Microsoft (NASDAQ: MSFT) announced its 2022 Q3 financial results on April 26, 2022. According to the announcement, total revenue, operating income and net income were up 18%, 19% and 8%, respectively (3 months, YoY, GAAP). In addition, diluted EPS was up 9% (3 months, YoY, GAAP). On the other hand, the free cash flow (FCF) was down 11% (YoY, 3 months). The FCF margin was 16%. Microsoft’s earnings structure in terms of the revenue growth and FCF margins has deteriorated since 2022 Q2. However, it still remains under good conditions.
Looking at revenue growth by segment, the product segment was up 3%, while the service and the others segment was up 29% (3 months, YoY). In this regard, the revenue of service segment accounted for 65% of the total revenue. As for revenue growth by product / service, Azure and other cloud services had the highest growth of up 46% (3 months, YoY). It was followed by Dynamics 365 of up 35% and LinkedIn of up 34%.
In the midst of rising industrial prices and the increasing risks in the supply chain due to the COVID-19 pandemic as well as the Ukrainian Crisis, Microsoft is becoming more dependent on the service segment. It seems to have made Microsoft more tolerant of rising risks. Considering these factors in addition to the current business performance, Watanabe & Brothers’ Investment will continue to invest in Microsoft from a long term perspectives.
Important Notice
- Watanabe & Brothers’ Investment is holding shares of Microsoft Corporation.
- This report is provided solely for informational purpose and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell any specific products.
- Any opinions or statements expressed in this report are based on the author’s personal and subjective views, and are not the official views of the organization to which the author belongs. In addition, although we have done our best efforts in making accurate assessments on the original financial statements, we cannot guarantee any complete accuracy of this report. We do not guarantee either that any future forecasts referred to in this report will certainly be realized. Investment in listed stocks, ETFs, etc. should be carried out under the responsibility of each investor, and even if the investor who read this report suffers a loss due to investment activities, Watanabe & Brothers’ Investment is not responsible for any liability.
- This report was originally prepared in English, and translated into the other languages with plugin utilizing Google Translation API. We hereby notify that the translations are provided only for the sake of reference, and any opinions or statements in this report should be interpreted in original English. We ask any investors reading this report to refer to the original financial statements issued by the company.