Microsoft Surface FY21 Q3 revenue is up 12% from last year with a solid $1.5B in rev

Surface Laptop 4 Amd 2021 Hero
Surface Laptop 4 Amd 2021 Hero (Image credit: Daniel Rubino / Windows Central)

What you need to know

  • Microsoft reported $1.5 billion in quarterly revenue for 2021.
  • The number leads over $1.3 billion from the same time in 2020.
  • Total revenue for More Personal Computing is up 19%, driven chiefly by Xbox and gaming.

Update 6 PM ET: During the investor call, it was noted that Microsoft did have "execution challenges" in shipping Surface this quarter, likely related to chip supply issues. Those challenges resulted in "lower than expected" revenue despite the YoY uptick. For the next quarter, a decline in Surface revenue is expected tied to those ongoing execution challenges. Windows 10 should have "mid-single-digit growth." The entire MPC division is expected to have between $13.6 and $14 billion in revenue for FY21 Q4.

Microsoft's earnings report is out for the third quarter of its 2021 fiscal year, and the company brought in a solid $1.5 billion in revenue for the Surface division.

Compared to this time last year, Microsoft pulled in $1.3 billion Surface revenue in April 2020, giving an uptick of 12% YoY.

Overall, Microsoft brought in $41.7 billion in revenue beating investor expectations.

The big news for More Personal Computing, especially the Surface division, is good all around. Microsoft is reporting a total of $13 billion in revenue in More Personal Computing, which includes Windows OEM licenses, Surface revenue, Xbox content and services, and Bing search advertising.

Xbox and gaming also had a massive quarter as it is up 50% in revenue.

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."

Surface growth continues despite market uncertainties

The $1.5 billion for Surface contrasts with the figures from late January, which pegged Surface revenue breaking $2 billion for the first time. Revenue in More Personal Computing was $15.1 billion in January (up 14%) due to continued strong work-from-home demand, gaming, and PC sales from the holiday season.

Source: Microsoft (Image credit: Source: Microsoft)

A drop-off post-holiday is expected, and Microsoft appears to be weathering it well as it is up overall 19% YoY for More Personal Computing. While there is a widespread chip shortage, it does not appear to have impacted Microsoft's bottom line.

It has been a mostly quiet year for Surface, so far, with a refresh and expansion of the popular Surface Laptop 4, now with more options for Intel or AMD processors. The company also pushed out new accessories geared for business and work-from-home (WFH) environments, including Surface Headphones 2+, Surface Duo expansion and a low-cost webcam.

Microsoft also released Surface Pro 7+ with 4G LTE back in February aimed primarily at businesses.

Summer 2021 will be interesting to see how demand keeps up with sales for Surface, especially as the market switches over to back-to-school towards August.

Microsoft is expected to hold another Surface event later in the October or November timeframe. We could see Surface Duo v2, Surface Studio 3, refreshed Surface Pro X, and perhaps a redesigned Surface Pro 8 driving strong holiday sales once again.

You can read more about our Surface predictions and expectations in our guide published in late 2020.

Daniel Rubino

Daniel Rubino is the Editor-in-chief of Windows Central. He is also the head reviewer, podcast co-host, and analyst. He has been covering Microsoft since 2007, when this site was called WMExperts (and later Windows Phone Central). His interests include Windows, laptops, next-gen computing, and watches. He has been reviewing laptops since 2015 and is particularly fond of 2-in-1 convertibles, ARM processors, new form factors, and thin-and-light PCs. Before all this tech stuff, he worked on a Ph.D. in linguistics, watched people sleep (for medical purposes!), and ran the projectors at movie theaters because it was fun.