Microsoft Q4 Results Top Expectations, Xbox Revenue Slips Amid a Lack of Games

Microsoft Q4 Results Acme Expectations, Xbox Revenue Slips Amid a Lack of Games

Microsoft (NASDAQ:MSFT) has delivered another set of outlook-busting results for the quarter ending June 30, 2021, largely cheers to the usual suspects, including the Azure cloud division and business organisation products including Office 365, Dynamics 365, and LinkedIn. Unfortunately, the company's Xbox segmentation, which had been cruising along nicely for several quarters thanks to the growth of Xbox Game Laissez passer and the launch of the Xbox Serial X and S consoles, suffered a year-on-year decline in revenue in Q4.

Microsoft scooped upward revenue of $46.2 billion and internet income of $19.1 billion during Q4 2021, a respectable 21 pct year on year increase for revenue and a whopping 42 percent increase for income. Earnings per share were $two.17, which is above the $ane.92 per share analysts were expecting and 49 percent upward compared to the same menses the previous year. For the full 2021 financial year, acquirement was $168 billion and income was $69.9 billion, upwards 18 percent and 32 percentage respectively. Microsoft stock dropped ii to 3 pct in later on-hours trading, then rebounded sharply following the visitor's earnings call.

The Cloud Picks Upwardly New Steam

As usual, there's no overlooking the Q4 effects of business concern productivity services like Office 365, Dynamics 365, and Teams, and the Intelligent Cloud division. Azure adoption drove Intelligent Deject revenue to $17.4 billion, a yr-on-twelvemonth increase of xxx percent, which is meliorate than the 23 per centum increase in Q3. This heating up of the cloud division was driven by a wide range of new corporate and public sector partnerships, ranging from major banks similar Morgan Stanley to the US Army. Naturally, products that help teams working from abode are still a goldmine given the land of the world, with Dynamics products being upwards 33 percent, driving the Productivity and Business organisation Processes division acquirement to $14.7 billion, up 27 percent compared to Q4 2020.

Xbox Hot Streak Cools

The Productivity and Intelligent Cloud divisions had to pull their weight this quarter, as some of Microsoft's businesses flagged in Q4. Information technology was a disappointing quarter for Xbox, which went from a very healthy 50 per centum year-on-year revenue increment in Q3 to a 4 per centum decrease in Q4. While Microsoft has struggled to get consoles on shelves, Xbox hardware sales were still up 172 per centum year on year, with the decrease in gaming revenue coming down to a simple lack of games to sell. During the same Q4 period terminal yr, Microsoft delivered Gears Tactics and Minecraft Dungeons, and this year they offered, well, nothing. Q1 2022 may suffer a similar fate, as final year Microsoft published 4 games during the period and this year they'll publish only two. That said, those two titles are strong ones (Psychonauts 2 and Age of Empires IV) and perhaps Microsoft will exist able to get more Xbox Series consoles to retailers.

Xbox wasn't the only section of the More Personal Computing partition dragging its feet – Surface sales were down 20 per centum yr-on-year and Windows OEM acquirement was down 3 percent. That said, Windows Commercial Products and cloud services were up twenty percent.

Outlook

Q4 2021 really demonstrated the value of Microsoft's integrated deject and business productivity stack, equally they can easily behave the company to big profits fifty-fifty every bit other aspects of the visitor sometimes falter. Based on the words of Microsoft CEO Satya Nadella, it sounds like the company will continue to autumn dorsum on its cloud business organisation as they endeavor to build up new "franchises" similar gaming, LinkedIn, and Microsoft Security…

We are innovating beyond the applied science stack to help organizations drive new levels of tech intensity across their business. Our results evidence that when we execute well and see customers' needs in differentiated ways in large and growing markets, we generate growth, every bit we've seen in our commercial cloud – and in new franchises nosotros've built, including gaming, security, and LinkedIn, all of which surpassed $10 billion in annual revenue over the by 3 years.

Microsoft has ridden out COVID-nineteen with style and now looks to kick of FY 2021 with a healthy Q1, which they expect to deliver $43.3 billion to $44.ii billion in revenue. If their recent hot streak is whatever indication, that'southward a bourgeois gauge. Looking farther into the hereafter, the launch of Windows 11 and the end of Xbox and Surface supply constraints should only heave results farther.