Microsoft Q3 2017 earnings: Meet expectations, Dynamics up 10%, Azure steady at 93% growth

With both Dynamics and Azure performing strongly, Microsoft has released the following results for the quarter ended March 31, 2017:

• Revenue was $22.1 billion GAAP, $23.6 billion non-GAAP, just missing analyst expectations of $23.62 billion
• Still, diluted earnings per share was $0.61 GAAP, $0.73 non-GAAP, exceeding expectations by $0.03
• Operating income was $5.6 billion GAAP, $7.1 billion non-GAAP
• Net income was $4.8 billion GAAP, $5.7 billion non-GAAP

CEO Satya Nadella believes results reflect the trust customers are placing in the Microsoft Cloud. "From large multi-nationals to small and medium businesses to non-profits all over the world, organizations are using Microsoft's cloud platforms to power their digital transformation," he said in a statement

Revenue in Productivity and Business Processes (home of Dynamics) was $8.0 billion and increased 22% (up 23% in constant currency), with the following business highlights:

• Dynamics products and cloud services revenue increased 10% (up 11% in constant currency) driven by Dynamics 365 revenue growth of 81% (up 82% in constant currency)
• LinkedIn contributed revenue of $975 million. Note that this is the first full quarter of earnings since the LinkedIn acquisition in 2016. Microsoft has just announced an update to the integration between Dynamics 365's Enterprise Sales app and LinkedIn Sales Navigator, and the combined Microsoft Relationship Sales (due for July release) will roll out at $135/user/month (before volume discounts).
• Office commercial products and cloud services revenue increased 7% (up 8% in constant currency) driven by Office 365 commercial revenue growth of 45% (up 45% in constant currency)
• Office consumer products and cloud services revenue increased 15% (up 14% in constant currency) and Office 365 consumer subscribers increased to 26.2 million

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