Microsoft Q4 2021 Earnings

Summary

• Revenue : 46.2B up 21%
• Gross Margin : 32.2B up 25%
• Operating Income : 19.1B up 42%
• Net Income : 16.5B up 47%

Segment Breakdown

Productivity and Business Processes (14.7B up 25%)

• Office commercial products and cloud services up 20% 
• Office 365 revenue up 25%
•  Office consumer products and cloud services up 18% 
• Linkedin revenue up 46% and marketing solutions up 97%
• Sessions grew by 30%
• Dynamic products and cloud services up 33% and Dynamics 365 up 49%

Intelligent Cloud (17.4B up 30%)

• Server products up 34%
• Azure up 51%
• Enterprises support services revenue grew by 12% - Premium support services and Microsoft consulting services

Personal Computing (14.1B up 9.1%)

• Windows OEM revenue decreased 3%
• Windows commercial products and cloud services up 20%
• Gaming revenue grew by 11%
• XBOX content and services revenue decreased 4%
• Xbox hardware revenue grew by 172% by Xbox XIS sales
• Search advertising revenue up 53%
• Surface revenue decreased 20%

Subscriptions

• Microsoft consumers subscribers up 51.9MN
• Enterprise mobility installed base grew to 190MN by 29%
• Added new data centre regions in 15 countries
• 75% of fortune 500 use MSFT Hybrid offerings
• 72% of the fortune 50 use Github

Customers

• AT&T chose Azure to power its 5G core network, making it the first tier 1 operator to move its existing customer traffic to the public cloud. We're also expanding our opportunity in hybrid. 
• Over 75% of the Fortune 500 use MSFT hybrid offerings
• Azure Arc extends the Azure control plane across on-premise multi-cloud and the edge. With Arc, customers like EY and Telstra can manage their Kubernetes deployments anywhere and deploy Azure SQL databases and run Azure application services on any infrastructure. 
• As the digital and physical worlds converge, we are leading in a new layer of the infrastructure stack, the enterprise metaverse. 
• AB InBev is using our solutions, including Azure Digital Twins and Azure IoT to optimize operations from the barley field to the warehouse, to distribution.
• Thousands of enterprises have migrated their ERP workloads to Azure, including Campbell Soup, L'Oréal, Mondelēz International, ServiceNow, and even SAP. 
• All this innovation is driving larger and more strategic Azure commitments from industry leaders, including Mars in consumer goods, Morgan Stanley in financial services, and NEC in IT. 
• Data
• Data is the most strategic asset for every business. We're the only cloud provider that helps organizations build sovereignty over their data by bringing together hyperscale, OLTP, analytics, and governance workloads. Cosmos DB has become the go-to database, powering the world's most demanding mission-critical workloads. New capabilities help organizations like Albertsons, ASOS, DHL, LaLiga, Maersk, Swiss Re, optimize cost and boost performance.
• Walmart is using Cosmos DB to handle billions of online requests daily and to ensure millions of customers receive the items they want when they need them. Azure Synapse brings together data integration, big data, and data warehouses into a single service. From ABN AMRO in finance and AmerisourceBergen in pharma to Walgreens in retail and WPP in advertising, organizations are using Synapse to generate insights from massive amounts of structured and unstructured data. Queries performed using Synapse increased 146% over the last quarter alone.
• Developers
• GitHub is used by 72% of the Fortune 50 to build, ship, and maintain software. Organizations like Ford, NASA, and Shopify are using new project planning capabilities to help developers better manage projects directly within their workflow. And Epic Games, Motorola Solutions, and Volkswagen Software Group all chose GitHub Advanced Security this quarter to help secure their code.
• Enterprise AI
• We're also leading in enterprise AI. Our new Azure Applied AI Services help organizations like Dow, Lufthansa, and Samsung apply AI to common business scenarios. And live captions in Twitter Spaces are being powered by our speech services. Finally, we are bringing the power of our partnership with OpenAI to both professional developers and domain experts.
• Github copilot
• With GitHub Copilot, professional developers can write code faster with less work, and using the world's most powerful language model, GPT-3, domain experts can build apps using natural language with Power Platform. Power Platform has become the leading business process automation and productivity suite for domain experts across all functions. Power BI is the leader in business intelligence in the cloud. Organizations in every industry, including Bayer, Cerner, Rolls-Royce, are choosing the platform to foster a data-driven culture.
• The number of organizations using Power Apps has more than doubled year over year. BASF chose Power Apps to give 122,000 employees the capability to build low-code no-code apps. And the Toyota Fusion teams of pro developers and domain experts are using Power Apps and Azure Pass services to improve quality control. All up, Power Platform revenue increased 83% over the past year.
• Dynamics 365
• And now, on to Dynamics 365. Every business function, including marketing, sales, customer support, and supply chain will need to be reimagined for an AI-first and collaboration-first world. And the silos between communications, collaboration, and business process have to be broken down. With Dynamics 365, we are building a new generation of business applications to help organizations adapt to this new reality.
• We continue to gain share. Dynamics 365 revenue accelerated for the third consecutive quarter, up 49% year over year. We are helping businesses to become digitally sovereign over their customer interactions with our customer insights product with organizations like Columbia Sportswear, GNC, and LA Clippers all choosing to unify customer profiles and deliver more personalized experiences. We are empowering employees for hybrid work by creating a new category of collaborative applications, bringing business processes directly into the flow of work.
• New integrations between Dynamics 365 and Teams enable anyone in an organization to seamlessly view and collaborate on customer records within Teams without having to purchase multiple licenses. Customers want this and no other vendor is doing this today. And we are helping organizations reimagine their core business process with new apps built for an age of omnichannel communications. With Dynamics 365, customer service organizations like Coca-Cola, Renault, and Xiaomi have a single comprehensive solution to deliver consistent and personalized support across all channels.
• Now on to industry solutions. Over the past year, we have introduced industry clouds for financial services, healthcare, manufacturing, nonprofits, and retail. And this quarter, we announced our new Microsoft Cloud for sustainability, bringing together capabilities across our stack to create an entirely new business process category to help every organization address this very urgent need. Now, on to LinkedIn.
• Linkedin
• LinkedIn's revenue surpassed $10 billion for the first time this fiscal year, up 27%, a testament to how mission-critical the platform has become to help people connect, learn, grow, and get hired over the course of their careers. In the past five years since our acquisition, revenue has nearly tripled and growth has accelerated. LinkedIn has become a leader across multiple secular growth areas spanning B2B advertising, professional hiring, corporate learning, and sales intelligence. And from LinkedIn profiles within Office to LinkedIn Learning courses within Microsoft Viva and LinkedIn Sales Navigator leads within Microsoft Dynamics 365, we have brought together the power of LinkedIn and Microsoft to transform how people learn, sell and connect.
• LinkedIn has more than 774 million members who are more engaged than ever. Sessions were up 30% this quarter compared to a year ago. And LinkedIn's advertising business surpassed $1 billion in revenue this quarter for the first time, up 97% year over year, growing 3 times faster than the category. Now to Microsoft 365 and Teams.
• Teams
• Hybrid work represents the biggest change to the way we work in a generation and will require a new operating model spanning people, places, and processes. We're the only cloud that supports everything an organization needs to successfully make the shift. Microsoft Teams is the new front end. It's where people meet, chat, call, collaborate and automate business processes all within the flow of work.
• Teams usage has never been higher. We are nearly 250 million monthly active users as people use Teams each day to communicate, collaborate, and co-author content across work, life, and learning. We are leading in the new and growing enterprise phone category. Just like video meetings, chat, and business processes happen in Teams, calls happen in Teams, creating a huge new opportunity.
• We have nearly 80 million monthly active Teams phones users, with total calls surpassing 1 billion in a single month this quarter, and we're just getting started. Teams is also at the center of orchestrating collaboration across the entire SaaS estate from HR to marketing to finance. Leading third-party SaaS vendors, including Adobe, Atlassian, Salesforce, SAP, ServiceNow, and Workday have now built apps that deeply integrate with Teams, bringing every business process and function directly into the flow of work. And we are bringing Teams to consumers, so people can connect and collaborate with family and friends across desktop, mobile, and the web.
• All this innovation is driving growth. 124 organizations now have more than 100,000 users of Teams, and nearly 3,000 have more than 10,000 users. More broadly, across Microsoft 365, we are seeing double-digit year-over-year seat growth in every segment from frontline and small business to enterprise. Leading companies like Bayer, Siemens, Vodafone, all chose our premium E5 offerings for advanced security, compliance, voice, and analytics.
• Now on to employee experience cloud. Having a digital employee experience platform is critical for every organization. With Microsoft Viva, we are creating an entirely new category, bringing together communications, learning, well-being, and knowledge directly into the flow of work. New capabilities empower leaders to build human capital, nurture wellbeing and focus on employee results.
• We are seeing strong interest and early adoption in every industry from American Express and Barclays to AT&T and Mars. Humana chose Viva to help 26,000 employees make the shift to hybrid work, gaining insights on everything from collaboration trends to manager effectiveness. Now on to Windows. Windows 11 is the biggest update to our operating system in a decade.
• We are reimagining everything from the Windows platform to the store to help people and organizations be more productive and secure and build a more open ecosystem for developers and creators. We are delighted by early feedback. More people have downloaded our early builds than any other Windows release or update in the history of our insider program. And along with our OEM ecosystem, we are excited to bring Windows 11 to new PCs beginning this holiday.
• And with Windows 365, we are creating a new category, the Cloud PC. Just like applications move to the cloud with SaaS, we are now bringing the operating system to the cloud, enabling organizations to stream the full Windows experience to any employee's personal or corporate device. Now on to security. With the cybersecurity landscape more complex than ever, it's never been clearer that every organization will need to deploy and maintain a zero trust security architecture.
• Security
• This is driving accelerated demand for our integrated end-to-end solutions spanning identity, security, compliance, and device management across all clouds and all platforms. No other vendor is recognized by analysts as the leader in as many categories. This is reflected in our share gains with nearly 600,000 organizations, including FedEx, Nestlé, NTT, and Volkswagen using our security offerings across Azure and Microsoft 365. We saw a 70% increase in the number of small and medium business customers.
• And it's reflected in our sales growth, with annual revenue continuing to increase 40% year over year. We're going further to protect organizations and our recent acquisitions of CloudKnox, ReFirm Labs and RiskIQ bolster our security capabilities in key areas, including identity management, IoT, and threat intelligence. Now, on to gaming. Gaming is the largest category in the entertainment industry, and we are expanding our opportunity to reach the world's 3 billion gamers wherever and whenever they play.
• Gaming
• We are all in on games. At E3 last month, we unveiled our biggest games lineup ever, announcing 27 new titles, which will all be available to Game Pass subscribers. Game Pass is growing rapidly and it's transforming how people discover, connect and play games. Subscribers play approximately 40% more games and spend 50% more than nonmembers.
• We continue to lead in the fast-growing cloud gaming market with last month -- just last month, we made Xbox Cloud gaming available on PCs as well as Apple phones and tablets via the browser in 22 countries with more to come. Millions have already streamed games to their desktops, tablets, and phones. And the Xbox Series S and X are our fastest-selling consoles ever, with more consoles sold live to date than any previous generation. Finally, we continue to grow our opportunity in the creator economy, adding new ways for players to build and monetize their creations in many of our most popular games, including Flight Simulator and Minecraft.
• Creators earned more than double what they did a year ago across our titles. In closing, going forward, every person and every organization will require more digital technology to be more resilient and to transform. We are innovating across the entire tech stack to ensure our customers succeed in this new era. With that, I'll hand it over to Amy.

Shareholders

• 10.4B returned to shareholders - 6B in share repurchases, 4B in dividends