Microsoft Q1 2020 Earnings: Surface Revenue Declines As Cloud Continues to Grow

Microsoft today published its earnings for FYQ1 2020, reporting total revenue of $33.1 billion, with a net income of $10.7 billion. The total revenue is down from last quarter, but Microsoft’s reported an increase of 14% in revenue YoY.

The growth in revenue is fueled almost equally by all three of Microsoft’s core businesses. Productivity and Business Processes brought in a revenue of $11.1 billion with a 13% growth, while Intelligent Cloud brought in $10.8 billion at a growth of 27%, and More Personal Computing brought in $11.1 billion at 4% growth.

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Here’s a break down of all the highlights from the three businesses:

  • More Personal Computing:
    • Surface revenue decreased by 4%, bringing in $1,136 millions in revenue. That’s slightly less than the $1,350 millions from last quarter, but the decline is mainly caused by the product lifecycle. Microsoft only just launched the new Surface line of products, so the sales of those devices aren’t yet part of the earnings.
    • Windows OEM revenue increased by 9%, with revenue from Windows Commercial products and cloud services increasing by 26%.
    • Gaming revenue declined by 7%, while Search advertising revenue grew 11%.
  • Intelligent Cloud:
    • Azure revenue grew 59% YoY.
    • Server products and cloud services revenue also increased by 30%.
    • Overall, there’s been good growth across the board in Microsoft’s Intelligent Cloud business, as expected.
  • Productivity and Business Processes:
    • Office Consumer products and cloud services revenue grew 25%.
    • Microsoft now has 35.6 million Office 365 Consumer subscribers.
    • Revenue from Office Commercial products and cloud services grew 13%.
    • Office 365 Commercial revenue grew 25%, with Office 365 Commercial seat numbers growing by 21%.
    • LinkedIn revenue grew by 25%, with Dynamics products and cloud services revenue growing by 14%.

As you can see, most of the numbers follow a similar trend that we have seen over the last few quarters. Microsoft’s cloud and Office business continue to grow steadily, while other parts of its business like Surface and Gaming aren’t doing consistently well.

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Conversation 10 comments

  • Thom77

    23 October, 2019 - 5:21 pm

    <p>Well, with their new innovative marketing strategy where they laugh at cucked husbands and steal the young hip crowd from Apple by reminiscing about the good ole days of Binders with pencil pockets, plus neglecting to stream their event on Youtube which is the current day TV for most people under 30 … I'm sure their Surface numbers will improve. </p>

    • ulrichr

      23 October, 2019 - 6:44 pm

      <blockquote><em><a href="#483046">In reply to Thom77:</a></em></blockquote><p>The main reason the Surface numbers are down is because everyone knew from the beginning of the quarter that a whole new range of products were being released around the October time frame. No one was buying the older stock, unless they found it at a bargain price.</p>

    • ym73

      23 October, 2019 - 7:48 pm

      <blockquote><em><a href="#483046">In reply to Thom77:</a></em></blockquote><p>You want them to stream their live event on youtube , which is owned by Google? I'm pretty sure apple doesn't stream their events on youtube either. The tech enthusiast who watch these events know how to view it. The youtube crowd will watch a synopsis by some blogger who will provide the highlights of the events. </p>

      • irfaanwahid

        24 October, 2019 - 2:14 am

        <blockquote><em><a href="#483073">In reply to ym73:</a></em></blockquote><p>The last Apple September event was live streamed on UTube, FYI.</p>

        • dontbeevil

          24 October, 2019 - 6:58 am

          <blockquote><em><a href="#483124">In reply to irfaanwahid:</a></em></blockquote><p>yeah…tell me the previous one?</p><p><br></p><p>FYI the MS october Surface event was streamed on Youtube</p>

    • warren

      23 October, 2019 - 9:11 pm

      <blockquote><em><a href="#483046">In reply to Thom77:</a></em></blockquote><p><br></p><p>Free advice: If the first thought out of your brain after reading a report on quarterly earnings of a tech company is "cucked husband", then, your opinions aren't really useful or interesting to the rest of us. If you have something to say, find a better way.</p><p><br></p>

  • dontbeevil

    24 October, 2019 - 6:56 am

    <p>Probably we're not going to see this news here: Rudy Huyn moved to MS to focus on UWP development</p><p>windowscentral.com/well-known-uwp-developer-rudy-huyn-joins-microsoft</p>

    • Greg Green

      24 October, 2019 - 8:33 am

      <blockquote><em><a href="#483149">In reply to dontbeevil:</a></em></blockquote><p>You should start your own website and not bother with this one.</p>

  • Slvrgun

    24 October, 2019 - 3:26 pm

    <p>whats going on with Xbox?</p>

  • ghostrider

    25 October, 2019 - 2:25 am

    <p>Microsoft's cloud services continue to grow – as MS herd their Enterprise customers into it as they no longer give them a choice between on-prem and cloud, which makes complete sense to MS. This feeds revenue, which looks great to shareholders and bean-counters.</p>

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