Microsoft's performance in the fourth quarter fell short of expectations, and its growth rate hit a new low.

Microsoft's performance in the fourth quarter fell short of expectations, and its growth rate hit a new low.

Microsoft's performance in the fourth quarter fell short of expectations, and its growth rate hit a new low. Microsoft mentioned in the financial report that Azure cloud service revenue increased by 40% year-on-year, compared with 46% in the previous fiscal quarter, and the average analyst expectation was 43. 1%. Microsoft's performance in the fourth quarter fell short of expectations, and its growth rate hit a new low.

Microsoft's performance in the fourth quarter fell short of expectations, with the growth rate hitting a new low of 65,438+0. After the close of US Eastern Time on July 26th, Microsoft announced its financial report for the fourth quarter of fiscal year 2022 as of June 30th. In the fourth quarter, Microsoft's revenue was $565,438+$87 million, which was lower than the analyst's expectation of $52.45 billion, with a year-on-year increase of 12%, the lowest growth rate since September 2020. The net profit was $6543.8+06.74 billion, up 2% year-on-year, which was also the lowest growth rate in the past two years.

Microsoft's diluted earnings per share (EPS) was $2.23, up 3% year-on-year, lower than analysts' expectations of $2.29. According to the American Consumer News and Business Channel, this is the first time since 20 16 that Microsoft's earnings per share are lower than market expectations.

Microsoft said that this quarter's performance was affected by many factors, including the interruption of supply chain in some areas, the reduction of Russian business and the turmoil in the digital advertising market.

In early June, due to exchange rate fluctuations, Microsoft lowered its performance guidance. The company said that the strong dollar means that Microsoft's overseas sales profit is low. Due to this factor, the company's revenue decreased by 595 million US dollars in the quarter.

In terms of business, the revenue growth rate of Microsoft's three major businesses-cloud business, productivity and business process business and personal computer business-has slowed down compared with the previous quarter.

Microsoft's intelligent cloud business, including server products such as Azure cloud, GitHub and Windows server, achieved revenue of $20.965438 billion+$100 million, up 20% year-on-year, lower than the Wall Street forecast of $265.438 billion+$06.5438 billion+$100 million. Among them, the revenue of Azure and other cloud services increased by 40% year-on-year, and the average growth rate expected by analysts was 43%, while the department increased by 46% year-on-year in the last quarter.

Satya Nadella, CEO of Microsoft, said in a conference call with analysts that the number of Azure contracts reached more than 654.38+million this quarter, with a contract value of 654.38+0 billion US dollars.

The revenue from productivity and business processes was $654.38+0.66 billion, up 654.38+03% year-on-year, and up 654.38+07% year-on-year in the previous quarter. Among them, revenue of Office commercial products and cloud services increased by 9%, revenue of Office 365 increased by 15%, revenue of Office consumer products and cloud services increased by 9%, revenue of LinkedIn increased by 26%, revenue of Dynamics 365 increased by 3 19%, and revenue of Dynamics products and cloud services increased by19%. The growth rate is lower than that of the previous quarter.

Personal computer business, including Windows operating system, advertising, equipment and games, achieved revenue of $65.438+0.436 billion, up 2% year-on-year, and increased by 654.38+065.438+0% year-on-year in the first quarter.

In addition, after Russia and Ukraine, Microsoft decided to shrink its business in Russia, resulting in operating expenses of $6,543.8+$26 million.

Recently, the digital advertising market is in turmoil, and Microsoft's advertising business has also been affected. The company said that the decrease in online advertising spending this quarter led to a decrease of more than $654.38 billion in LinkedIn and other advertising revenue.

It is worth noting that Netflix announced this month that it chose Microsoft as its global advertising sales and technology partner and launched a brand-new advertising subscription model.

In response to the economic recession, Microsoft is also one of the companies that "tighten their belts". Earlier, Microsoft said that the company would significantly reduce the number of vacant positions, and the Azure cloud business and security software departments would slow down recruitment. Microsoft said that the employee severance pay brought by business restructuring this quarter reached $65,438+0./kloc-0. 3 billion.

Despite the grim economic situation, Microsoft reiterated its forecast for fiscal year 2023 three months ago. Amy Hood, chief financial officer of Microsoft, said in a conference call with analysts: "With the fixed exchange rate and the US dollar, the company's operating income will achieve double-digit growth."

Hood also said, "In the ever-changing macro environment, we have seen strong demand and gained market share. Business bookings have increased by 25%, and Microsoft's cloud revenue is 25 billion US dollars, up by 28% year-on-year. At the beginning of the new fiscal year, the company will continue to strive to balance the operation and investment in key strategic areas to promote future revenue growth. "

As of the closing of US stocks on 26th, Microsoft fell 2.68% to close at $2,565,438 +0.9, up nearly 4% after hours.

Microsoft's performance in the fourth quarter fell short of expectations, and its growth rate hit a new low. On Tuesday, local time, Microsoft released its financial report for the fourth quarter of the fiscal year ending June 30. The financial report shows that Microsoft's revenue in the fourth quarter was $565,438+$87 million, a year-on-year increase of 12%, lower than the analyst's expectation of $52.44 billion, the lowest year-on-year increase since September 2020; The net profit was $654.38+$0.674 billion, up 2% year-on-year, and the adjusted earnings per share was $2.23, which was lower than the average market expectation of $2.29.

After the financial report was released, Microsoft's share price fluctuated little in after-hours trading in new york stock market. On that day, Microsoft shares closed down 2.7% to $2,565,438+$0.90 per share. Since the beginning of this year, Microsoft's share price has fallen by 25%, and the Standard & Poor's 500 Index has fallen by about 18%.

In terms of business, Microsoft intelligent cloud's revenue in the fourth quarter, including Azure cloud service, SQL Server, Windows Server and other enterprise services, was $209,654.38 billion, up 20% year-on-year, but still lower than analysts' average expectation of $21654.38 billion.

Microsoft mentioned in the financial report that Azure cloud service revenue increased by 40% year-on-year, compared with 46% in the previous fiscal quarter, and the average analyst expectation was 43. 1%. Microsoft did not disclose the specific revenue of Azure cloud services.

The revenue of Microsoft's productivity and business process department, including office software, LinkedIn and Dynamics, was $654.38+0.66 billion in the fourth fiscal quarter, up nearly 654.38+03% year-on-year, slightly lower than the average analyst's expectation of $654.38+0.66 billion. However, Microsoft said that Microsoft's cloud service revenue for commercial customers, including Azure cloud service and Office 365 subscription service, was $25 billion, up 28% year-on-year.

In the fourth fiscal quarter, the revenue of personal computing business including Windows, Xbox, search advertising and Surface was $65.438+0.436 billion, up 2% year-on-year, which was basically the same as the average analyst's expectation of $65.438+0.465 billion. According to Microsoft, due to the increase in search volume and revenue brought by each search, the revenue of search and news advertisements excluding the cost of traffic acquisition increased by 65,438+08%. Even so, the overall decline in the digital advertising market has led to a decrease of $654.38 billion in Microsoft's search, news advertising and LinkedIn business revenue.

In the fourth quarter, Microsoft's revenue from selling Windows licenses to PC equipment manufacturers decreased by 2% year-on-year. Gartner, a research institute in the technology industry, said earlier this month that supply chain problems in the second quarter of 2022 led to a year-on-year decline of 65,438+02.6% in PC shipments. Microsoft said that the closure of some factories in the second quarter and the overall poor performance of the PC market in June this year reduced Microsoft's revenue from selling Windows licenses to PC equipment manufacturers by $300 million.

Microsoft's biggest challenge in the fourth quarter is the exchange rate issue. Microsoft said that this factor led to a decrease of $595 million in revenue and $0.04 in earnings per share. In June this year, Microsoft lowered its revenue and profit forecast for the quarter on the grounds of interest rate fluctuation, saying that it would bring a revenue loss of 460 million US dollars. Microsoft's fourth quarter revenue and future expectations are at the low end of the expected revenue range announced in June.

In addition, after Russia and Ukraine, Microsoft decided to stop selling products and services in the Russian market, which also led to the company's operating expenses of 65.438+0.26 billion US dollars.

Recently, Microsoft also paid a severance payment of $65,438+0.10.3 billion for layoffs. Earlier this month, Microsoft said that the total number of employees in the company was 6,543.8+0.8 million, and the proportion of layoffs was less than 654.38+0%, which mainly affected the consulting services and customer solutions provided by the company.

Microsoft said it plans to increase the number of employees before the end of this fiscal year. In addition to layoffs, the company canceled the planned recruitment of many vacant positions and slowed down the recruitment of departments such as Azure, Windows, Office and security software. Last week, Microsoft said that these recruitment restrictions will continue to exist in the foreseeable future.

Satya Nadella, CEO of Microsoft, announced this quarter that employees of the company will get a raise, and the company launched a service to help customers deal with security incidents.

Amy Hood, chief financial officer of Microsoft, said in an interview that excluding the impact of exchange rate, the year-on-year growth rate of the company's Azure cloud service was 65,438+0% lower than the performance forecast released in April. Hood said that despite this, the number of Azure contracts signed by the company with a value of more than US$ 654.38 billion and US$ 654.38 billion still set a record.

Hood revealed that the business bookings for measuring Microsoft's sales to corporate customers were "significantly" better than the company's expectations, with a year-on-year increase of 25%, which indicated that the demand for Microsoft software remained strong in the fourth quarter. Hood said: "Most of our business bookings were completed in June, which was much better than we expected."

But analysts are not so optimistic. Derrick Wood, an analyst at Cowen, an investment bank, said that in the last weeks of Microsoft's fourth quarter, demand slowed down further because customers delayed buying in anticipation of the possible global economic recession.

"After the end of May, business growth slowed down further, and you began to find that customers were more cautious in buying and the sales cycle was longer," Wood said. These unfavorable factors may have a greater impact on Microsoft's future performance than its fourth quarter performance. Since Microsoft lowered its performance forecast last month, the exchange rate situation has become even more unfavorable.

Microsoft's fourth-quarter results fell short of expectations, and its growth rate hit a new low. It is reported that Microsoft announced its financial report for the fourth fiscal quarter of fiscal year 2022 today, with revenue of $51900 million, a year-on-year increase of 12% and net profit of1670 million, a year-on-year increase of 2%. Although the overall revenue has increased, the revenue of Microsoft's two core businesses, Windows operating system and Xbox game console, has declined.

Windows licensing business declines

Microsoft's performance is closely related to the computer market. The global COVID-19 epidemic once boosted the PC market. According to Gartner's research report, the computer market has experienced a sharp decline in the last quarter, with a year-on-year decline of 65,438+03%. This is also the biggest decline in nine years, and the factors behind it include geopolitical situation, inflation and continuous supply chain tension.

This quarter, Microsoft's Windows licensing business (that is, computer manufacturers pay Microsoft the licensing fee for installing the operating system) dropped by 2%. Microsoft explained that the main reason was that the production activities of enterprises were suspended and the computer market deteriorated.

Kendra Goodenough, head of investor relations at Microsoft, said that in the fourth quarter, Microsoft found that the computer market was weak, which also impacted the company's performance.

In the analyst conference call after the financial report was released, Microsoft CEO Nadella said that although the computer market changed in the last fiscal year, the computer shipments were still higher than before the epidemic, and Microsoft systems were still grabbing share.

Although the PC market is weak, Microsoft's Surface tablet and computer hardware business for enterprises has performed well. Although Microsoft did not release a heavyweight new tablet in the fourth quarter, the overall revenue of Surface hardware increased by 10%.

Gunaf explained that from the perspective of the overall demand environment, consumer demand has fallen sharply, but Surface hardware has performed strongly and given satisfactory results.

In June, Microsoft upgraded its Surface Laptop Go with Intel 1 1 generation processors. However, Microsoft will not release a major upgrade of Surface products until this fall. In addition, 2022 is also the anniversary of the birth of the Surface business 10, so Microsoft may bring some surprises to hardware buyers.

In the personal computer market, the outside world is concerned about the planned price increase of CPU and chips and its impact on the computer market. According to the previous announcement, Intel will raise the price of CPU and many other chip products (such as Wifi and communication chips) later this year.

Game business decline

In the hardware business of Xbox game consoles, Microsoft's revenue declined 1 1% in the fourth quarter. Game content and service revenue decreased by 6%.

Microsoft explained that the decline in game service revenue was mainly due to the decrease in online time of players and the decrease in official and third-party game revenue of Microsoft. It is reported that the total revenue of Microsoft game content decreased by 7% year-on-year.

Gunaf said that Microsoft upgraded the Xbox game console two years ago, and there is still strong demand in the market, but it has already bid farewell to the hot period when it was first released.

Although the hardware revenue of game consoles has declined, Nadella, the head of Microsoft, stressed that in North America, Microsoft has become the market leader of the next generation of game consoles for three consecutive quarters. In the just-concluded fiscal year 2022, Xbox's total revenue was $6,543.8+$62 million, creating the best achievement in history.

For the first fiscal quarter of fiscal year 2023, Microsoft predicts that game revenue, Xbox content and services will continue to decline.

Last quarter, Microsoft revealed that the number of users of Xbox cloud game service has reached100000. However, the scale of users still has great growth prospects, because Microsoft only provides a free game "Fortress Night" on cloud games at present, and more free games may be provided in the future.

On Tuesday, Nadella said that up to now, 4 million people have experienced Fortress Night through cloud games, of which 65,438+0,000 are new players who have joined the Microsoft game ecosystem.

On Tuesday, Microsoft did not announce the latest number of members of "Xbox Game Pass", which is 25 million this year 1 month.

At the analyst meeting, Microsoft did not talk about the progress of the $68.7 billion acquisition of Activision Blizzard. The transaction is scheduled to end in fiscal year 2023, and Microsoft will also acquire a series of classic game assets of Activision Blizzard.

Cloud computing continues to develop rapidly.

In addition to games and Windows business, Microsoft's office software, cloud computing and server products continue to achieve high growth.

Office business software business and cloud service revenue increased by 9%, office consumer business increased by 9%, and the number of "Microsoft 365" consumer business members increased to 59.7 million. It is reported that Microsoft is still taking various measures to promote the chat tool "Teams" for Office members and enterprises.

Microsoft's server and cloud computing services revenue soared by 22% year-on-year, of which core Azure cloud computing and other cloud services revenue increased by 40%.

Driven by the advertising business, LinkedIn, a white-collar social network, continues to be one of the growth engines of Microsoft. The revenue of this business increased by 26% (Microsoft attributed it to enterprise-oriented talents and marketing solutions). In addition, Microsoft's search and news advertising business increased by 15%.

Lowered their prospects

In June before the financial report was released, Microsoft lowered its outlook for the fourth quarter. One of the reasons was the exchange rate issue.

At present, influenced by geopolitics and inflation, the US dollar has appreciated against a series of currencies. In this way, if Microsoft's overseas income is converted into dollars, this figure will fall.

In addition to the appreciation of the US dollar, Microsoft has now added more variables, such as the above-mentioned weak computer market, coupled with the uncertainty of the US economy, advertisers have also cut advertising costs, which will affect some of Microsoft's businesses.