Microsoft Credits Digital Transformation for Strong Earnings

Posted on October 24, 2018 by Paul Thurrott in Microsoft with 10 Comments

Microsoft today announced its earnings for the quarter ending September 30. The firm credits the strength of its digital transformation efforts for the strong results.

“We are off to a great start in fiscal 2019, a result of our innovation and the trust customers are placing in us to power their digital transformation,” Microsoft CEO Satya Nadella noted in a prepared statement. “We’re excited to help our customers build the digital capability they need to thrive and grow, with a business model that is fundamentally aligned to their success.”

The software giant posted net income of $8.8 billion on revenues of $29.1 billion, jumps of 34 percent and 19 percent, respectively, over the same quarter a year ago.

Key news from the earnings report include:

  • More Personal Computing, which is responsible for Windows 10 and Xbox, was again Microsoft’s biggest business with $10.7 billion in revenues. Productivity and Business Processes delivered $9.8 billion in revenues and Intelligent Cloud hit $8.6 billion.
  • Office commercial revenue jumped 17 percent in the quarter, with Office 365 commercial revenue growing by 36 percent. There are now 155 million Office 365 commercial users and 32.5 million Office 365 consumer subscribers, Microsoft said.
  • LinkedIn revenues rose by 33 percent YOY, and Dynamics was up by 51 percent.
  • Server and cloud products revenue rose by 28 percent. Enterprise services were up 6 percent. Azure revenue was up 76 percent(!). Enterprise Mobility now has over 88 million seats, a gain of 55 percent.
  • Windows revenues from PC makers jumped 3 percent in the quarter, with Windows commercial rising 12 percent.
  • Gaming revenue rose by 44 percent in the quarter, and Xbox software and services revenue rose by 36 percent.
  • Surface revenue was up 14 percent. There are no further details here for some reason.

I’ll dig deeper into Microsoft’s earnings in Friday’s edition of Short Takes on Petri, as usual.


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Comments (10)

10 responses to “Microsoft Credits Digital Transformation for Strong Earnings”

  1. Daekar

    Wow. Well, that's encouraging.

  2. MikeGalos

    Fun to see the Microsoft colors across from an ad for the late, lamented TV show Scorpion which had Microsoft product placements and a Microsoft credit at the end of most episodes.

    • TechsUK

      In reply to MikeGalos:

      I saw a couple of Scorpion episodes a couple of days ago. Plenty of tech lingo in there and fun enough. Has it got a bad rep?

      • Jackwagon

        In reply to TechsUK:

        If I'm correct, "late, lamented X" would mean that it is sadly gone; it's a phrase more typically associated with a deceased close acquaintance (generally a friend, relative, or partner).

        As far as how it was received, apparently reviews were mixed, but it got four seasons/series, so I'd imagine someone must have liked it.

      • MikeGalos

        In reply to TechsUK:

        Scorpion was cancelled after 4 seasons.

        It did have gaping plot-holes but what it had that was special was characters in the Exceptionally Gifted (160-180 IQ) and Profoundly Gifted (above 180) IQ range who were portrayed accurately.

        That's incredibly rare in any film or TV show. That they were able to keep that accuracy for four full seasons instead of changing that portrayal into "laugh at the nerd" jokes designed to appeal to a mass audience is unheard of. Typically shows with high IQ protagonists get those characters watered down in their 2nd season to increase the "likeability" of the character to increase the show's demographic reach and increase the ad rates.

        It's likely that this was due to contractual obligations with Scorpion Computer Services and their spin-off Concierge Up who pitched the show and remained involved with it, in part, to recruit people in that IQ range for their consulting services. The show was their solution to finding people to hire in the 99.99th percentile and above.

  3. dontbe evil

    but but MS, windows 10, xbox and surfaces are falling apart!!! /s

  4. waethorn

    Um....isn't all software digital?