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Microsoft (MSFT) Q3 2022 earnings release narrowly beats revenue and EPS expectations

Microsoft's Q3 2022 performance isn't going to blow anybody away, but the news certainly could have been worse.

April 26, 2022 1:13 PM

Microsoft Corp. (MSFT) has reported its financials for Q3 2022, which is its fiscal quarter ending on March 31, 2022. The news wasn't anything to be blown away about, but it certainly wasn't negative. Microsoft's Q3 2022 earnings surpassed revenue and EPS expectations, albeit only slightly.

Microsoft reported quarterly revenue of $49.4 billion USD, which is just a hair above the $49.0 billion that was expected. Its EPS came in at $2.22 per share, which is just three cents over the expected amount. However, it should be noted that whisper number expectations had that amount at $2.28 per share, so that target was missed.

Here are some of the highlights from the Microsoft Q3 2022 earnings release:

Revenue was $49.4 billion and increased 18%

Operating income was $20.4 billion and increased 19%

Net income was $16.7 billion and increased 8% GAAP (up 13% non-GAAP)

Diluted earnings per share was $2.22 and increased 9% GAAP (up 14% non-GAAP)

Revenue and diluted earnings per share results include $(302) million and $(0.03) of additional impact from unfavorable foreign exchange rate movement within the quarter and $111 million and $(0.01) from Nuance, which closed on March 4, 2022, neither of which were included in the forward-looking guidance provided on January 25, 2022. Additional details are provided in the Earnings Call Slides.

"Going forward, digital technology will be the key input that powers the world’s economic output," said Satya Nadella, chairman and chief executive officer of Microsoft. "Across the tech stack, we are expanding our opportunity and taking share as we help customers differentiate, build resilience, and do more with less."

"Continued customer commitment to our cloud platform and strong sales execution drove better than expected commercial bookings growth of 28% and Microsoft Cloud revenue of $23.4 billion, up 32% year over year," said Amy Hood, executive vice president and chief financial officer of Microsoft.

Business Highlights

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)

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)

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.

Microsoft Corp. (MSFT) stock fell slightly ahead of the Q3 2022 earnings report's release. However, the company has gradually begun to make up for losses in after-hours trading.

The Q3 2022 conference call is expected today at 2:30 p.m PT/5:30 p.m. ET. We'll be on the lookout for any noteworthy stories regarding the Xbox division, the Activision Blizzard acquisition, or anything else from the world of Microsoft. Keep it on Shacknews for the latest updates.

Ozzie Mejia

Senior Editor

Ozzie has been playing video games since picking up his first NES controller at age 5. He has been into games ever since, only briefly stepping away during his college years. But he was pulled back in after spending years in QA circles for both THQ and Activision, mostly spending time helping to push forward the Guitar Hero series at its peak. Ozzie has become a big fan of platformers, puzzle games, shooters, and RPGs, just to name a few genres, but he’s also a huge sucker for anything with a good, compelling narrative behind it. Because what are video games if you can't enjoy a good story with a fresh Cherry Coke?

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