Microsoft posted the primary quarter of its 2022 financial results today, reporting income of $45.3 billion and a web revenue of $20.5 billion (GAAP). Income is up 22 %, and web revenue has elevated by 48 %. Microsoft has seen sturdy income efficiency in its cloud, server, and Workplace companies this quarter.

Microsoft may need simply launched Home windows 11 earlier this month, however within the months forward of this new model of Home windows, PC gross sales have began to say no within the US as a result of provide points.

That doesn’t appear to have impacted Microsoft’s Home windows revenues, although. Home windows OEM income has elevated by 10 % this quarter, regardless of what Microsoft calls “continued PC demand impacted by supply chain constraints.”

Laptop mode on the Surface Laptop Studio.

Microsoft’s new Floor Laptop computer Studio.
Photograph by Vjeran Pavic / The Verge

Home windows industrial merchandise and cloud providers income has additionally elevated by 12 %, because of demand for Microsoft 365. Home windows 11 has solely simply arrived on new units earlier this month, so Microsoft and OEMs might be hoping the availability points enhance and that the brand new working system drives much more demand for laptops and PCs.

Microsoft CEO Satya Nadella believes the PC is essential proper now. “The PC will be more critical than ever,” stated Nadella throughout an earnings name in the present day. “There has been a structural shift in PC demand emerging from this pandemic.” Microsoft can also be now anticipating Home windows OEM income progress throughout Q2.

Over on the Floor aspect, we’re now into the second quarter of Floor Laptop computer 4 and Floor Professional 7 Plus gross sales for Microsoft’s Floor revenues. Floor income has decreased by 17 % this quarter, and Microsoft says that’s associated to a stronger prior 12 months by comparability.

It doesn’t appear to be Floor income will enhance subsequent quarter, both. Microsoft CFO Amy Hood warned that Microsoft’s Q2 outlook consists of an anticipated dip of Floor income within the “single digits.” It seems Microsoft is feeling the results of PC part provide points.

Microsoft’s Xbox Collection S and X consoles.
Photograph by Vjeran Pavic / The Verge

It’s almost been a 12 months since Microsoft’s Xbox Collection X and Collection S consoles have been available on the market, they usually’ve been frequently rising {hardware} income for Xbox in current months. {Hardware} income is up once more this quarter by 166 %, because of continued demand for Xbox Collection X and Collection S consoles.

Hood says Microsoft was “able to ship more Xbox Series X and S consoles than expected, even as demand continues to exceed supply.” It’s not clear if this higher than anticipated console provide will final into Q2, and Microsoft’s Xbox chief has already warned provide constraints will final into 2022.

Microsoft’s general gaming income can also be up by 16 %, almost $3.6 billion for the quarter and a file Q1 for Xbox. However Xbox content material and providers income has solely elevated by 2 %. Microsoft says there was some “growth in Xbox Game Pass subscriptions,” however the firm isn’t itemizing a brand new determine for its subscriber rely. The final publicly disclosed one was 18 million Xbox Sport Cross subs in January 2021.

We may get an Xbox Sport Cross numbers replace as soon as Forza Horizon 5 and Halo Infinite have had an affect on subscriber numbers. Hood says Microsoft expects Xbox content material and providers income progress “in the mid teens” for Q2, because of the again to again Xbox Sport Cross releases.

As all the time, it’s the cloud progress that has been spectacular for Microsoft’s revenues, significantly as companies alter to hybrid work. Income in clever cloud is up 31 % 12 months over 12 months, together with Azure and different cloud providers income progress of fifty %.

Workplace has additionally had a powerful quarter, with Workplace shopper merchandise and cloud providers income up 10 %, and Microsoft 365 shopper subscribers up 19 % to 54.1 million in complete.

Microsoft’s enterprise highlights for Q1, 2022.
Picture: Microsoft

Microsoft’s enterprise variations of Workplace and related cloud providers are additionally up 18 % in income 12 months over 12 months, with Workplace 365 industrial income up 23 %. In case you’re questioning whether or not companies are transferring to the cloud, Workplace industrial merchandise income dipped 13 % 12 months over 12 months, because of the continuing shift to cloud providers.

Whereas Microsoft’s three core enterprise segments are nonetheless properly balanced by way of income, the clever cloud enterprise is steadily pulling away. Productiveness and Enterprise Processes, which incorporates Workplace, LinkedIn, and Dynamics, makes up round 33 % of Microsoft’s revenues. Clever Cloud, which incorporates Auzre, server merchandise, and cloud providers, now generates 38 % of Microsoft’s revenues. That leaves Extra Private Computing, which incorporates Xbox, Home windows, and Floor, with round 29 % of Microsoft’s general income.

Replace, October twenty sixth 6:30PM ET: Article up to date with feedback from Microsoft CEO Satya Nadella and CFO Amy Hood.


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