Microsoft Q3, 2022 Earnings analysis

Summary

• Revenue : 49.4B up 18%
• Operating income : 20.4B up 19%
• Net income : 16.7B up 8%
• EPS : $2.22 up 9%
• Microsoft Cloud 23.4B up 32%

Segment Breakdown

Productivity and Business Processes (15.8B up 17%)

• Office commercial products and cloud services up 12% 
• Office 365 revenue up 17%
•  Office consumer products and cloud services up 11% 
• Linkedin revenue up 34%
• Dynamic products and cloud services up 22% and Dynamics 365 up 35%

Intelligent Cloud (19.1B up 26%)

• Server products up 29%
• Azure up 46%

Personal Computing (14.5B up 11%)

• Windows OEM revenue increased 11%
• Windows commercial products and cloud services up 14%
• XBOX content and services revenue increased 4%
• Search advertising revenue up 23%
• Surface revenue increased 13%

Subscriptions

• Microsoft consumers subscribers up 58.4MN
• Paid office commercial seats grew 16% to 345M
• Developer SAAS
• Visual studio has more than 31M active users
• 90% of fortune 100 use github
• Azure Cloud
• Microsoft is the market leader for all SAP applications in the cloud
• The number of 100M+ azure deals more than doubled YoY
• Cosmos DB transactions and data volume grew 100% YoY for the third year in a row
• Synapse data volume more than doubled year over year
• Azure ML inference requests grew 86% YoY
• Power platform 
• 2BN in revenue in the past 12 months up 72% YoY
• Power BI has more than 200k customers
• Linkedin 
• 830M professionals
• Talent solutions up 43% marking 6 consecutive quarter of accelerating growth
• 28M subscribers to atleast 1 newsletter, up 51% YoY
• Teams
• differentiation : only solution with meetings, chat, video, collaboration and business process automation
• 1000+ collaboration apps like asana and zendesk
• Teams is a platform and companies have built custom apps on teams to bring business processes into workflows
• Viva has more than 10M MAUs
• Linkedin's glint employee engagement tool also got added to viva
• Windows
• More than 100M PCs have shipped in each of the last 8 quarters
• Windows 11 and windows 365 enabling switch between cloud and local PC
• 500M MAU of Microsoft personalized content feed - Microsoft start
• Flywheel : content consumption and commerce, microsoft edge helping people save through commerce deals
• Security
• 24 Trillion threat signals each day
• Azure active directory has 550M MAUs
• 785k customers for security solutions, grew 50% YoY
• 15k partners in security ecosystem
• Gaming
• XBox cloud gaming - 10M people have streamed games
• Azure gaming revenue fiscal grew 66% YTD

Google Q1, 2022 Earnings Analysis

Numbers

• Revenue: $68.1B vs $55.3B in Q1, 2021 (up 26%)
• Operating Income: $20.1B vs 16.4B in Q1, 2021
• Net Income - 16.4B vs 17.9B in Q1, 2021
• Operating margin - 30% vs 30% in Q1, 2021
• Finished with 134B of cash and purchased $52B of stock in the last 12 months

Segment Breakdown

• Google search 39.6 vs 31.8B in Q1, 2021 up 24.5%
• Google Cloud revenue: $5.8 billion vs. 4.0B in Q1 2021 up 43%
• YouTube ads: $6.8 billion vs. $6.0 billion in Q1 2021 up 14%
• Traffic Acquisition Costs (TAC): $11.99B billion  vs. $9.7B
• Google Network 8.1B vs 6.8B in Q1, 2021 up 20%
• Google Other(hardware, playstore, non-advertising youtube revenues) 6.8B (6.4B in Q1 2021) up 5%

Operating Income breakdown

• Google Service - 22.9B
• Cloud lost 930M in Q4. Prediction is that in 2022 Cloud will be cash flow positive
• Other bets lost 1.1B
• Google ends the quarter with 139B in cash
• Stock split 1:20 coming soon
• 70B new buyback announced
  

Search

• Multisearch - people can search using both images and text

• Search to help people find health care providers who take their insurance and book appointments online.

• Retail was the largest contributor for YoY growth to the ads business followed by travel

• 
  

Youtube

• 2B monthly signed in users

• Short form videos : 30B daily viewing hours, 4x in the last year

• Current focus is on user experience and monetization will follow later

• Youtube usage has continued to grow despite return to physical world post covid

• 135M people were reached via youtube on connected TVs

• Youtube made the transition from mobile to TV, over 700M hours of content watched on TV daily

• YouTube accounts for over 50% of ad-supported streaming watch time on connected TVs among people ages 18 and up. And over 35% of viewers in this group can't be reached by any other ad-supported streaming service. In other words, we're seeing that when users choose to watch ad-supported CTV, they choose to watch YouTube, and YouTube delivers CTV audiences that advertisers can reach anywhere else.

• later this year, in partnership with Nielsen, we'll help brands directly compare their YouTube reach to linear TV, including the ability to measure co-viewing. This apples-to-apples comparison will be a game changer in helping advertisers make smarter investment decisions.

• Warner Bros., who leaned to YouTube to help drive awareness among key audiences for The Batman. By using a combination of best-performing video creative, connected TV media and video ad sequencing, Warner Bros. expanded its target audience in the 2 weeks leading up to its release, helping contribute to its successful $134 million opening weekend.

• For direct response, we continue to believe there's great opportunity to address commercial intent on YouTube between video action campaigns, app campaigns, product feeds and new live commerce features.

Google play

• 99% developers pay less than 15%
• Pixel 6 is the fastest growing Pixel in the portfolio

Cloud

• Q1 revenue grew 44%

Google maps

• Google maps searches for shops near me grew 100% YoY
• Omnichannel is still a winning strategy

Other bets

• Waymo launched driverless operations in San Francisco expanding from Phoenix
• Wing started drone deliveries in Dallas Fortworth area completing 50k orders and growing 3x

ARBeauty

• Shoppers can now virtually discover and try on thousands of products from 90-plus brands, including Maybelline New York, MAC and Charlotte Tilbury as well as from retailers like Ulta Beauty right in Google Search.

Buybacks:

2022 : $70B

2021 : $50B

2019 : $25B

$GOOG Q1 revenue:

2022: $68.0 billion

2021: $55.3 billion

2020: $41.2 billion

2019: $36.3 billion

2018: $31.1 billion

2017: $24.8 billion

2016: $20.3 billion

2015: $17.3 billion

2014: $15.4 billion

2013: $12.9 billion

2012: $10.6 billion

2011: $8.6 billion

2010: $6.8 billion