August 5, 2021

Microsoft Reported 19% Growth in its Net Income of Q3 2021.

The US-based technology company Microsoft announced its third-quarter earnings results of 2021 on Tuesday. According to the earnings report released by the company, it has recorded a revenue of USD 41.7 Billion and net income of USD 15.5 Billion GAAP. Microsoft’s revenue and net income is up by 19% and 44% respectively, as compared to the Q3 2020.

The company’s Intelligent Cloud business segment grew by 23% with a revenue of USD 15.1 Billion. This growth was driven by its cloud service provider Azure that recorded a revenue growth of 50% than last year same period. The firm didn’t disclose the revenue of Azure in terms of dollars. In its financial report, Microsoft also announced the diluted earnings per share of USD 2.03 GAAP, which was just USD 1.40 GAAP last year.

Microsoft’s Productivity and Business segment brought in USD 13.55 Billion in revenue, which is up by 15% as compared to same period of 2020. According to the reports, LinkedIn’s advertisement business has delivered above USD 3 Billion in revenue in this quarter. The company has beat the Pinterest and Snap’s revenue in ads category. As per the quarterly earnings reports, Pinterest and Snap reported a revenue of USD 2.8 Billion and USD 1.9 Billion in revenue.

Microsoft CEO Satya Nadella said in the earning call that its ‘More Personal Computing’ unit that includes Windows, gaming devices, and search advertising revenue recorded around USD 13 Billion in revenue. This figure is around 19% higher than its last year fiscal results. In its earning call, the company disclosed that its Windows OS is running on 1.3 Billion devices. The increase in the market share of the company was due to the COVID-19 pandemic, which brought in more PCs and Laptops for employees and home needs.

“Over a year into the pandemic, digital adoption curves aren’t slowing down. They’re accelerating, and it’s just the beginning,” said CEO in the earnings report. “We are building the cloud for the next decade, expanding our addressable market and innovating across every layer of the tech stack to help our customers be resilient and transform,” he added. While the CFO and Vice President of Microsoft Amy Hood said that “The Microsoft Cloud, with its end-to-end solutions, continues to provide compelling value to our customers generating $17.7 billion in commercial cloud revenue, up 33% year over year.”

The Turmoil

On Tuesday, Microsoft suffered an outage on its video conferring platform Microsoft Teams. Earlier, the outage was only reported in Europe; however, the issue was seen in Asia Pacific too. In response to the outage, Microsoft’s support tweeted “We’ve monitored the environment and confirmed that the service is performing as expected,” it tweeted. “If a user is still experiencing impact, they need to restart their clients to recover. Further details can be found under TM252802 in the admin center.”

Latest Contracts and Acquisitions

The company announced in this quarter that it has won the US Army contract worth USD 21.88 Billion for 10 years to build custom HoloLens augmented reality headsets. This contracts follows 2018 contract that Microsoft received from Army to provide Integrated Visual Augmented Systems (IVAS). While in 2019, it secured a cloud service contract from Pentagon worth around USD 10 Billion. The company won the contract after beating market leader Amazon Web Services (AWS).

In March 2021, Microsoft announced that it has completed the acquisition of ZeniMax, the parent company of the video game company Bethesda. In September, the company said it will acquire the video game publisher for USD 7.5 Billion in cash. Till date, it is Microsoft’s biggest gaming acquisition. In a blog post published by the company, it confirmed the rumors regarding the exclusivity of some Bethesda games to Xbox consoles. The gaming industry has expanded at an exponential rate owing to the pandemic, which has let people spend more time on gaming.

In April 2021, the company announced the acquisition of Nuance for USD 19.7 Billion, which include the later company’s debt. Nuance offer AI expertise and customer engagement solution in the healthcare industry. “Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI,” Microsoft’s CEO said in a statement.