Despite its massive $1 trillion market capitalization, Microsoft (NASDAQ:MSFT) continues to grow at an impressive rate, as evidenced by the tech titan's solid fiscal third-quarter results. 

Microsoft results: The raw numbers

Metric Q3 2019 Q3 2018 Year-Over-Year Change
Revenue $30.6 billion $26.8 billion 14%
Operating income $10.3 billion $8.3 billion 25%
Net income $8.8 billion $7.4 billion 19%
Earnings per share $1.14 $0.95 20%

Data source: Microsoft Q3 2019 earnings release.

What happened with Microsoft this quarter?

Growth in Microsoft's Intelligent Cloud division was particularly robust. Revenue in this segment jumped 22% to $9.7 billion, fueled by a 73% surge in the company's Azure cloud computing business.

"Leading organizations of every size in every industry trust the Microsoft cloud," CEO Satya Nadella said in a press release. "We are accelerating our innovation across the cloud and edge so our customers can build the digital capability increasingly required to compete and grow."

Growth was also strong in Microsoft's Productivity and Business Processes division. Revenue in this segment climbed 14% to $10.2 billion. The gains were broad-based, with Office 365 commercial, Dynamics 365, and LinkedIn posting revenue increases of 30%, 43%, and 27%, respectively.

"Microsoft 365 empowers everyone -- from the largest multinationals to small businesses; from knowledge workers to firstline workers -- with an integrated, secure, compliant experience on any device," Nadella said during a conference call with analysts. "It is the only comprehensive productivity, collaboration and communications solution that integrates with an organization's business process workflows."

Microsoft's Personal Computing division also continues to post surprisingly solid growth. Despite a sluggish PC market, Microsoft's Windows licensing revenue from computer manufacturers rose 9% in the third quarter. Better still, Windows commercial products and cloud services revenue grew 18%.

"Windows 10 is now active on more than 800 million devices and continues to gain traction in the enterprise as the most secure and productive operating system," Nadella said.

A person holding an upwardly sloping chart

All three of Microsoft's core businesses are enjoying robust growth. Image source: Getty Images.

In all, Microsoft's companywide revenue increased by 14% to $30.6 billion. Moreover, the tech giant is becoming more profitable as it expands. "Strong revenue growth, improving gross margins and disciplined investment in strategic and high growth areas resulted in operating margin expansion," CFO Amy Hood said. In turn, operating income leapt 25% to $10.3 billion, while net income rose 19% to $8.8 billion, or $1.14 per share.

Moreover, Microsoft's cash generation remains robust. Free cash flow increased 19% to $11 billion. That allowed the company to return $7.4 billion to shareholders via dividends and stock buybacks in the third quarter. 

Looking forward

Microsoft's fourth-quarter guidance includes: 

  • Intelligent Cloud revenue of $10.85 billion to $11.05 billion
  • Productivity and Business Processes revenue of $10.55 billion to $10.75 billion
  • More Personal Computing revenue of $10.8 billion to $11.1 billion

"Our decision to invest with significant ambition in high growth areas coupled with strong execution has resulted in material revenue growth at scale and a stronger position in many key markets," Hood said. "As fiscal 2020 approaches, we again see tremendous opportunity to drive sustained long-term growth."