MSFT Stock: How Did Microsoft Perform In Q2 of Fiscal 2022?
03 Fevereiro 2022 - 7:26AM
Finscreener.org
Microsoft (NASDAQ:
MSFT) released its
second-quarter financials
for the fiscal year 2022 last
Tuesday after the closing bell. Though the stock initially fell by
more than 5% in extended trading sessions, it turned positive soon
after the company issued its sales forecast for the current
year.
Microsoft was able to beat the
market’s expectations this earnings season. It reported solid
holiday-season earnings and further expects to reach record cloud
revenue once again, challenging the $50 billion level in the
current quarter as well.
With the ongoing market
volatility, investors seem to have almost zero tolerance, even for
minor disappointments. The only blemish on the company’s ledger is
that Azure’s cloud-services business failed to meet the “whispered”
growth rate forecast at 48% by Wall Street.
Key Financial Numbers for Microsoft in Q2
Microsoft’s revenue grew by 20%
year-over-year to $51.7 billion, while its net income and diluted
earnings per share also increased by 21% and 22%, respectively,
reaching the $22.2 billion and $2.48 mark.
Though the company managed to
grow its revenues across all segments, its
Intelligent Cloud
business was a key
catalyst and increased by 25.52%, primarily driven by the 46%
revenue growth in the Azure and other cloud services areas.
However, this 46% growth rate was the lowest Microsoft recorded in
the past four quarters.
Besides, amongst its Productivity
and Business Processes segment, the search and news advertising
area and LinkedIn showed tremendous potential growing by about 32%
and 37% year-over-year, respectively.
In addition, the LinkedIn
sessions had grown by 22%, this time showcasing record engagement
and including more than 20,000 events. As per CEO Satya Nadella,
the strong demand for advertising had fueled the growth of both
these segments. Lastly, its Personal Computing unit posted a 15%
improvement in its revenues to $17.5 billion.
Microsoft’s increased spending in
cloud engineering, gaming, LinkedIn, and commercial sales inflated
its operating expenses by 14%. For example, investments in the
cloud engineering and gaming section saw its research expenditure
increase by 18%.
In comparison, the sales and
marketing costs increased by 9% following increased investments in
commercial sales and the LinkedIn section. However, these
investments seem justified as Microsoft has deployed its resources
only in areas contributing significantly to its revenue
growth.
Moreover, the giant also spent
$10.9 billion on stock repurchases and dividend payments in the
quarter, which was 9% higher than the year-ago
period.
What’s Ahead for MSFT stock investors?
Nadella has a vision for
developing a metaverse and feels Microsoft is well-positioned to
gain traction in what can potentially be a trillion-dollar market.
To achieve its lofty goals, Microsoft recently announced the
acquisition of Activision Blizzard
(NASDAQ:
ATVI) for $68.7 billion,
which is the largest deal in the tech sector.
Following the acquisition,
Microsoft will now be the third-largest gaming company globally in
terms of sales provisioning the tech heavyweight access to several
multi-billion-dollar franchises.
Microsoft, being one of the
worldU+02019s largest companies, faces difficulties in maintaining
its steep valuation. So, the stock can lose momentum if growth
rates decelerate in the upcoming quarters. Alternatively, Microsoft
will continue to benefit from secular tailwinds such as the shift
towards hybrid work environments in a post-pandemic world, which
will drive cloud sales higher.
MSFT stock is currently trading
at $309, and Wall Street has a 12-month average price target of
$372. It suggests Microsoft is trading at a discount of over 20%
right now.
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