Microsoft Corporation Q3 FY2022 Earnings Call

· Earnings call transcript and AI-powered summary

Microsoft Fiscal Q3 2022 Earnings Summary

Overview

  • Record third quarter driven by strong Microsoft Cloud revenue of $23 billion, up 32% year-over-year.
  • Total revenue reached $49.4 billion, up 18% (21% in constant currency) compared to Q3 FY2021.
  • EPS was $2.22, up 14% (18% in constant currency) compared to the prior year, adjusted for previous tax effects.
  • Commercial Cloud revenue grew 32% to $23.4 billion; gross margins slightly improved excluding accounting changes.
  • Key headwinds included FX impacts, the Nuance acquisition, and suspension of sales in Russia due to the Ukraine war.

Business Segment Highlights

Intelligent Cloud

  • Revenue: $19.1 billion, up 26% (29% in constant currency).
  • Azure and Other Cloud Services: growth of 46% (49% in constant currency), faster than expected.
  • Server products and cloud services revenue grew 29% (32% in constant currency).
  • Nuance contribution was limited but added four weeks of results.
  • Tier-1 workload migrations increased, with major customers like Boeing, Kraft Heinz, Blackrock, and Lufthansa expanding commitments.

Productivity & Business Processes

  • Revenue: $15.8 billion, up 17% (19% in constant currency).
  • Office 365 Commercial revenue: up 17% (20% in constant currency).

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Operator: Ladies and gentlemen thank you for standing by. Welcome to the Microsoft Fiscal Year 2022 Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brett Iversen, General Manager, Investor Relations. Thank you. You may begin. Brett Iversen: Good afternoon and thank you for joining us today. On the call with me are Satya Nadella, Chairman and Chief Executive Officer; Amy Hood, Chief Financial Officer; Alice Jolla, Chief Accounting Officer; and Keith Dolliver, Deputy General Counsel. On the Microsoft Investor Relations website, you can find our earnings press release and financial summary slide deck, which is intended to supplement our prepared remarks during today’s call and provides the reconciliation of differences between GAAP and non-GAAP financial measures. Unless otherwise specified, we will refer to non-GAAP metrics on the call. The non-GAAP financial measures provided should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP. They are included as additional clarifying items to aid investors in further understanding the company’s third quarter performance in addition to the impact these items and events have on the financial results. All growth comparisons we make o

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