Microsoft Q3: revenue up 15% YoY to $35B, net income of $10.8B, up 22% YoY, Intelligent Cloud revenue of $12.3B, up 27%, LinkedIn revenue up 21%, Azure's up 59%
This quarter sits mid-way through a multi-year arc the corpus traces cleanly: back in 2017, Azure was growing 93% YoY off an Intelligent Cloud base of just $6.8B, and a year before this report Microsoft's Q1 FY2019 results already showed Intelligent Cloud up 27% on Azure. What the Q3 print adds is proof the curve bends slowly — Azure at 59% on a far larger base, with Intelligent Cloud reaching $12.3B.
The follow-on coverage confirms this wasn't a spike: the very next quarter Azure still grew 47%, and more than a year later Azure was still above 50% alongside LinkedIn at 42%. A 59% print in between reads as the steady state of a business compounding, not a one-off.
First-order effects
Intelligent Cloud becomes Microsoft's growth engine at $12.3B, up 27%, with Azure's 59% doing the pulling, while LinkedIn's 21% gives the company a second double-digit franchise inside the same quarter.
Net income rising faster than revenue (22% vs. 15%) shows the cloud mix converting directly into operating leverage for Microsoft in the period.
Second-order effects
Sustained Azure hypergrowth forces rival hyperscalers into escalating infrastructure commitments — the pattern the corpus later captures in the combined $67.5B Amazon, Microsoft, and Google pledged across India in an AI spending surge.
Competitors selling on-premises software and services face a pricing problem: Microsoft is growing total revenue 15% while its fastest segment grows twice that, squeezing rivals' relative value proposition every quarter.
Third-order effects
If the pattern holds, Microsoft's center of gravity shifts structurally from licensed software to metered cloud consumption — Intelligent Cloud nearly doubling from $6.8B in 2017 to $12.3B here, with Azure still above 50% growth by late 2021.
Enterprise IT spending consolidates around a handful of hyperscale platforms whose growth rates stay elevated even at massive scale, raising the odds of regulatory scrutiny of cloud concentration as the dependency deepens.
The trend: Metered cloud consumption is becoming the compounding core of mega-cap software companies, with Azure-class hypergrowth persisting even as the underlying revenue base triples.
Read the full Microsoft's Q3 Earnings Release here: https://www.microsoft.com/... Note about Forward-Looking Statements in earnings tweets: https://view.officeapps.live.com/ ...
On the earnings call, Microsoft shared that Xbox Live now has nearly 90 million monthly active users, Xbox Game Pass has more than 10 million subscribers, and Project xCloud has hundreds of thousands of active users in preview across seven countries. https://venturebeat.com/...
📈👀 I see you $MSFT. Earnings reads like WFH and LFH revenue not fully realized in this quarter. Expect to see more upside in the next Q? Probably. https://twitter.com/...
Not surprised Microsoft had such a good Q3. $MSFT primarily a BtoB *required* purchase, not *discretionary* consumer spend or advertising play, pegged to consumer. Company actually helping with W/S/GFH, cloud expansion, immediate digital transformation. https://www.microsoft.com/…
Big Tech thus far holding up remarkably well: *Google, Facebook - say ad prices are strengthening after a steep drop in March *Microsoft - says covid-19 has had ‘minimal’ impact on revenue *Microsoft stock within 5% of its all-time high https://www.cnbc.com/...
Microsoft reports a profit of $10.75B, up 22 percent from a year ago,($1.40 EPS) on revenue of $35.0 billion, up 15%. Analysts polled by Yahoo Finance expected earnings of $1.26 on revenue of $33.66B.