10-QPeriod: Q3 FY2023

MICROSOFT CORP Quarterly Report for Q3 Ended Mar 31, 2023

Filed April 25, 2023For Securities:MSFT

Summary

Microsoft Corporation reported solid financial results for the third quarter and nine months ended March 31, 2023. Total revenue increased by 7% year-over-year for the quarter to $52.9 billion, and by 6% for the nine-month period to $155.7 billion. Net income also saw growth, rising 9% to $18.3 billion for the quarter and declining 7% to $52.3 billion for the nine months, primarily impacted by a significant tax benefit in the prior year's comparable period. The company demonstrated continued strength in its Intelligent Cloud segment, with revenue up 16% for the quarter, driven by Azure and other cloud services. The Productivity and Business Processes segment also performed well, with revenue up 11% driven by Office 365 Commercial. However, the More Personal Computing segment experienced a revenue decline of 9% for the quarter, mainly due to decreases in Windows OEM and Devices, reflecting ongoing channel inventory adjustments and a softening PC market. Microsoft continues to return capital to shareholders through share repurchases and dividends, demonstrating confidence in its financial position and future prospects. The company also highlighted its ongoing investments in strategic areas like cloud engineering and artificial intelligence, positioning itself for future growth.

Financial Highlights

53 data points
Beta

Revenue

$52.86B

69.5% Gross Margin

Net Income

$18.30B

34.6% Net Margin

EPS (Diluted)

$2.45

Total Assets

$380.09B

Cash & Equivalents

$26.56B

Free Cash Flow

$17.83B

Financial Statements
Beta
Revenue$52.86B
Cost of Revenue$16.13B
Gross Profit$36.73B
R&D Expenses$6.98B
Operating Income$22.35B
Interest Expense$496.00M
Net Income$18.30B
EPS (Basic)$2.46
EPS (Diluted)$2.45
Shares Outstanding (Basic)7.44B
Shares Outstanding (Diluted)7.46B

Key Highlights

  • 1Total revenue for the quarter increased 7% to $52.9 billion, with Intelligent Cloud and Productivity and Business Processes segments driving growth.
  • 2Net income for the quarter increased 9% to $18.3 billion, or $2.45 per diluted share.
  • 3Intelligent Cloud revenue grew 16% driven by Azure and other cloud services, with Azure and other cloud services revenue up 27%.
  • 4Productivity and Business Processes revenue increased 11%, led by Office 365 Commercial growth of 14%.
  • 5More Personal Computing revenue declined 9%, impacted by decreases in Windows OEM (down 28%) and Devices (down 30%), reflecting inventory adjustments and PC market weakness.
  • 6Microsoft Cloud revenue increased 22% to $28.5 billion for the quarter.
  • 7The company returned $9.7 billion to shareholders through share repurchases and dividends in the third quarter.

Frequently Asked Questions

Microsoft reported a 7% increase in total revenue to $52.9 billion for the three months ended March 31, 2023, and a 6% increase to $155.7 billion for the nine months ended March 31, 2023. Net income for the quarter increased by 9% to $18.3 billion, while for the nine-month period, it decreased by 7% to $52.3 billion, primarily due to a large tax benefit in the prior year's comparable period.

The Intelligent Cloud segment showed strong growth, with revenue up 16% driven by Azure and other cloud services, which grew 27%. The Productivity and Business Processes segment also grew by 11%, fueled by Office 365 Commercial. However, the More Personal Computing segment saw a 9% revenue decrease, impacted by declines in Windows OEM and Devices due to ongoing inventory adjustments and a weaker PC market.

Microsoft Cloud revenue increased by 22% to $28.5 billion for the quarter. Key components like Azure and other cloud services revenue saw a significant 27% increase, underscoring the company's strength in cloud offerings.

Microsoft continues to return capital to shareholders. In the third quarter of fiscal year 2023, the company returned $9.7 billion to shareholders through share repurchases and dividends. The company still has $26.9 billion remaining under its current share repurchase program.