Microsoft and Google; Still growing strongly (Q1 2022 results)

Microsoft and Google are currently little affected by the war in Ukraine: The results for the first quarter of 2022 (Q1 2022) are in line with previous quarters, in other words up and above market expectations…

Not only have the pandemic crises not affected the digital giants, but they have even contributed to their growth. And while these crises now seem to be receding, they are being replaced by geopolitical crises which, again, seem to have little effect on their growth trajectory even as these companies have stopped all business in Russia.

Microsoft and Alphabet/Google thus published their results for the first calendar quarter of 2022 yesterday. And they are excellent, proof of the resilience of these major international groups, whose progress nothing seems likely to affect.

Microsoft posts revenue up 18%

$16.7 billion… This is not Microsoft’s turnover but the net profits earned during the first quarter of 2022! Profits up 8% compared to the same record quarter of 2021, while quarterly turnover increased by 18% to reach 49.4 billion dollars.

Unsurprisingly, it is once again the cloud that is driving this growth. ” Today and tomorrow, digital technology is the source that fuels global economic output “, explains Satya Nadella, president and CEO of Microsoft. ” Across the technology stack, we’re expanding our possibilities and taking ownership by helping our customers differentiate themselves, build resilience, and do more with less. “.
The turnover of the “Microsoft Cloud” division amounts to $23.4 billion over the quarter up 32% over last year. The Azure cloud contributes greatly to this with a 46% growth in these revenues.

But all the other divisions of the group are also growing.

Office 365 revenues are up 17% in the business universe and 11% in the consumer universe. Microsoft now has 58.4 million users of the ‘personal’ and ‘family’ editions..

“Dynamics” services grew by 22%.

The division ” More Personal Computing » displays a turnover of $14.5 billion up 11%. It is mainly driven by Windows (OEM sales are up by 11%, business sales by 14%) but also by the good health of the Surface division, which posted growth of 13%. The Xbox division is also up 4% driven by better than expected hardware sales (14% growth for the Xbox Hardware division).

The division LinkedIn shows strong growth in this quarter: 34%.

All is well also at Alphabet

Alphabet, the parent company of Google, also published its results for the first calendar quarter of 2022 yesterday. The turnover is up 23% compared to last year and amounts to 68 billion dollars. Earnings, on the other hand, are trending down 8.3% but still amount to $16.4 billion. !

This decline in profits is due to a loss of more than 1 billion of the value of Google’s investments. This shows that the current situation and certain risks taken have an impact on large groups, even if this remains limited.

Because there is really no need to panic for Google and its shareholders. The core business is still flourishing. Advertising continues to represent more than 80% of the group’s revenues and shows a growth of 22% (compared to Q1 2021) to reach 54.7 billion dollars. !

The information most followed by IT observers, however, remains the results of the Google Cloud division. And these are still ultimately a bit mixed. Google Cloud contributes only $5.8 billion to the group’s turnover (a turnover however significantly higher than market expectations which was counting on 5.7 million dollars).
The good news is that Google Cloud continues its strong growth with 44% increase compared to the same quarter last year (a progression ultimately similar to that of Microsoft Azure and its 46% growth).
Still, Google’s cloud division is still not profitable with a loss amounting to 931 million dollars over the quarter as it continues to invest heavily to open new regions all over the world but also to launch new services (like BigLake recently announced). Admittedly, these losses are a little lower than a year ago, but analysts were expecting a lower figure and had forecast a loss of $752 million.

Also read:

> Azure is gaining ground strongly on AWS, Google Cloud is progressing slowly…

> Google is doing well… but its Cloud is still not profitable.

> Microsoft, Google, AMD… 2021 is off to a strong start!

> Google Cloud launches BigLake and unifies its data platforms.

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