Microsoft (MSFT 0.31%) announced third quarter earnings for fiscal 2021 after the market closed on Tuesday, beating Wall Street's expectations on both the top and bottom lines. The company's revenue hit $41.7 billion, up 19% over the prior year and above the 17% growth posted last quarter. Similarly, diluted earnings per share came in at $2.03, up an impressive 45%.
Hitting the highlights, revenue from Microsoft's Productivity and Businesses Processes segment grew 15% to $13.6 billion. This was the result of strong sales in commercial software products like Office 365 and Dynamics 365, which jumped 22% and 45%, respectively.
During the earnings call, CEO Satya Nadella also mentioned that Microsoft Teams reached 145 million daily active users, nearly double the 75 million daily active users reported last year. This indicates continued demand for videoconferencing and collaboration solutions that support remote work.
Sales in Microsoft's Intelligent Cloud segment surged 26% to $15.1 billion, driven in large part by 50% revenue growth in Microsoft Azure, the company's cloud computing business. While that's an impressive figure, it marks a deceleration compared to the 59% growth in the same quarter last year.
Finally, Microsoft's More Personal Computing revenue hit $13 billion, up 19%. Xbox was main growth driver in this segment. Gaming sales surged 50%, benefiting from continued momentum following the launch of the Xbox Series X and S last November.
Despite these strong results, Wall Street wasn't impressed and shares dropped 3% after hours. This is likely a reaction to slowing growth in Microsoft Azure, which represents a significant portion of the company's long-term potential. Even so, Microsoft stock is up 14% year-to-date and 45% over the trailing 12 months.