Microsoft FY18 Q3 earnings: $26.8 billion in revenue with Surface surge, cloud growth

Microsoft today released its earnings report for FY18 Q3, showing revenues of $26.8 billion and $7.4 billion in net income. That's up from the same period a year ago, during which Microsoft brought in $23.2 billion in revenue and $5.5 billion in net income.

Here are the highlights from this quarter's release:

• Revenue was $26.8 billion and increased 16%
• Operating income was $8.3 billion and increased 23%
• Net income was $7.4 billion and increased 35%
• Diluted earnings per share was $0.95 and increased 36%

This quarter's earnings are boosted largely by growth in Microsoft's cloud and commercial services, as has become a trend over the past several quarters. Office commercial products and cloud services revenue was up 14 percent, while Office consumer products and cloud services revenue rose by 12 percent. LinkedIn even saw quite a surge, showing a 37 percent increase in revenue. Meanwhile, server products and cloud services revenue as part of Microsoft's Intelligent Cloud business surged 20 percent.

In terms of the More Personal Computing category, which encompasses Windows OEM revenue, Surface, gaming and more, things were on the up as well. Windows OEM revenue rose by four percent, while Windows commercial products and cloud services were up 21 percent. Surface revenue surged by 32 percent, while gaming ralso saw a pretty significant bump of 18 percent, driven by software and services growth. Here are the highlights:

• Windows OEM revenue increased 4% (up 4% in constant currency) driven by OEM Pro revenue growth of 11%
• Windows commercial products and cloud services revenue increased 21% (up 17% in constant currency) driven by an increased volume of multi-year agreements and the mix of products that carry higher in-quarter revenue recognition
• Gaming revenue increased 18% (up 16% in constant currency) driven by Xbox software and services revenue growth of 24% (up 21% in constant currency) mainly from third party title strength
• Surface revenue increased 32% (up 27% in constant currency) against a prior year comparable impacted by product end-of-life-cycle dynamics
• Search advertising revenue excluding traffic acquisition costs increased 16% (up 14% in constant currency) driven by higher revenue per search and search volume

As usual, Microsoft will hold a conference call and webcast at 2:30 p.m. PT / 5:30 p.m. ET on its investor site to discuss the earnings.