Microsoft Touts Strong Growth in Q2 2022 on Back of Cloud

Microsoft revenue in the second quarter of fiscal 2022 increased 20% over Q2 2021 to $51.7 billion, according to the company during a Tuesday earnings call.

Microsoft CEO Satya Nadella pointed to strong growth in the cloud and the shifting technology landscape as major factors for the growth, and the reason why the company was able to beat analyst forecasts for the quarter. 

"We are living through a generational shift in our economy and society," said Nadella in the earnings call. "Digital technology is the most malleable resource at the world's disposal to overcome constraints and reimagine everyday work and life. We are innovating and expanding our entire portfolio across consumer and commercial segments to help people and organizations thrive in this new era."

The company's cloud business, which includes offerings like Azure and Microsoft 365 subscriptions, grew 32% year over year. More specifically, on the Microsoft 365 subscriber front, the company said it now has 56.4 million subscribers and its Dynamics 365 business grew 45%. With the growth of the cloud offering came a decrease of 17% for commercial Office licensing, which Amy Hood, Microsoft chief financial officer, said the company expected.

While migration numbers to Windows 11 were not given, Nadella said that the company is happy with the growth in both Windows 10 and 11, saying there are now 1.4 billion devices running either version of the Windows operating system.

Microsoft pointed to LinkedIn as another winner for the quarter, jumping 37% in revenue. Hood points to the stronger job market for the platform's growth and she expects this to continue as the market bounces back from the COVID-19 slump.

As for Microsoft's gaming efforts, the Xbox brand and the company's gaming revenue grew 8%, with its services and software, which includes Microsoft Gamepass, growing 10% and amassing 25 million subscribers for the PC and console service. Gaming is a hot topic for investors, with Microsoft announcing last week its intentions to acquire video game publisher Activision Blizzard for $68.7 billion, a deal expected to close in 18 months.

While the deal, which will likely become the largest acquisition in U.S. corporate history, was not further discussed, Tuesday's reporting did confirm that Microsoft has more than $125 billion in cash on hand to pay the nearly $70 billion price tag for the gaming publisher.

About the Author

Chris Paoli (@ChrisPaoli5) is the associate editor for Converge360.


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