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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