Well, there’s always a first time for everything! Microsoft has been riding high these past few years, blasting through revenue projections quarter after quarter, delighting Wall Street.
But it ended its fiscal year with unfavorable financial results.
On the whole, Q4 of FY22 was a strong quarter for the Redmond based company by all counts. But certain global and macroeconomic factors played their part and negatively impacted its results for the fiscal year 2022 that ended on June 30, 2022.
You can locate the nitty gritty details about Microsoft’s financials in this most recent earnings report.
In its last quarter, the company posted revenue of $51.9 billion, which is an impressive 12% increase compared to the same period in the previous fiscal year. At the same time, operating income boasted a more modest single-digit growth of 8%, coming in at $20.5 billion.
Net income increased by 2% to $16.7 billion, while diluted earnings per share were $2.23, up 3%.
Yet, hidden in these figures are unforeseen circumstances that the company did not actually bring up in its forward-looking statements published in April 2022, at the time of its last earnings call.
For starters, unfavorable foreign exchange rates not only negatively affected revenue by $595 billion, but also diluted earnings per share by $0.04. Reductions in advertising spend contributed to a negative impact on LinkedIn, with Search and News advertising revenue decreasing by another $100 million.
Things were not helped by extended production shutdowns in China throughout May, coupled with the deterioration of the PC market in June, leading to a decline of $300 million in Windows OEM revenue.
Not to mention the ongoing situation with the Russian invasion of Ukraine, which led to the company scaling down operations in the country and posting an operating expense of $126 million in lieu of bad debts, asset impairments, and severance packages.
And then, even outside of Russia, Redmond realigned its business groups across the globe, resulting in employee severance payments to the tune of some $113 million.
Despite this doom and gloom, the software titan managed to return $12.4 billion back to shareholders for the quarter through dividends and repurchases of stocks, representing an increase on its buyback programs year-over-year.
These are the reasons that Microsoft cites for its misses, and their combined impact has meant that the company has failed to meet or exceed its own earnings projections for the first time since 2016.
Like I said, there’s a first time for everything!
