If there is such a thing as having a good pandemic, Microsoft is having a whale of a time.

Largely on the back of booming cloud revenue – and, admittedly, with the help of a handy one-off $620 million tax gain in India and some favorable currency swings – the Redmond-based company once again beat profit estimates and analysts' sales expectations for fiscal Q3 2021 (ended March 31).

Revenue and adjusted earnings per share were $41.7 billion and $1.95 respectively, above analysts' estimates of $41.03 billion and $1.78, according to data from Refinitiv (as cited by Reuters).

Figure 1: The only way is up: COVID-19 continues to be a pandemic with a purpose for Microsoft, with another decent set of numbers.
(Source: Todd A Bishop on Flickr CC2.0)

Microsoft returned $10 billion to shareholders in the form of share repurchases and dividends in Q3, up 1% compared with the same quarter last year.

We've only just begun

Microsoft CEO Satya Nadella, in prepared remarks, sounded – understandably – bullish.

"Over a year into the pandemic, digital adoption curves aren't slowing down. They're accelerating, and it's just the beginning," he said.

"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."

Microsoft's Azure cloud service surges on, with sales up 50% year-on-year. More people working and studying from home helped boost PC sales, along with greater demand for Xbox consoles, content and services, all fillips to the software giant's More Personal Computing division.

With all that in mind, Microsoft's Q3 headline figures – not surprisingly perhaps – looked impressive.

Turnover was up 19%, year-on-year, to $41.7 billion. Operating income jumped 31%, to $17 billion. Net profit? On a GAAP basis that was up 44%, over the same period, to $15.5 billion.

Working through the divisions

Scrolling down each of Microsoft's three business segments, everything appears – at least turnover-wise – on an upward trajectory.

Sales in the Productivity and Business Processes division was up 15%, to $13.6 billion, driven by increases in Office products and cloud services revenue. LinkedIn revenue was up 25%.

Turnover at Intelligent Cloud, where Microsoft Azure sits, was up 23%, to $15.1 billion. The More Personal Computing division drummed up $13 billion in sales, up 19% compared with Q3 2020.

Can't please all the people

Despite posting a robust set of Q3 figures, Microsoft's share price dipped on announcing them.

"One-off tax [in India] and currency advantages have boosted Microsoft's third-quarter numbers, and as a result the market isn't being quite as welcoming of expectation-beating numbers as you might expect," said Nicholas Hyett, equity analyst at Hargreaves Lansdown (as quoted by Reuters).

CFO Amy Hood said Microsoft was expecting revenue of between $43.6 billion and $44.5 billion during fiscal Q4, which, at the middle of the range, would represent 16% growth.

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— Ken Wieland, contributing editor, special to Light Reading