Microsoft Earnings Beat Expectations
- Paul Thurrott
- Jan 29, 2020
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Microsoft announced today that it earned $11.6 billion on revenues of $36.9 billion in the quarter ending December 31. Both represent sharp gains—38 percent and 14 percent, respectively—over the same quarter one year ago.
“We are innovating across every layer of our differentiated technology stack and leading in key secular areas that are critical to our customers’ success,” Microsoft CEO Satya Nadella said in a prepared statement. “Along with our expanding opportunity, we are working to ensure the technology we build is inclusive, trusted and creates a more sustainable world, so every person and every organization can benefit.”
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Microsoft’s three primary business units once again all delivered solid results, and More Personal Computing, thanks to Windows 7 upgraders, once again took first place, delivering $13.2 billion in revenues. Productivity and Business Processes landed at $11.8 billion, while Intelligent Cloud delivered a nearly-identical $11.9 billion in revenues.
And that Windows 7 upgrade cycle did deliver the goods: Windows revenues from PC makers were up 18 percent in the quarter, while Windows commercial revenues jumped 25 percent. Surface had a solid quarter as well, delivering almost $2 billion in revenues, a gain of 6 percent YOY. Xbox continued its downward slide with an 11 percent drop in revenues overall; gaming revenue fell by 21 percent.
Office commercial grew 16 percent in the quarter, while Office consumer jumped an even more impressive 19 percent. Office 365 commercial users grew 27 percent, and there are now 37.2 million Office 365 consumer subscribers, Microsoft said.
Key to Microsoft’s success, of course, is Azure, its main cloud business, which continues to grow at a torrid pace: Microsoft reported that Azure revenues jumped 62 percent year-over-year, well ahead of analysts’ expectations of 58 percent. Microsoft’s overall server and cloud revenue rose by 30 percent in the quarter.
I will provide a deeper dive into Microsoft’s financials in Friday’s Short Takes on Petri.com.