Microsoft Q3 2022 earnings: Cloud, Office, Windows, Xbox

Microsoft’s Q3 2022 financial results are here, and the company is posting double-digit growth again: revenue of $49.4 billion and net income of $16.7 billion. Revenue is up 18 percent, and profit is an 8 percent jump year over year. Microsoft attributes a large part of this quarter’s growth to the cloud, with cloud and server revenue specifically up 29 percent, and Microsoft Cloud up 32 percent to $23.4 billion.

There was plenty of reason to doubt that Microsoft would still be smiling this quarter. As the PC industry began to retreat from its pandemic highs, it was eroding sales of Chromebooks — not Microsoft Windows machines — that were responsible for the recent decline in its entirety. Meanwhile, the Xbox had its best seller in 11 years, handily beating the relatively show-constrained PS5.

Sure enough, Microsoft says its “personal computing” businesses, including Windows and Xbox, rose 11 percent to $14.5 billion in the third quarter — and “Windows OEM revenue growth,” which should include the price manufacturers are paying To specifically put Windows 11 on laptops and desktops you buy at 11 percent. Xbox revenue was up 14 percent, with a 4 percent jump in Xbox content and services revenue “driven by growth in Xbox Game Pass subscriptions and first-party titles,” for an overall 6 percent increase in gaming revenue to $3.74 billion.

We were eager to see if Microsoft’s large cloud and office business also stayed rosy with some employees returning to their physical offices, and the answer is definitely yes: Revenue growth of 17 percent in the “Productivity and Business Processes” segment this quarter, with Office up 12 percent. percent and 11 percent in the commercial and consumer divisions, respectively. Office 365 subscribers now has 58.4 million consumers, an increase of 2 million from last quarter and an increase of 8 million since this time last year. Intelligent Cloud revenue increased 26 percent to $19.1 billion.

LinkedIn continues to experience explosive growth, up 34 percent this quarter, after growth of 37 percent, 42 percent, and 46 percent in the previous three quarters, respectively.

Microsoft’s Surface devices also appear to be doing well with a 13 percent increase in revenue after its revenue surprisingly increased by 8 percent last quarter (although the company has previously warned of a pullback). 2022 is the 10th anniversary of Microsoft Surface, and we’re expecting the company to have up its sleeves more than a dull Surface Laptop SE and that cool, great camera for teleconferencing.

Here’s one image with all the relative gains (and one loss) for individual Microsoft companies:

Here’s how much each of the companies mentioned did in the last quarter of the year in dollars (note: measured in millions):

Microsoft’s purchase of Activision Blizzard, which is set to make Microsoft “the third-largest gaming company by revenue, after Tencent and Sony,” likely won’t show up in those earnings — the deal isn’t likely to expire until next year.

We expect Microsoft to comment more on all of these clips during this afternoon’s earnings call, and we’ll add the best comments to this post.


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