Microsoft reported fiscal third-quarter revenue of $41.7 billion, a 19% increase year over year, and net income of $15.5 billion, up 44%, driven largely by strong Xbox performance, Surface device sales and growth in cloud services.
Hardware and PC demand lift revenue
Sales of Surface devices totaled $1.5 billion for the quarter. Although below the prior quarter’s record $2 billion, the third-quarter Surface revenue still represented a 12% increase compared with the same period a year earlier.
The company said global PC demand, supported by widespread remote work, helped boost OEM Windows 10 revenue, which rose 10% as manufacturers responded to increased computer purchases. OEM products are built by manufacturers for resale rather than being sold directly to end consumers.
During the quarterly presentation, CEO Satya Nadella noted there are more than 1.3 billion active Windows 10 devices.
Xbox division posts large gains
Microsoft reported significant growth in its gaming hardware business, led by Xbox Series X and Series S console sales. Hardware revenue for the division grew 232% year over year.
Content and services revenue for Xbox rose 34% year over year to $739 million. The company attributed these gains to sales of first-party games, third‑party titles and subscriptions, with Xbox Game Pass reaching 18 million subscribers during the quarter.
Cloud and productivity drive recurring revenue
Demand for digital transformation accelerated by the pandemic supported healthy performance in Microsoft’s cloud segment.
Commercial revenue for Office and cloud services grew 14% for the quarter, while Office 365 subscription revenue increased 22%. Microsoft highlighted Microsoft Teams usage at 145 million daily active users and roughly 300 million paid seats.
Consumer Office and cloud products also grew, with consumer subscription revenue up 5% as Microsoft 365 Consumer subscriptions reached 50.2 million, a 27% increase.
Segment contributions and totals
Microsoft’s Intelligent Cloud products — which include servers and Azure — generated $15.1 billion in revenue, accounting for 36% of the cloud segment’s results. The Productivity and Business Processes division, which includes LinkedIn and Office, contributed $13.6 billion, or 33% of the company’s revenue for the period.
Source: The Verge.
