Microsoft on Tuesday reported strong third-quarter results that exceeded Wall Street's expectations, and as a result, the company's shares increased by 8.58% in extended trading. The growth was driven by the company's cloud computing and Office productivity software businesses.
According to the statement released by Microsoft, the company's profit was $18.3 billion, which is a 9% increase in net income, while the overall company revenue increased by 7% to $52.9 billion in the quarter ended March 31. Microsoft's cloud computing and artificial intelligence offerings were the main contributors to its revenue and profit growth in the first three months of this year.
The cloud business Azure saw a 27% growth rate in the latest quarter, compared to 31% in the prior quarter, which was slightly higher than analysts' estimate of 26.6%. The overall revenue for Microsoft's cloud business, which includes the Azure public cloud, Enterprise Services, SQL Server, and Windows Server, was $22.1 billion, up 16%, which was slightly above the estimated revenue of $21.85 billion.
Microsoft's productivity and business process segment, which includes Office software and advertising sales for LinkedIn, posted $17.52 billion in revenue. The software giant attributed its 14% increase in revenue from commercial Office 365 productivity software subscriptions to the growth in revenue per user.
On the other hand, the sales of Windows operating-system licenses declined by 28%, with higher channel inventory levels hurting results. The overall personal computing segment, which includes Windows, Surface, Xbox, and Bing, delivered $13.26 billion in revenue, down 9%.
Microsoft CEO Satya Nadella commented that the company's cloud and AI technologies are helping customers get the most value out of their digital spend and innovate for the next generation of AI. He also mentioned that Microsoft is the platform of choice across the Microsoft Cloud.
While Microsoft's strong earnings boosted its shares, the overall US stock market experienced a slump on Tuesday due to recession fears. The S&P 500 fell by 1.44%, the Dow Jones Industrial Average by 0.99%, and the Nasdaq Composite by 1.72%.
