Microsoft has posted another storming quarter fuelled by its cloud business, with total group revenue up 19% to $41.7bn. But shares fell slightly after-hours as analysts such as Citi says fiscal Q3 results were "broadly ahead of the street," but might have fallen short of elevated expectations, particularly for Azure and More Personal Computing. The firm notes that Azure will face easier comps in FQ4 and praises the reacceleration of Office 365 Commercial bookings. Citi maintains a Buy rating and $302 price target.
BMO Capital says Microsoft's earnings were "good but not great" against high estimates. The firm remains confident in Azure's growth trajectory. BMO maintains an Outperform rating and raises Microsoft's price target from $280 to $290.
In the results for the third quarter, operating income was $17bn, an increase of 31%, and net income was $15.5bn - a jump of 44%.
“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 (pictured), 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,” he said.
Amy Hood, executive vice president and chief financial officer of Microsoft, added: “The Microsoft cloud, with its end-to-end solutions, continues to provide compelling value to our customers - generating $17.7bn in commercial cloud revenue - up 33% year-over-year.”
Revenue in Productivity and Business Processes was $13.6bn and increased 15% annually. Within this segment Office Commercial products and cloud services revenue increased 14%, driven by Office 365 Commercial revenue growth of 22%. Office Consumer products and cloud services revenue increased 5% and Microsoft 365 Consumer subscribers increased to 50.2m. Dynamics products and cloud services revenue increased 26% driven by Dynamics 365 revenue growth of 45%.
In the Intelligent Cloud segment - including Azure - sales were $15.1 billion and increased 23%. As part of this server products and cloud services revenue increased 26% fuelled by Azure revenue growth of 50%.
Revenue in the More Personal Computing segment was $13bn - up 19%. Windows OEM revenue increased 10% and Windows Commercial products and cloud services revenue also increased 10%.
Surface revenue increased 12%, said Microsoft.
