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Microsoft Earnings Highlight the Powerhouse the Company Has Become

The Motley Fool
The Motley Fool
 2022-01-26

Following a market sell-off that has punished high-growth tech stocks more than most other types of stocks, Microsoft (NASDAQ: MSFT) earnings offer a reminder of just how robust a successful technology company 's financials can become over a long period of time. Even more, the tech-giant's latest quarterly report shows that even the biggest technology companies in the world can still manage to grow at impressively high rates -- in this case, more than 45 years after the company was founded.

Here's a look at Microsoft's impressive fiscal second-quarter results -- and how they illustrate the company's strengths.

https://img.particlenews.com/image.php?url=4UpvRc_0dw77HtX00

Image source: Microsoft.

Microsoft Q2 earnings: An overview

The company's fiscal second-quarter revenue increased 20% year over year to $51.7 billion. Operating income grew even faster, rising 24% year over year to $22.2 billion. This translated to a 22% increase in earnings per share.

Revenue and adjusted earnings per share of $51.7 billion and $2.48, respectively, were both ahead of analysts' average estimates. The consensus forecasts for these two metrics were $50.9 billion and $2.31, respectively.

Microsoft's operating strength was notably broad-based. Its productivity and business-processes segment delivered 19% growth, its intelligent cloud business revenue jumped 26%, and its "more personal computing" segment (primarily revenue from Windows, search and news advertising, gaming, and Surface) revenue grew 15%.

Microsoft is still tapping into hypergrowth

But the stark reminder of Microsoft's healthy business is buried in its intelligent cloud segment, which is the company's largest segment, representing 35% of total revenue. Microsoft's cloud-computing arm Azure, the segment's biggest growth driver, grew a whopping 46% year over year during the period.

Its once-nascent cloud-computing efforts are now a behemoth -- and with growth like this, the business unit is likely just getting started. After all these years, Microsoft is still using the expertise it has developed in technology to identify and capitalize on some of the best opportunities in the market.

In Microsoft's fiscal second-quarter earnings release, CEO Satya Nadella clearly summarizes this enduring and lucrative opportunity for the company in the technology space:

Digital technology is the most malleable resource at the world's disposal to overcome constraints and reimagine everyday work and life. As tech as a percentage of global [gross domestic product] continues to increase, we are innovating and investing across diverse and growing markets, with a common underlying technology stack and an operating model that reinforces a common strategy, culture, and sense of purpose.

Nadella's words are more than hot air. They're backed by incredible financial results and years of impressive execution from Microsoft and its droves of engineers.

Some tech companies may have deserved to take a breather during this sell-off. But Microsoft is probably not one of them.

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Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool owns and recommends Microsoft. The Motley Fool has a disclosure policy .

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