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Last week Microsoft released great results. Revenues increased 12% versus this time last year and would have grown by 16% if the USD had not been so strong. Net income grew 2% to $16.7 billion; this is a hugely profitable business.
Their cloud business grew by an impressive 28% and is now 50% of the group's revenues. That is a big milestone for a relatively new operation. Cloud computing is very defensive in an inflationary environment. In fact, it probably benefits from a bit of inflation because digitising helps businesses to cut costs. Microsoft's customers are trying to improve efficiencies by taking the plunge and moving servers to the cloud.
The Windows and Microsoft Office subscription business is also defensive, if you use these software tools to work, you will not cancel your annual subs. Revenues in business computing increased by 13% and personal computing rose by 2%.
Microsoft returned $12.4 billion to shareholders in the form of buybacks and a dividend for the quarter. This business really does tick all the boxes. It trades at 24 times this year's earnings and continues to show solid growth. Microsoft is an absolute must-have in every investor's portfolio.
