thurrott in Microsoft with 8 Comments

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Microsoft reported that it earned a net income of $16.7 billion on revenues of $51.87 billion in the quarter ending June 30. But several of its businesses, including Windows and Xbox, took a tumble, and the results fell short of expectations.

“We see real opportunity to help every customer in every industry use digital technology to overcome today’s challenges and emerge stronger,” Microsoft CEO Satya Nadella said. “No company is better positioned than Microsoft to help organizations deliver on their digital imperative – so they can do more with less.”

But CFO Amy Hood offered up some actual insight, noting that the software giant is “committed to balancing operational discipline with continued investments in key strategic areas to drive future growth.” In other words, the company needs to do better in a challenging financial environment: Microsoft had lowered its guidance for the quarter in June, but the final results came in even lower.

Microsoft’s top two businesses, Intelligent Cloud, with $20.9 billion in revenues, and Productivity and Business Processes, with $16.6 billion in revenues, both experienced double-digit growth of 20 and 13 percent, respectively. But More Personal Computing stumbled into third place with just $14.4 billion in revenues and just 2 percent growth.

Windows revenues from PC makers declined 2 percent in the quarter, while Windows commercial products and services grew by just 6 percent, driven by demand for Microsoft 365. And Xbox revenues fell by 6 percent year-over-year. Surface revenue, curiously, was a highlight, with 10 percent growth.

Office commercial revenue was up 9 percent, while Office 365 commercial surged 15 percent. But Azure growth was just 40 percent.

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Comments (8)

8 responses to “Microsoft Earnings Miss a Beat”

  1. Bart

    LinkedIn; 850 million members according Frank Shaw. Revenue up 26%. I mean,...hello! This takeover by Microsoft is proofing it's worth quarter after quarter. Amazing.

    • miamimauler


      Yes, LinkedIn has been a genuine success for MS to this point.

      • rob_segal

        There's not enough information to call it a success or a failure. LinkedIn growth during a time when a lot of people are thinking about or actively changing jobs shouldn't be surprising. Can this translate to long-term sustained growth with the service hitting milestones Microsoft expects? I don't know. Not enough information.

    • Paul Thurrott

      I don't see how LinkedIn can be considered a success. What were the profits? Was it ever profitable? Will it ever earn back the investments Microsoft made in it? How is Microsoft leveraging LinkedIn across its other products and services? Does it materially impact the Microsoft Graph in a positive way? Etc. I'm not saying I have the answers here. Just that Microsoft is a big enough company to hide these (potential) issues.
      • nine54

        This seems like a great topic for an article where you evaluate the impact of the acquisition: Looking back on LinkedIn.

        At the time, it seemed like a big data grab and a way to "sell" valuable employee insights back to enterprises, perhaps with tie-ins to AD and Dynamics. Or, maybe MSFT saw it as a threat, a type of public directory service that could displace AD.

  2. jgraebner

    The growth for surface probably isn't that surprising, since the Surface Pro line got the first significant re-design in a long time in the past year and the Surface Laptop Studio is probably a more compelling design for many than the Surface Book was. Of course, modest increases of generally small revenues can look pretty impressive when reported as a percentage.

  3. MutualCore

    Holy smokes Batman!