Last week, Microsoft (Nasdaq: MSFT) announced its fourth quarter results that surpassed all market expectations. Microsoft has executed well across board dispelling concerns about its dependence on Azure for growth.

Microsoft’s Financials

Fourth quarter revenues grew 21% to $46.2 billion, significantly ahead of the market’s forecast of $44.24 billion. GAAP net income increased 47% to $16.5 billion. GAAP EPS grew 49% to $2.17 versus analyst estimates of $1.92.

By segment, revenues from Productivity and Business Processes grew 25% to $14.7 billion. Office Commercial products and cloud services revenue grew 20% driven by 25% growth of Office 365 Commercial revenue. Office Consumer products and cloud services revenue increased 18% and Microsoft 365 Consumer subscribers increased to 51.9 million. LinkedIn revenue increased 46% or $928 million driven by 97% growth of Marketing Solutions revenue. Dynamics products and cloud services revenue increased 33% driven by 49% growth of Dynamics 365 revenue.

Revenue from the Intelligent Cloud segment improved 30% to $17.4 billion driven by 34% increase in Server products and cloud services revenue and 51% growth in Azure revenues. Analysts had estimated Intelligent Cloud revenue of $16.33 billion and Azure growth of 45.3%.

Revenue from the More Personal Computing segment grew 9% to $14.1 billion driven by 53% growth on Search Advertising revenue, 172% growth in Xbox hardware revenue driven by higher price and volume of consoles sold due to the Xbox Series X|S launches, and 20% growth in Windows Commercial products. However, Windows OEM revenue fell 3%; Xbox content and services revenue declined 4% versus 65% a year ago; and Surface revenue declined 20% due to supply challenges.

Fiscal year 2021 revenue grew 18% to $143 billion. Net income was $61.3 billion, up 38%.

For the first quarter, Microsoft forecast revenues of $14.5- $14.75 billion from its Productivity and Business Processes segment, higher than the analyst estimate of $14.07 billion. For the Intelligent Cloud segment, the company expects $16.4 – $16.65 billion in revenue, higher than the $15.71 billion estimate. Revenue from the More Personal Computing segment is expected to be $12.4 – $12.8 billion, versus market estimate of $12.67 billion.

Microsoft’s Security Acquisitions

After the $19.7 billion acquisition of Nuance’s conversational AI capabilities, Microsoft has followed it up with three much smaller acquisitions in the security space, the most notable among them being the $500 million acquisition of RiskIQ, a leader in global threat intelligence and attack surface management. Founded in 2009 by Elias Manousos, Chris Kiernan, and David Pon, RiskIQ uses machine learning applications to gain the context of the source of attacks. RiskIQ will join Microsoft’s suite of cloud-native security products such as Microsoft 365 Defender, Microsoft Azure Defender, and Microsoft Azure Sentinel. RiskIQ had raised $83 million in funding prior to the acquisition.

Microsoft also acquired IoT security startup ReFirm Labs for an undisclosed sum in June. Founded in 2017 by Peter Eacmen and Terry Dunlap, ReFirm Labs is known for its Binwalk open-source software, which has been used to analyze firmware security issues by over 50,000 organizations. The acquisition is expected to enhance Microsoft’s chip-to-cloud protection capabilities. Last year, Microsoft acquired CyberX to bolster Azure Defender for IoT. Prior to the acquisition, ReFirm Labs had raised $3.5 million in funding.

Last month, Microsoft acquired Cloud Infrastructure Entitlement Management (CIEM) provider CloudKnox Security to give organizations visibility into privileged access, right-size permissions and consistently enforce least-privilege principles with the aim of reducing risk. Founded in 2016 by Balaji Parimi and Rao Cherukuri, CloudKnox had raised $22.8 million in funding prior to the acquisition.

Microsoft has a history of building growth engines from its acquisitions like LinkedIn and GitHub. It would be interesting to see how it leverages its recent acquisitions.

Its stock is trading at $286.51 with a market capitalization of $2.16 trillion. It hit a 52-week high of $290.15 in July this year and a 52-week low of $196.25 in September last year.