Microsoft reported an 8.2 per cent year-on-year jump in net profit in the third quarter of its 2022 fiscal year, underpinned by double-digit growth in its cloud and productivity businesses.
Net profit soared to more than $16.7 billion in the three months to March 31, nearly $1.3bn more than the same period last year. However, it was 11.2 per cent down on a quarterly basis.
Revenue during the third quarter jumped 18 per cent to almost $49.4bn, exceeding analysts' expectations of $49bn. It was down 4.4 per cent compared to the December quarter.
The third quarter of the 2022 financial year marked the Redmond, Washington-based company’s 19th straight quarter of double-digit revenue growth.
“Going forward, digital technology will be the key input that powers the world’s economic output,” Microsoft chairman and chief executive Satya Nadella said.
“Across the tech stack, we are expanding our opportunity and taking share as we help customers differentiate, build resilience and do more with less,” Mr Nadella said.
The company's stock, which has dropped almost 20 per cent since the start of 2022 calendar year, reached nearly $265.38 a share in extended-hours trading on Tuesday, nearly 2 per cent down.
Revenue in the company’s intelligent cloud business increased 26 per cent year-on-year to $19.1bn in the third quarter. Driven by Azure — a cloud computing service operated by Microsoft — and other cloud services revenue growth, Microsoft’s server products and cloud services sales increased almost 29 per cent in the three-month period.
“Continued customer commitment to our cloud platform and strong sales execution drove better than expected commercial bookings growth of 28 per cent and Microsoft Cloud revenue,” the company’s executive vice president and chief financial officer Amy Hood said.
The company’s operating income grew 19 per cent to $20.4bn in the previous quarter from the prior year period while the diluted earnings per share was up 9 per cent on an annual basis at $2.22.
The company’s productivity and business processes division, which includes both its Microsoft Office business and revenue from LinkedIn, surged 17 per cent to $15.8bn.
LinkedIn revenue increased almost 34 per cent annually. Microsoft did not give a dollar figure for its LinkedIn revenue and did not disclose the number of users.
Microsoft 365 Consumer (a bundle of various apps) subscribers increased to 58.4 million at the end of the last quarter, up 3.5 per cent on a quarterly basis, the company said.
Sales in the personal computing division rose 11 per cent to $14.5bn in the quarter while surface revenue increased 13 per cent yearly. Microsoft said it saw an increase in the sale of its PCs as more people and businesses adopted hybrid work modes due to the Covid-19 pandemic.
Search and news advertising revenue increased by 23 per cent annually, while Xbox content and services revenue jumped 4 per cent in the third quarter.
In January, to strengthen its gaming portfolio, Microsoft agreed to buy video game company Activision Blizzard in a $68.7bn all-cash deal. It will make Microsoft the third-largest gaming company in the world by revenue, behind China’s Tencent and Japan’s Sony.
The company spent more than $6.3bn on research and development, about 12.7 per cent of its total sales in the quarter. This is 21.2 per cent more than what was spent on R&D in the same period last year.
Microsoft also returned $12.4bn to shareholders in the form of share repurchases and dividends in the last quarter, a yearly increase of 25 per cent compared to the prior year period.
UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Winners
Ballon d’Or (Men’s)
Ousmane Dembélé (Paris Saint-Germain / France)
Ballon d’Or Féminin (Women’s)
Aitana Bonmatí (Barcelona / Spain)
Kopa Trophy (Best player under 21 – Men’s)
Lamine Yamal (Barcelona / Spain)
Best Young Women’s Player
Vicky López (Barcelona / Spain)
Yashin Trophy (Best Goalkeeper – Men’s)
Gianluigi Donnarumma (Paris Saint-Germain and Manchester City / Italy)
Best Women’s Goalkeeper
Hannah Hampton (England / Aston Villa and Chelsea)
Men’s Coach of the Year
Luis Enrique (Paris Saint-Germain)
Women’s Coach of the Year
Sarina Wiegman (England)
