Microsoft shares rise after the tech giant posts 15% growth

Today Microsoft reported its third-quarter, fiscal 2020 quarter earnings, the period of time corresponding to Q1 2020 on the regular calendar.

The technology giant generated $35 billion in revenue, up 15% from the year-ago period. That top line led to $13 billion in operating income (+25% YoY), and $10.8 billion in net income (+22% YoY). Microsoft saw $1.40 in earnings per share in the quarter.

Investors had expected the company to report $1.26 in per-share profit off of revenue of $33.66 billion, according to Yahoo Finance. Right after reporting its results, Microsoft shares were up around 1.5%. The firm rallied 4.5% during regular trading hours on the back of a strong day of trading for technology equities.

Other headlines from the company's earnings report include Azure (its AWS competitor) growing 59% from its year-ago result, 25% growth in Office 365 commercial incomes, LinkedIn top line growing 21% from the year-ago period, and roughly flat results from its Xbox, search, and Surface businesses.

However, calendar Q1 (Q3 F2020 for Microsoft) only included a portion of the world's COVID-19 response. The results reflected that, with the company noting that "COVID-19 had minimal net impact" on revenue in the quarter, boosting cloud usage, lowering some advertising revenue from LinkedIn, raising gaming engagement, and slowing search advertising top line. The balance of that appears to be largely a wash.

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The company will talk more about the future on its earnings call, but the firm did warn in its own report that "the effects of COVID-19 may not be fully reflected in the financial results until future periods."

In case anyone else is interested in other metrics, we've collected the most interesting numbers from Microsoft's earnings slides for your enjoyment. Here they are:

• Q3 F2020 aggregate gross margin: 69%, +2% YoY
• Q3 F2020 aggregate operating margin: 37%, +3% YoY
• The company's commercial bookings growth dropped sharply compared to preceding quarters; a portion of this was due to currency changes, which lowered growth in the category from 12% to 7% (YoY). The preceding lowest set of results since Q3 F2019 was that year's Q4 which saw 22% growth (YoY) and 25% on a currency-adjusted basis.
• Commercial cloud revenue at Microsoft as $13.3 billion in the quarter, up 39% YoY. Remember when Microsoft wanted to hit a $20 billion run rate for commercial cloud revenue? Good times.
• LinkedIn got name-checked as a driver of rising operating expenses, which rose 10% to $11.1 billion; the only other category noted was cloud engineers. Which, to be clear, are expensive.
• Microsoft returned $9.9 billion to shareholders in the quarter, and spent $3.9 billion on capital expenditures. (Why aren't those flipped?)
• And finally, operating cash flow at the company was $17.5 billion in the quarter. Chew on that, startups.

On the whole it was a good quarter for the company, which didn't take too much damage from COVID-19. Of course, its outlook will matter quite a lot when we get it. For now, investors are content.