The Visitor's Center at Microsoft Headquarters campus is pictured July 17, 2014 in Redmond, Washington.Source: Stephen Brashear/Getty Images for Microsoft

What you need to know

  • Microsoft reported its FY21 Q4 earnings.
  • The company brought in $46.2 billion in revenue.
  • Cloud and commercial revenue saw big upticks.

Update July 27, 2021 at 6:15 p.m. ET: Comments from Microsoft's FY21 Q4 earnings call have been added to the end of this report.

Microsoft released its FY21 Q4 earnings, and the results far exceed what Wall Street predicted for the company. While expectations were for a $44.10 billion revenue haul, the tech giant achieved $46.2 billion in the fourth quarter of its fiscal year. Here are the highlights from the report (all results are compared against the same quarter last year):

  • Revenue was $46.2 billion and increased 21%
  • Operating income was $19.1 billion and increased 42%
  • Net income was $16.5 billion and increased 47%
  • Diluted earnings per share was $2.17 and increased 49%

"We are innovating across the technology stack to help organizations drive new levels of tech intensity across their business," said Satya Nadella, Microsoft's CEO. "Our results show that when we execute well and meet customers' needs in differentiated ways in large and growing markets, we generate growth, as we've seen in our commercial cloud – and in new franchises we've built, including gaming, security, and LinkedIn, all of which surpassed $10 billion in annual revenue over the past three years."

Amy Hood, the executive vice president and chief financial officer of Microsoft, highlighted commercial cloud growth. "Our commercial cloud revenue grew 36% year over year to $19.5 billion," she said.

Commercial and cloud go big

Cloud RevenueSource: Microsoft

Microsoft's Office products and cloud services managed 25% YoY (year-over-year) growth, contributing to the backbone of a stronger-than-expected quarter. Microsoft listed the following items as key highlights from the fourth fiscal quarter's results:

  • Office Commercial products and cloud services revenue increased 20% (up 15% in constant currency) driven by Office 365 Commercial revenue growth of 25% (up 20% in constant currency)
  • Office Consumer products and cloud services revenue increased 18% (up 15% in constant currency) and Microsoft 365 Consumer subscribers increased to 51.9 million
  • LinkedIn revenue increased 46% (up 42% in constant currency) driven by Marketing Solutions growth of 97% (up 91% in constant currency)
  • Dynamics products and cloud services revenue increased 33% (up 26% in constant currency) driven by Dynamics 365 revenue growth of 49% (up 42% in constant currency)

Microsoft's Intelligent Cloud revenue shot up 30% YoY to $17.4 billion thanks to Azure's 51% growth, which saw cloud services and server products increase by 34%. The company cited strong demand for its "consumption-based services" and saw Enterprise Services revenue increase 12%, which it attributed to growth in Microsoft Consulting Services and Premier Support Services.

Personal computing stays strong

Gaming RevenueSource: Microsoft

The More Personal Computing sector was up 9%, though several areas saw decreases in growth both YoY as well as relative to FY21 Q3.

  • Windows OEM revenue decreased 3%
  • Windows Commercial products and cloud services revenue increased 20% (up 14% in constant currency)
  • Xbox content and services revenue decreased 4% (down 7% in constant currency)
  • Search advertising revenue excluding traffic acquisition costs increased 53% (up 49% in constant currency)
  • Surface revenue decreased 20% (down 23% in constant currency)

Despite a slowdown in Xbox growth, gaming revenue was still up 11%, and Xbox Series X & S hardware were cited as key contributors to a 172% increase for Xbox hardware revenue.

Microsoft held its standard quarterly earnings call today at 5:30 p.m. ET, which can be joined each quarter via Microsoft's site.

The major news from the call included updates on Microsoft Teams statistics and an optimistic outlook for FY22. It expects on-prem revenue declines (20%) due to consumer shifts to the cloud, Office 365 consumer subscription single-digit revenue growth, and Intelligent Cloud revenue between $16.4 and $16.65 billion. Low single-digit growth for Xbox and low double-digit growth for gaming services is also expected.

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