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Microsoft Q3 2021 earnings: $41.7 billion in revenue, large growth amidst pandemic

The Visitor’s Center at Microsoft Headquarters campus is pictured July 17, 2014 in Redmond, Washington.
The Visitor’s Center at Microsoft Headquarters campus is pictured July 17, 2014 in Redmond, Washington. (Image credit: Stephen Brashear/Getty Images for Microsoft)

What you need to know

  • Microsoft brought in $41.7 billion in revenue over the last quarter.
  • That's a 19% year-over-year increase.
  • Commercial cloud revenue was up 33% over last year.

Microsoft reported its fiscal year 2021 Q3 results today, revealing that it's pulled in a hefty $41.7 billion in revenue over the last quarter. Here's a highlight from the Q3 earnings report:

  • Revenue was $41.7 billion and increased 19%
  • Operating income was $17.0 billion and increased 31%
  • Net income was $15.5 billion GAAP and $14.8 billion non-GAAP, and increased 44% and 38%, respectively
  • Diluted earnings per share was $2.03 GAAP and $1.95 non-GAAP, and increased 45% and 39%, respectively

"Over a year into the pandemic, digital adoption curves aren't slowing down. They're accelerating, and it's just the beginning," said Microsoft's CEO Satya Nadella in the Q3 press release. "We are building the cloud for the next decade, expanding our addressable market and innovating across every layer of the tech stack to help our customers be resilient and transform."

Cloud and commercial bring in big hauls

Microsoft reported $13.6 billion in revenue in Productivity and Business Processes, an increase of 15%. Office products, LinkedIn revenue, and cloud services all saw big gains. These were the highlights:

  • Office Commercial products and cloud services revenue increased 14% (up 10% in constant currency) driven by Office 365 Commercial revenue growth of 22% (up 19% in constant currency)
  • Office Consumer products and cloud services revenue increased 5% (up 2% in constant currency) and Microsoft 365 Consumer subscribers increased to 50.2 million
  • LinkedIn revenue increased 25% (up 23% in constant currency)
  • Dynamics products and cloud services revenue increased 26% (up 22% in constant currency) driven by Dynamics 365 revenue growth of 45% (up 40% in constant currency)

Meanwhile, the Intelligent Cloud space saw $15.1 billion in revenue, marking an increase of 23%. Azure revenue growth was up 50%, enabling a 26% increase in server products and cloud service revenue.

Microsoft Earnings Q3 Cloud

Source: Microsoft (Image credit: Source: Microsoft)

Gaming gains: Xbox, Game Pass, and more raise the bar

Revenue in More Personal Computing was $13.0 billion, which is a 19% increase. Here are the highlights:

  • Windows OEM revenue increased 10%
  • Windows Commercial products and cloud services revenue increased 10% (up 7% in constant currency)
  • Xbox content and services revenue increased 34% (up 32% in constant currency)
  • Search advertising revenue excluding traffic acquisition costs increased 17% (up 14% in constant currency)
  • Surface revenue increased 12% (up 7% in constant currency)

Gaming revenue as a whole grew 50%, with part of the 34% growth in Xbox content mentioned above attributed to Game Pass subscriptions and strong games lineups consisting of first and third-party titles.

Surface revenue is up to $1.5 billion or 12% YoY. That number compares favorably to the peak of $2 billion from the last quarter driven by holiday sales. Overall, Surface continues to grow at a steady and modest pace despite chip shortages and increased competition.

Windows 10 OEM revenue is also up 10%, driven by solid consumer PC demand (Pro licenses were down by 2%, but non-Pro revenue is up a staggering 44%). Even Bing search advertising is up 17% YoY with "improved customer advertising spend."

Microsoft Earnings Q3 Gaming

Source: Microsoft (Image credit: Source: Microsoft)

As the reports show, the pandemic has only accelerated growth for Microsoft in a great many areas.

Microsoft will hold its standard quarterly earnings call at 5:30 p.m. ET to provide more insights on its quarter three results, which can be listened to via Microsoft's site.

Robert Carnevale is the News Editor for Windows Central. He's a big fan of Kinect (it lives on in his heart), Sonic the Hedgehog, and the legendary intersection of those two titans, Sonic Free Riders. He is the author of Cold War 2395. Have a useful tip? Send it to robert.carnevale@futurenet.com.

5 Comments
  • It would be nice to know the sales of Xbox consoles for a change since everything seems to be going well with Xbox. If Xbox revenue as a whole is great, I don't think it would be so bad to still know that PS outsells Xbox 2 to 1.
  • It doesn't.
    We don't need the actual numbers to know that: PS5 sales to date are just a tad better than the PS4 launch while XBOX sales are much better than XB1. So no 2:1.
    Both are selling every last unit they can build and Sony is expecting it to continue all year to about 17M. XBOX can do 12M easy, possibly 15M going by (rumored) launch numbers. (VGCHARTS) At best 50% better for Sony instead of double. So it's a real race this time. It's worth remembering PS4 was much cheaper at launch than XBOX which isn't so this time around. Instead, the low cost box is the Series S. And then there's XBOX ALL ACCESS goosing low end sales at $25/35 a month.
    Sony is probably outselling MS on hardware but it is because both are supply constrained. Once the chips start flowing things will get interesting. BTW, not only did MS release their financials for the quarter and the year, but so did Sony.
    Sony news were...okay...but they missed expectations and will be spending part of their net to buyback stock to prop up stock price. That reduces their free cash flow (~$1B) and their ability to go and buy studios like MS, Tencent, and others. Like I said, things are going to get interesting.
  • The only down segment for Sony was Pictures (movies), due to the Covid pandemic. Every other segment was up nicely and, like Microsoft, game/console sales were up just over 50%.
  • Bloomberg is reporting a (continuing) decline in camera sensors tied to Huawei and a drop in PSN monthly active users vs same quarter 2020, when they got the biggest boost from pandemic lockdowns. Other interesting numbers were that for all the talk about "believing in generations" that bulk of software revenue, predictably came from the installed base of PS4s. Next gen games haven't been bringing in much revenue yet. As I said, the numbers were good enough, just not as good as expected. (Word is PS5 is doing poorly in Japan. Not XBOX-bad but way worse than PS4 launch. Nintendo is killing them.) They're also spending way more on R&D than after PS4 launch. Keep an eye out for an early PS5 lite or Pro or both. Japan doesn't like big consoles. Sony isn't spending their free cash to buy back stock for fun; it's because the leading indicators are that at least until the chip shortage ends they'll be growth constrained. Its not PS3 era bad, just not PS4 days good.
  • Meh, they had decent performance with increases in every segment but Pictures, analysts thought they would do even better and so they are being punished (like Microsoft). https://finance.yahoo.com/news/sony-sony-q4-earnings-revenues-132001719....