Microsoft Revenues Jump 12 Percent to $32.5 Billion

Analysis: Microsoft Earnings

Microsoft today announced that it earned net income of $8.4 billion on revenues of $32.5 billion in the quarter ending December 31. The results were in line with analyst expectations.

“Our strong commercial cloud results reflect our deep and growing partnerships with leading companies in every industry including retail, financial services, and healthcare,” Microsoft CEO Satya Nadella is credited with saying in a canned statement. “We are delivering differentiated value across the cloud and edge as we work to earn customer trust every day.”

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“Commercial cloud,” of course, is not a real Microsoft business. Instead, it is a cherry-picked collection of well-performing products and services that span Microsoft’s actual businesses. But it is widely thought to be made up largely of Azure, Office 365, and related offerings. And Microsoft uses it to compare its successes with those of rivals like Amazon.

Microsoft’s cloud businesses are certainly surging for the most part. The Intelligent Cloud business saw revenue growth of 24 percent overall, with Azure revenue growth hitting 76 percent. But with $9.4 billion in revenues, Microsoft’s Intelligent Cloud business unit was only the firm’s third largest: More Personal Computing—Windows, Xbox, Surface—hit $13 billion in revenues while Productivity and Business Processes—Office 365, Dynamics—delivered 10.1 billion in revenues.

From a growth perspective, Surface was one of Microsoft’s strongest performers: Its revenues surged by 39 percent in the quarter, thanks to strong sales across both consumer and commercial. Office also grew strongly in the quarter, especially on the commercial side, where Office 365 experienced growth of 34 percent.

That said, Office 365—like Windows—was hurt by what Microsoft called a “weaker than expected consumer market.” The Office 365 consumer subscriber base hit 33.3 million users in the quarter. But Windows 10 revenues from PC makers dove 11 percent for consumers and 2 percent for Pro/commercial.

Gaming was a bit mixed, given the holiday quarter: Overall revenue grew 8 percent, and Xbox software and services jumped 39 percent. But Xbox hardware revenues actually fell 19 percent, which Microsoft blamed on a high prior year because of the Xbox One X launch.

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Conversation 21 comments

  • ponsaelius

    30 January, 2019 - 5:36 pm

    <p>Ditching consumers is paying well on the bottom line. Boring but profitable. Wall Street must love Satya.</p>

  • Bdsrev

    30 January, 2019 - 5:42 pm

    <p>Panos is PUMPED</p>

  • provision l-3

    30 January, 2019 - 5:44 pm

    <p>12% growth isn't too shabby. It will be interesting to see what their guidance is for next quarter given there is a certain amount of recession rumblings going around. </p>

    • Greg Green

      01 February, 2019 - 7:01 pm

      <blockquote><em><a href="#400729">In reply to provision l-3:</a></em></blockquote><p>They seem more resilient to the China slowdown than other companies. I wonder if that means they’re more geographically diversified.</p>

  • Cdorf

    Premium Member
    30 January, 2019 - 6:27 pm

    <p>Not surprising Xbox revs fell too in that they were heavily discounted over the holidays. </p>

  • brettscoast

    Premium Member
    30 January, 2019 - 6:44 pm

    <p>Good wrap Paul the standout here seems to the the surface numbers quite an impressive jump there.</p>

  • glenn8878

    30 January, 2019 - 6:52 pm

    <p>Microsoft is more Enterprise than consumer. </p>

  • pecosbob04

    30 January, 2019 - 6:59 pm

    <p>Down 2.5% in after hours trading.</p><p><br></p>

    • provision l-3

      30 January, 2019 - 7:39 pm

      <blockquote><em><a href="#400742">In reply to pecosbob04:</a></em></blockquote><p>When a company provides financial guidance and meets their guidance that seems kind of like success to me. The company is in the best position to tell you how they are going to do. So when things like this happen, where Microsoft is getting pummeled not for missing their guidance but because they missed someone else's misplaced expectations I find it odd. </p>

      • robsanders247

        Premium Member
        31 January, 2019 - 8:03 am

        <blockquote><em><a href="#400748">In reply to provision l-3:</a></em></blockquote><p>No, investors look less at the results of the past quarter and more at the guidance given for the upcoming quarter.</p>

        • provision l-3

          31 January, 2019 - 10:28 am

          <blockquote><em><a href="#400800">In reply to robsanders247:</a></em></blockquote><p>You are correct, but at the time both comments were posted MS hadn't had it's conference call where it gave guidance. The initial drop was due to MS coming up short of exceptions. </p>

    • dontbe evil

      31 January, 2019 - 12:52 am

      <blockquote><em><a href="#400742">In reply to pecosbob04:</a></em></blockquote><p><br></p><p>check 1 year time stocks for apple and msft … enjoy</p>

  • robincapper

    30 January, 2019 - 8:45 pm

    <p>I wonder how much of that Surface 39% was Go?</p>

    • NoFlames

      30 January, 2019 - 9:34 pm

      <blockquote><a href="#400754"><em>In reply to robincapper:</em></a><em> hard to say but this is the best growth for the surface line that I recall. </em></blockquote><p><br></p>

    • Daishi

      Premium Member
      31 January, 2019 - 2:50 am

      <blockquote><em><a href="#400754">In reply to robincapper:</a></em></blockquote><p>AdDuplex apparently has the Go as the 4th most used member of the Surface family, behind the the Pro 4, 5 &amp; 3, accounting for something like 12% of all devices. Given how short a time it’s been in the market that seems like a crazy good result.</p>

  • dontbe evil

    31 January, 2019 - 12:51 am

    <p>but but they'll not sell more surfaces</p><p>xbox sucks</p><p>office sucks</p><p>ms sucks</p><p>linkedin sucks</p>

    • GuyDye

      Premium Member
      31 January, 2019 - 7:57 am

      <blockquote><em><a href="#400774">In reply to dontbe_evil:</a></em></blockquote><p>Such wisdom. ;/</p>

      • dontbe evil

        31 January, 2019 - 11:09 am

        <blockquote><em><a href="#400799">In reply to GuyDye:</a></em></blockquote><p>yup that's what the people use to say … and I was clearly sarcastic :)</p>

        • jamJAR

          01 February, 2019 - 2:14 pm

          <blockquote><em><a href="#400882">In reply to dontbe_evil:</a></em></blockquote><p>You should tag it with #sarcasm otherwise people think you're being a troll.</p>

          • Greg Green

            01 February, 2019 - 6:59 pm

            <blockquote><em><a href="#401221">In reply to jamJAR:</a></em></blockquote><p>He’s still a troll, full of the same biases he complains others have.</p>

          • dontbe evil

            02 February, 2019 - 3:44 am

            <blockquote><em><a href="#401221">In reply to jamJAR:</a></em></blockquote><p>I think it was quite clear with "but but" in begin :)</p><p><br></p><p>if I add sarscam is not fun anymore</p><p><br></p>

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