Microsoft (MSFT) Third Quarter 2023 Earnings Report


Microsoft CEO Satya Nadella speaks at the company’s Ignite Spotlight event in Seoul on November 15, 2022.

Seong Joon Cho | Bloomberg | Getty Images

Microsoft Shares rose 6% in extended trading on Tuesday after the software maker reported fiscal third-quarter results that beat analysts’ forecasts.

Here’s how the company did it:

  • Earnings: $2.45 per share, versus $2.23 per share as expected by analysts, according to Refinitiv.
  • Income: $52.86 billion, versus $51.02 billion as forecast by analysts, according to Refinitiv.

The company’s overall revenue increased 7% year-over-year in the quarter ended March 31, according to a statement. Net profit, at $18.30 billion, rose 9%.

Revenue from Microsoft’s Intelligent Cloud business segment, which includes Azure public cloud, Enterprise Services, SQL Server and Windows Server, generated $22.08 billion in revenue. That’s up 16% and more than the $21.94 billion consensus among analysts polled by StreetAccount.

Revenue from Azure and other cloud services increased 27% from 31% in the prior quarter. The average estimate from analysts polled by CNBC was for growth of 26.5%, while those consulted by StreetAccount were expecting 27.2%.

The Productivity and Business Process segment containing Dynamics, LinkedIn and Office, recorded revenue of $17.52 billion, up about 11% and above the StreetAccount consensus of $17.05 billion. Microsoft said the growth in revenue per user helped the company realize 14% more revenue from commercial subscriptions to Office 365 productivity software.

The Teams communications app had more than 300 million monthly active users during the quarter, Microsoft CEO Satya Nadella said on a conference call with analysts. That’s up from 280 million in the previous quarter.

The More Personal Computing segment, including Bing, Windows, Surface and Xbox, generated $13.26 billion in revenue, down 9% but more than the StreetAccount consensus of $12.25 billion. Bing now has more than 100 million daily active users and gaming subscription revenue has approached $1 billion, Nadella said.

Sales of Windows operating system licenses to device manufacturers fell approximately 28% as higher channel inventory levels hurt results. Gartner research firm estimated that PC shipments were down 30%. But PC demand was a little better than management had expected, said Amy Hood, Microsoft’s chief financial officer.

During the quarter, Microsoft announced a new multi-billion dollar investment in OpenAI and said it would leverage the company’s artificial intelligence models for a new version of its Bing search engine and improvements to Microsoft 365 productivity software.

Despite the after-hours move, Microsoft shares are up 15% so far this year, while the S&P 500 index is up 6% over the same period.

Executives will discuss the results with analysts and provide guidance on a conference call beginning at 5:30 p.m. ET.

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