Investors still cautious after Microsoft post $49B revenue-record quarter for FY22 Q3

Despite posting another record quarter of earrings for its FY22 Q3 report, Microsoft's stock took a bit of a beating during after hours trading as shares are down 0.57%.

The news that Microsoft managed to grow revenue in the double digits across its More Personal Computing, Productivity and Businesses Processes and its flagship Cloud computing sector comes with the backdrop that the company's shares are still trading 19% down from the beginning of the year and 22% down from its 52 week high of $349.67.

Perhaps, the more incremental gains have investors spooked as they see saturation beginning to creep into the market, regardless of the dip in shares after this record quarter, Microsoft has managed to once again beat odds with room to spare in many categories.

Microsoft Logo On Building

For the quarter, Microsoft brought in $49.4 billion in revenue and $16.7 billion in net income. FY22 Q3 represents an 18 percent revenue increase year over year as well as an 8 percent bump in profit.

Breaking down the individual product industries for company, its cloud services revenue was up a whopping 29 percent or $19.1 billion dollar terms, despite more people going back to the offices. In addition to more people going back to the office, it would seem that move was also beneficial for Microsoft's Windows business as it posted an 11 percent increase to the tune of $14.5 billion in revenue for the quarter.

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Even Microsoft's Xbox and Surface divisions saw increases, with the former hitting an 11 year high for software and services revenue and the latter pushing a 13% increase in revenue year over year despite warning investors of a possible dip this quarter.

For more details and context, here are the investors notes:

Productivity and Business Processes

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)

Intelligent Cloud

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)

More Personal Computing

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.

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Microsoft will share more details on its investors call in a few hours, scheduled for 5:30 PM ET/ 3:30 PT. Leading up the call Microsoft has also issued a list of Forward-Looking Statements that investors will most likely want addresses to some measure during the call.

  • intense competition in all of our markets that may lead to lower revenue or operating margins;
  • increasing focus on cloud-based services presenting execution and competitive risks;
  • significant investments in products and services that may not achieve expected returns;
  • acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our business;
  • impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;
  • cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position;
  • disclosure and misuse of personal data that could cause liability and harm to our reputation;
  • the possibility that we may not be able to protect information stored in our products and services from use by others;
  • abuse of our advertising or social platforms that may harm our reputation or user engagement;
  • the development of the internet of things presenting security, privacy, and execution risks;
  • issues about the use of artificial intelligence in our offerings that may result in competitive harm, legal liability, or reputational harm;
  • excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;
  • quality or supply problems;
  • government litigation and regulatory activity relating to competition rules that may limit how we design and market our products;
  • potential consequences under trade, anti-corruption, and other laws resulting from our global operations;
  • laws and regulations relating to the handling of personal data that may impede the adoption of our services or result in increased costs, legal claims, fines, or reputational damage;
  • claims against us that may result in adverse outcomes in legal disputes;
  • uncertainties relating to our business with government customers;
  • additional tax liabilities;
  • the possibility that we may fail to protect our source code;
  • legal changes, our evolving business model, piracy, and other factors may decrease the value of our intellectual property;
  • claims that Microsoft has infringed the intellectual property rights of others;
  • damage to our reputation or our brands that may harm our business and operating results;
  • adverse economic or market conditions that may harm our business;
  • catastrophic events or geo-political conditions, such as the COVID-19 pandemic, that may disrupt our business;
  • exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange and
  • the dependence of our business on our ability to attract and retain talented employees.

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