Microsoft Cloud strength fuels third quarter results

Microsoft Corp. today announced the following results for the quarter ended March 31, 2022, as compared to the corresponding period of last fiscal year:

  • Revenue was $49.4 billion and increased 18%
  • Operating income was $20.4 billion and increased 19%
  • Net income was $16.7 billion and increased 8% GAAP (up 13% non-GAAP)
  • Diluted earnings per share was $2.22 and increased 9% GAAP (up 14% non-GAAP)

Revenue and diluted earnings per share results include $(302) million and $(0.03) of additional impact from unfavorable foreign exchange rate movement within the quarter and $111 million and $(0.01) from Nuance, which closed on March 4, 2022, neither of which were included in the forward-looking guidance provided on January 25, 2022. Additional details are provided in the Earnings Call Slides.

“Going forward, digital technology will be the key input that powers the world’s economic output,” said Satya Nadella, chairman and chief executive officer of Microsoft. “Across the tech stack, we are expanding our opportunity and taking share as we help customers differentiate, build resilience, and do more with less.”

“Continued customer commitment to our cloud platform and strong sales execution drove better than expected commercial bookings growth of 28% and Microsoft Cloud revenue of $23.4 billion, up 32% 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 Income Diluted Earnings per Share
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
2022 As Reported (GAAP)$49,360$20,364$16,728$2.22
Percentage Change Y/Y (GAAP)18%19%8%9%
Percentage Change Y/Y (non-GAAP)18%19%13%14%
Percentage Change Y/Y (non-GAAP) Constant Currency21%23%17%18%

Business Highlights

Revenue in Productivity and Business Processes was $15.8 billion and increased 17%, with the following business highlights:

  • Office Commercial products and cloud services revenue increased 12% (up 14% CC) driven by Office 365 Commercial revenue growth of 17% (up 20% CC)
  • Office Consumer products and cloud services revenue increased 11% (up 12% CC) and Microsoft 365 Consumer subscribers grew to 58.4 million
  • LinkedIn revenue increased 34% (up 35% CC)
  • Dynamics products and cloud services revenue increased 22% (up 25% CC) driven by Dynamics 365 revenue growth of 35% (up 38% CC)

Revenue in Intelligent Cloud was $19.1 billion and increased 26%, with the following business highlights:

  • Server products and cloud services revenue increased 29% (up 32% CC) driven by Azure and other cloud services revenue growth of 46% (up 49% CC)

Revenue in More Personal Computing was $14.5 billion and increased 11%, with the following business highlights:

  • Windows OEM revenue increased 11%
  • Windows Commercial products and cloud services revenue increased 14% (up 19% CC)
  • Xbox content and services revenue increased 4% (up 6% CC)
  • Search and news advertising revenue excluding traffic acquisition costs increased 23% (up 25% CC)
  • Surface revenue increased 13% (up 18% CC)

Microsoft returned $12.4 billion to shareholders in the form of share repurchases and dividends in the third quarter of fiscal year 2022, an increase of 25% compared to the third quarter of fiscal year 2021.

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.

Environmental, Social, and Governance (ESG)

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