Microsoft cloud fuels third quarter results

Microsoft Corp. today announced the following results for the quarter ended March 31, 2021, as compared to the corresponding period of last fiscal year:

  • Revenue was $41.7 billion and increased 19%
  • Operating income was $17.0 billion and increased 31%
  • Net income was $15.5 billion GAAP and $14.8 billion non-GAAP, and increased 44% and 38%, respectively
  • Diluted earnings per share was $2.03 GAAP and $1.95 non-GAAP, and increased 45% and 39%, respectively
  • GAAP results include a $620 million net income tax benefit explained in the Non-GAAP Definition section below

“Over a year into the pandemic, digital adoption curves aren’t slowing down. They’re accelerating, and it’s just the beginning,” said Satya Nadella, chief executive officer of Microsoft. “We are building the cloud for the next decade, expanding our addressable market and innovating across every layer of the tech stack to help our customers be resilient and transform.”

“The Microsoft Cloud, with its end-to-end solutions, continues to provide compelling value to our customers generating $17.7 billion in commercial cloud revenue, up 33% year over year,” said Amy Hood, executive vice president and chief financial officer of Microsoft.

The following table reconciles our financial results reported in accordance with generally accepted accounting principles (GAAP) to non-GAAP financial results. Additional information regarding our non-GAAP definition is provided below. All growth comparisons relate to the corresponding period in the last fiscal year.

Three Months Ended March 31,
($ in millions, except per share amounts)RevenueOperating IncomeNet IncomeDiluted Earnings per Share
2020 As Reported (GAAP)$35,021$12,975$10,752$1.40
2021 As Reported (GAAP)$41,706$17,048$15,457$2.03
Net income tax benefit related to India Supreme Court decision on withholding taxes(620)(0.08)
2021 As Adjusted (non-GAAP)$41,706$17,048$14,837$1.95
Percentage Change Y/Y (GAAP)19%31%44%45%
Percentage Change Y/Y (non-GAAP)19%31%38%39%
Percentage Change Y/Y (non-GAAP) Constant Currency16%27%32%34%

Business Highlights

Revenue in Productivity and Business Processes was $13.6 billion and increased 15% (up 12% in constant currency), with the following business highlights:

  • Office Commercial products and cloud services revenue increased 14% (up 10% in constant currency) driven by Office 365 Commercial revenue growth of 22% (up 19% in constant currency)
  • Office Consumer products and cloud services revenue increased 5% (up 2% in constant currency) and Microsoft 365 Consumer subscribers increased to 50.2 million
  • LinkedIn revenue increased 25% (up 23% in constant currency)
  • Dynamics products and cloud services revenue increased 26% (up 22% in constant currency) driven by Dynamics 365 revenue growth of 45% (up 40% in constant currency)

Revenue in Intelligent Cloud was $15.1 billion and increased 23% (up 20% in constant currency), with the following business highlights:

  • Server products and cloud services revenue increased 26% (up 23% in constant currency) driven by Azure revenue growth of 50% (up 46% in constant currency)

Revenue in More Personal Computing was $13.0 billion and increased 19% (up 16% in constant currency), with the following business highlights:

  • Windows OEM revenue increased 10%
  • Windows Commercial products and cloud services revenue increased 10% (up 7% in constant currency)
  • Xbox content and services revenue increased 34% (up 32% in constant currency)
  • Search advertising revenue excluding traffic acquisition costs increased 17% (up 14% in constant currency)
  • Surface revenue increased 12% (up 7% in constant currency)

Microsoft returned $10.0 billion to shareholders in the form of share repurchases and dividends in the third quarter of fiscal year 2021, an increase of 1% compared to the third quarter of fiscal year 2020.

Business Outlook

Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

Quarterly Highlights, Product Releases, and Enhancements

Every quarter Microsoft delivers hundreds of products, either as new releases, services, or enhancements to current products and services. These releases are a result of significant research and development investments, made over multiple years, designed to help customers be more productive and secure and to deliver differentiated value across the cloud and the edge.

Here are the major product releases and other highlights for the quarter, organized by product categories, to help illustrate how we are accelerating innovation across our businesses while expanding our market opportunities.

Responding to COVID-19

At Microsoft, our focus remains on ensuring the safety of our employees, striving to protect the health and well-being of the communities in which we operate, and providing technology and resources to our customers and partners to help them do their best work while remote. Additional information about Microsoft’s COVID-19 response can be found here.

Environmental, Social, and Governance (ESG)

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