Microsoft just posted its FY20 Q3 earnings and despite a global pandemic, the company seems to be firing on all cylinders in almost every business sector the tech giant operates in.
According to Microsoft's official earnings press release, the company generated $35.0 billion in revenue for the quarter, posting a 15% increase year over year for the same period.
Microsoft's increased revenue haul is reflected in the company's $10.8 billion net income return that also tops last year's return for the same three months earnings, by 22%.
While the COVID-19 pandemic only accounts for a small time in for Microsoft's total quarterly revenue, executive vice president and CIO Amy Hood does credit the extraneous situations brought on by the global virus, throughout its filings in various business sectors.
“In this dynamic environment, our sales teams and partners executed a solid third quarter, with Commercial Cloud revenue-generating $13.3 billion, up 39% year over year. We remain committed to balancing operational discipline with continued investments in key strategic areas to drive future growth.”
Office Commercial Products
Revenue in Productivity and Business Processes was $11.7 billion and increased 15% (up 16% in constant currency), with the following business highlights:
- Office Commercial products and cloud services revenue increased 13% (up 15% in constant currency) driven by Office 365 Commercial revenue growth of 25% (up 27% in constant currency)
- Office Consumer products and cloud services revenue increased 15% (up 17% in constant currency) with continued growth in Office 365 Consumer subscribers to 39.6 million
- LinkedIn revenue increased 21% (up 22% in constant currency)
- Dynamics products and cloud services revenue increased 17% (up 20% in constant currency) driven by Dynamics 365 revenue growth of 47% (up 49% in constant currency)
Revenue in Intelligent Cloud was $12.3 billion and increased 27% (up 29% in constant currency), with the following business highlights:
- Server products and cloud services revenue increased 30% (up 32% in constant currency) driven by Azure revenue growth of 59% (up 61% in constant currency)
- Enterprise Services revenue increased 6% (up 7% in constant currency)
More Personal Computing
Revenue in More Personal Computing was $11.0 billion and increased 3% (up 4% in constant currency), with the following business highlights:
- Windows OEM revenue was relatively unchanged year over year
- Windows Commercial products and cloud services revenue increased 17% (up 18% in constant currency)
- Search advertising revenue excluding traffic acquisition costs increased 1%
- Xbox content and services revenue increased by 2%
- Surface revenue increased 1% (up 2% in constant currency)
In summation, Microsoft was able to return roughly $9.9 billion to shareholders highlighting a 33% increase from 2019 despite the early signs of a potential global recession emerging at the tail end of its earnings quarter. The company qualifies COVID-19 related disruptions as having "minimal impact" on its bottom line.
Looking beyond the numbers, Microsoft's Q3 earnings represent a company running lean with significant cloud gains and minimal expenditures, however, it should be noted that its relatively flat Surface hardware numbers and lowered Windows licensing gains highlight a trend that may eventually begin to drag on the company's next reported earnings.
Lowered LinkedIn traffic, minimal Windows licenses and, supply chain issues for partnered OEM PC efforts could also be an issue for Microsoft as world economies shift in the wake of the COVID-19 pandemic.