Cloud computing, be it through storage, application hosting or any other of the numerous applications it allows, has become invaluable to businesses and private citizens. It’s no surprise then that one of the companies fuelling the cloud sector has reported substantial gains over the last quarter.
On Tuesday Microsoft released its financial results for the third quarter of its 2022 financial year. Looking at the highlights, revenue for the quarter clocked in $49.4 billion, an 18 percent increase compared to the same quarter in 2021. Operating income was $20.4 billion, a 19 percent increase compared to Q3 2021 while net income was $16.7 billion.
Drilling down into the numbers, revenue from both Office Commercial and Office Consumer products increased 12 and 11 percent respectively. This comes on the back of growth in both Office 365 Commercial and Microsoft 365 Consumer over the quarter. The firm reports that Microsoft 365 Consumer subscribers grew to 58.4 million.
Over its Productivity and Business Processes business, Microsoft saw revenue of $15.8 billion.
“It was a record third quarter, driven by the continued strength of the Microsoft Cloud, which surpassed $23 billion in revenue, up 32 percent year-over-year,” Microsoft chief executive officer Satya Nadella said during an earnings call.
“Going forward, digital technology will be the key input that powers the world’s economic output. Across the tech stack, we are expanding our opportunity and taking share as we help customers differentiate, build resilience, and do more with less,” the CEO added.
Looking at Microsoft’s more consumer focused business, things are also good. Windows OEM revenue increased 11 percent, Xbox content and services revenue also increased, although it’s a rather low increase of just four percent.
The figure we find interesting however is the 23 percent increase in revenue from search and news advertising. While this increase doesn’t account for traffic acquisition costs, we are left wondering if the weather and news widgets in Windows 10 and 11 are pushing more users to Bing and MSN.
Something else rather interesting mentioned in its earnings call is the impact suspension of sales had on revenue and earnings per share (EPS). According to Amy Hood, Microsoft’s chief financial officer, investors are likely to lose one cent.
“We suspended all new sales of our products and services in Russia. Revenue generated in Russia represents less than 1% of total company revenue and we expect that it will decline significantly. The impact to operating income this quarter was roughly $130 million split evenly between lower revenue and higher bad debt expense, resulting in a negative $0.01 impact to EPS,” said Hood.
Overall, this was a very good quarter for Microsoft with Hood and Nadella commenting that results were better than expected.
