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

Posted on October 23, 2019 by Mehedi Hassan in Microsoft with 10 Comments

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.

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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Comments (10)

10 responses to “Microsoft Q1 2020 Earnings: Surface Revenue Declines As Cloud Continues to Grow”

  1. Thom77

    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.

  2. dontbeevil

    Probably we're not going to see this news here: Rudy Huyn moved to MS to focus on UWP development

    windowscentral.com/well-known-uwp-developer-rudy-huyn-joins-microsoft

  3. Slvrgun

    whats going on with Xbox?

  4. ghostrider

    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.

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