Microsoft reported third-quarter earnings after the market closed on Wednesday, beating Wall Street expectations. Shares were up about 1 percent in after-hours trading to more than $179 per share.
Here's what the company reported:
- Revenue: $35 billion (Wall Street expected $33.66 billion), up from $30.6 billion in the same quarter last year.
- Earnings: $1.40 per share, compared to analysts' estimate of $1.26 per share.
- Net income: $10.8 billion, up 22 percent.
Microsoft's overall commercial cloud business – which includes Microsoft's Azure cloud computing platform, Office 365 and other cloud services – reached $13.3 billion in sales for the quarter, up 39 percent year over year.
The division Microsoft calls "More Personal Computing" — which includes Windows, search, Xbox and Surface, was $11 billion, up 3 percent from this time last year. Microsoft in February lowered its sales forecast for that business, citing issues with its supply chain and "uncertainty related to the public health situation in China."
Despite the supply chain issues, Microsoft said revenue from Windows and its Surface devices benefitted as more people started to work remotely. Its gaming division also got a boost, with Xbox content and services revenue up 2% year-over-year.
Microsoft's "Intelligent Cloud" business, which includes Azure, server products, enterprise and cloud services, brought in $12.3 billion in revenue, up 27 percent from the same quarter last year.
Microsoft said Azure revenue grew 59 percent compared to the same quarter last year, but the company doesn't report actual revenue figures for the platform.
Revenue for Microsoft's "Productivity and Business Processes" business unit, which includes Office products for businesses and customers, LinkedIn revenue and Dynamics products and cloud services, increased 15 percent to $11.7 billion.
Microsoft said the coronavirus crisis had "minimal net impact" on company revenue. Cloud usage increased — especially for the Microsoft 365 bundle of cloud applications including Teams, Azure, Windows Virtual Desktop, advanced security solutions, and Power Platform.
Meanwhile, Microsoft said there was a slowdown in transactional licensing, especially for small and medium business, and a reduction in LinkedIn advertising spend during the quarter.
Microsoft's business seems on solid footing amid the pandemic, but there are already signs that the company is adopting a strategy of caution as doubts swirl over the global economy.
The company has experienced an unprecedented surge in usage as remote workers turn to its software and its cloud platform powers many of the apps and websites they use. The increase has created capacity challenges for Microsoft and it's having a hard time keeping up with the demand. In its earnings release, Microsoft said it delayed cloud infrastructure spending because of supply chain constraints.
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