Earnings per share were $2.48, up 22%. Wall Street was predicting Microsoft would come in at $50.9 billion for its fiscal second quarter, with profits of $2.31 a share. This was the first time that Microsoft passed $50 billion in a quarter, officials said during its earnings report on January 25. The company executed strongly across all its product groups. Office commercial products and cloud services were up 14%, with Office 365 commercial revenues up 19%. LinkedIn revenues were up 37%. Dynamics products and cloud services were up 29%, with Dynamics 365 revenues up 45%. Windows OEM revenues were up 25%, in spite of ongoing PC component shortages, largely as a result of strong business demand. (Commercial licenses contribute more money than non-commercial ones.) Windows OEM revenue growth included a positive impact from the Windows 11 revenue deferral as well. Even Surface was up this quarter by 8%, in spite of predictions by Microsoft officials that the Surface business would have a rough Q2. Surface growth was largely attributable to Surface Laptop sales, officials said. Officials cited growth in “the number of larger, long-term Azure contracts” as contributing to strong commercial bookings (up 32% compared to a year ago). However, Microsoft Cloud gross margin was down slightly year-over-year, to 70% from 71%, due to a change in Microsoft’s accounting estimate for the useful life of server and network equipment. Azure and other cloud services grew 46% in the second quarter, which was down from the last several quarters, where growth was 50% or higher, which some are attributing to the fall in Microsoft’s stock price after hours. Update: After CFO Amy Hood forecast that Azure would be up sequentially next quarter, the market reacted favorably.
