To The Moon

With cloud service revenue jumping, Microsoft beat expectations in Q3.

KEY Figures:

- Total revenue was $49.4 billion and increased 18% y/y

- Net income was $16.7 billion and increased 8% GAAP (up 13% non-GAAP) y/y

- Diluted EPS was $2.22 and increased 9% GAAP (up 14% non-GAAP) y/y

KEY Points:

- Microsoft delivered an all-around beat in fiscal Q3, and proved itself that is more durable than other tech giants.

- Microsoft cloud revenue of Q3 is $23.4 billion, up 32% y/y. The revenue will continue to be driven by strong growth in consumption business.

- Sales and marketing expenditures totaled $5.6 billion, 10% higher y/y and now is the fastest growth in recent 3 years.

- The company announced plans to buy Activision Blizzard for almost $69 billion, the largest transaction in Microsoft's history.

- Fourth-quarter revenue guidance still surpassed the expectations of analysts on wall street.

- The Q4 FY22 outlook implies the EPS may grow by more than 16% but it could be impacted from the macro risks.

Microsoft share has down 19% since the start of 2022, underperforming the S&P 500, which is about 12% declined on the same period.