Microsoft posted their first quarter of 2022 financial reports stating that they made RM188.34 billion in revenue and net income of RM85.04 billion.
Despite what Microsoft calls a “continued PC demand impacted by supply chain constraints”, Windows Original Equipment Manufacturer (OEM) revenue was reported to increase by 10%.
Windows’ commercial and cloud services was up by 12% and that is thanks to Microsoft 365 demands.
Microsoft is hopeful that with the release of Windows 11, PC OEMs are going to improve supply chain issues and that the OS will drive in more demand for PCs and laptops.
The PC will be more critical than ever.
Microsoft CEO Satya Nadella.
Microsoft CEO Satya Nadella also stated that they are expecting Windows OEM sales to grow in second quarter (Q2) of 2022.
Up In The Cloud
It is the cloud technology growth that made headlines for Microsoft, especially as more businesses are adopting hybrid work place practice.
The Intelligent Cloud segment rose by 31% year-over-year (YOY) while services like Azure, server products, and cloud service saw a 50% growth in revenue in this quarter.
Office also saw a strong quarter with revenues in consumer products and cloud services up by 10% with Microsoft 365 seeing 54.1 million total consumers to date.
The business version of Office and cloud services also increased with Office 365’s commercial revenue going up by 23%. Businesses are truly moving into cloud technology as Office commercial product revenue dipped 13% YOY.
Not Surfacing Well
Microsoft is in their second quarter of sales with their Surface Laptop 4 and Surface Pro 7 Plus, but it is not looking too good for these devices
Microsoft reported a 17% decrease in revenue for Surface devices. It does not look like Microsoft will be able to increase the revenue for Surface in Q2 either.
Microsoft CFO Amy Hood issued a warning that they are to expect a dip in revenue for Surface products in the single digits. Microsoft is really feeling the effects of the chip shortage.
Xbox Series X and S
Yes I know that Malaysia did not officially get the Xbox. However, it is one of the talking points for Microsoft, the manufacturer.
It has been almost a year since Microsoft launched the Xbox Series X and S. The demand for the console is what caused revenue to go up again this quarter by 166%.
We are able to ship more Xbox Series X and S consoles than expected, even as demand continues to exceed supply
Microsoft CFO Amy Hood
This does not reflect the future stability of the chip shortage just yet. Xbox boss Phil Spencer already warned that the disruption will continue into 2022.
Microsoft’s gaming revenue was reported to increase by 16%, nearly RM14.93 billion for the quarter and a record Q1 for Xbox.
Microsoft also said they are seeing growth in Game Pass subscription but they didn’t mention the subscriber count figures. The last time they disclosed the figures were in January of this year with 18 million Xbox Game Pass subs.
Hood stated that they are expecting the growth to continue in Q2 2022, thanks to back-to-back Xbox Game Pass releases.
Round Up
Businesses that include productivity services like Office, LinkedIn, and Dynamics, makes up around 33% of Microsoft’s revenues.
Intelligent Cloud, which includes Azure, server products, and cloud services, now generates 38% of Microsoft’s revenues.
Finally, personal computing that includes Xbox, Windows, and Surface, with around 29% of Microsoft’s overall revenue.
