Microsoft Q4 2022 Results: Revenues Miss Estimates, Outlook Raised

Microsoft Q4 FY22 Earnings

Microsoft reported its Q4FY22 earnings on Tuesday, and the share price of the software maker was trading 4% higher in the pre-market despite the numbers falling below estimates. Microsoft shares closed 2.68% lower at $251.90 per share. It has fallen nearly 25% YTD.

Microsoft Q4 2022: Key Highlights

  • Revenue: $51.87 billion, up 12% year-on-year
  • Net Income: $16.7 billion, up 2% year-on-year
  • Guidance: Microsoft called for $49.25 billion to $50.25 billion in guidance for the first quarter of the new fiscal year.

Let us look at all the details of Microsoft's June earnings:

Microsoft Q4 FY22: Revenue Below Estimates

The company reported net revenue of $51.87 billion against street estimates of $52.44 billion. Compared to last year, in the same quarter, the revenue was up by 12%, the slowest revenue growth since 2020. 

The Intelligent Cloud computing platform generated revenue of $20.91 billion, a rise of 20% but below estimates of $21.10 billion. Azure and other cloud services grew by 40%. LinkedIn's revenue increased 26% year-on-year. Microsoft ad revenue was reduced by about $100 million due to reductions in advertising spending.

Microsoft Q4 2022 Results: Increase in Net Income

Microsoft Corporation reported a Net Income of $16.7 billion, a growth of 2%. In constant currency, the growth was 7%. Diluted earnings per share (EPS) was $2.23 against the analyst's estimate of $2.29. 

Microsoft Q4 FY22: Cash and dividend

Microsoft has $105 billion in cash, cash equivalents, and short-term investments. 

The company returned $12.4 billion to shareholders in the form of share repurchases and dividends in Q4FY22, an increase of 19% compared to Q4FY21.

Microsoft Q4 2022 Results: Guidance

The company called for $49.25 billion to $50.25 billion in revenue for the new fiscal first quarter. At $49.75 billion (middle of the extreme ends), implies about 10% revenue growth. It is mainly because of worsening PC sales and slower cloud infrastructure growth. Analysts had expected more at $51.49 billion. The company’s implied gross margin, at 69.85%, is more than the 69.30% consensus among analysts.

Microsoft Q4 FY22 Earnings: Management Commentary

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

Microsoft Q4 2022 Results: Analysts' Views

Based on 26 analysts offering 12-month price targets, the average price target is $336.88 with a high forecast of $411 and a low forecast of $287. 

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