Azure sales propel Microsoft in 'better than expected' Q2 results

The tech giant has posted another ‘record quarter’ in its fiscal Q2

Microsoft reported a revenue hike of 20 per cent in the second quarter of its fiscal 2022 financial results, earning revenues of $51.7bn (€45.8bn).

Operating income for the quarter ended December 31, 2021 also saw double-digit growth of 24 per cent to $22.2bn (€19.6bn).

Microsoft's results beat previous analyst expectations, largely owing to the tremendous growth seen in its Microsoft Cloud business, which spiked 32 per cent year on year to reach revenues of $22.1bn.

"It was a record quarter, driven by continued strength of the Microsoft Cloud", Microsoft chairman and CEO, Satya Nadella told viewers in an earnings call.

"We're living through a generational shift in our economy and society. Digital technology is the most malleable resource at the world's disposal to overcome constraints and reimagine everyday work and life."

Business Highlights

The tech giant's revenue in Productivity and Business Processes totalled $15.9bn, up 19 per cent.

Broken down, this increase was mainly driven by growth in Office Consumer products and cloud services, rising 15 per cent alongside Microsoft 365 Consumer subscribers expanding to 56.4 million.

On the cloud side, sales in Intelligent Cloud rose 26 per cent, generating $18.3bn.

Microsoft said its server products and cloud services revenue climbed 29 percent thanks to Azure and other cloud services revenue growth of 46 per cent.

Nadella added in the webcast that Microsoft's Azure Arc customer base has tripled year over year.

The company's overall gaming revenue enjoyed an upward trend of eight per cent, with continued appetite for the latest Xbox Series X and Series S consoles driving Xbox hardware revenue up four per cent.

Microsoft's gaming arm has gained recent attention following last week's acquisition of Activision Blizzard for $68.7bn.

Business Outlook

Microsoft said it expects cost of goods sold (COGS) of $15.5bn to $15.7bn and operating expense of $13.4bn to $13.5bn driven by headcount investments in high-growth, strategic areas to drive continued long-term revenue growth.

"And finally, for FY22, given our strong performance in the first half of the fiscal year and our current H2 outlook, full year operating margins should be slightly up year over year even with the impact of changes in accounting estimates noted earlier and the significant strategic investments we are making to capture the tremendous opportunities ahead of us," Nadella added during the call.