Microsoft Earnings Soar in Difficult Times

Microsoft Just Lost the Windows 10 FUD War (Premium)

Microsoft experienced a better-than-expected fourth fiscal quarter, thanks largely to the work-at-home requirements of the COVID-19 pandemic.

The firm reported net income of $11.2 billion on revenues of $38 billion in the quarter ending June 30. Net income was up 13 percent year-over-year, while revenues jumped 15 percent.

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“The last five months have made it clear that tech intensity is the key to business resilience,” Microsoft CEO Satya Nadella said in a prepared statement. “Organizations that build their own digital capability will recover faster and emerge from this crisis stronger. We are the only company with an integrated, modern technology stack—powered by cloud and AI and underpinned by security and compliance—to help every organization transform and reimagine how they meet customer needs.”

Addressing COVID, Microsoft noted that “business trends” in the quarter were “similar to the previous quarter.” Cloud usage and demand increased as customers continued to work and learn from home, the firm said, while transactional license purchasing, conversely, continued to slow, particularly in small and medium businesses, while LinkedIn “was negatively impacted by the weak job market and reductions in advertising spend.” Windows sales to PC makers, Surface, and the Xbox business all benefited from increased demand due to “work-, play-, and learn-from-home scenarios.”

Of Microsoft’s three primary business units, Intelligent Cloud was the biggest, at $13.4 billion in revenues and growth of 17 percent YOY. More Personal Computing was number two, with $12.9 billion in revenues and growth of 14 percent YOY. Productivity and Business Processes brought up the rear with $11.8 billion in revenues and 6 percent growth YOY.

Looking at these businesses more closely, Intelligent Cloud saw a 19 percent increase in revenues related to servers and cloud services, while enterprise services were relatively unchanged YOY. Azure revenues were up 47 percent. And enterprise mobility seats grew 26 percent to 147 million.

More Personal Computing saw big gains across all of its major businesses except for search. Windows revenues from PC makers were up 7 percent. Windows commercial was up 9 percent. Xbox content and services surged an incredible 65 percent. And Surface revenues increased 28 percent to $1.7 billion.

At Productivity and Business Processes, Office commercial jumped 5 percent, while Office consumer rose 6 percent; Office 365 Commercial was the bright spot, with 19 percent revenue growth. And Office 365 consumer now has 42.7 million subscribers, up 23 percent. LinkedIn revenues were up 10 percent. And Dynamics grew by 13 percent.

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Conversation 10 comments

  • pecosbob04

    22 July, 2020 - 8:40 pm

    <p>Market seems unimpressed.</p>

    • cavalier_eternal

      23 July, 2020 - 8:29 am

      <blockquote><em><a href="#555868">In reply to pecosbob04:</a></em></blockquote><p>These results are already baked into the stock price. The market is forward looking and the best I can tell is that Microsoft offered no guidance. So the market is just reacting to a lack of uncertainty. I’d expect a bit of that through the current earnings season. Hopefully Google, Apple or Amazon will have something positive to say looking forward. That will help boost tech overall. If not it will be another quarter of daily whiplash for tech stocks. </p>

      • pecosbob04

        23 July, 2020 - 8:35 am

        <blockquote><em><a href="#555949">In reply to cavalier_eternal:</a></em></blockquote><p>I know it is a typo but I'd kill for a "lack of uncertainty" in the market about now.</p><p><br></p>

        • waethorn

          23 July, 2020 - 11:05 am

          <blockquote><em><a href="#555953">In reply to pecosbob04:</a></em></blockquote><p>The only stocks doing well are the ones that the Fed is printing money for.</p><p><br></p><p><br></p><p><em>"….and the walls came a-tumbling down."</em></p><p><br></p><p><em> — ancient Hebrew proverb</em></p>

          • cavalier_eternal

            23 July, 2020 - 1:40 pm

            <blockquote><em><a href="#555983">In reply to Waethorn:</a></em></blockquote><p>MSFT is up 25% for the year even with today's 3% job. It's doing just fine. </p>

            • solomonrex

              27 July, 2020 - 8:03 am

              <blockquote><em><a href="#556010">In reply to cavalier_eternal:</a></em></blockquote><p>MS as a tech giant will generally benefit from recessions, but also specifically from the pandemic shift in usage, which is what they said above. While the stock market is extremely unreliable and dumb right now, MS is a good long term bet. And I expect no meaningful antitrust movement from the Trump admin, just a shakedown for campaign contributions. The big 5 – MS, Facebook, Google, Apple and Amazon – will benefit enormously and be fine. The rest of the market is in real trouble as many rely on small businesses, which rely on foot traffic or rely on other small businesses. And we missed our chance to address that effectively and health care is worse, less funded and more disorganized than ever.</p>

        • cavalier_eternal

          23 July, 2020 - 1:36 pm

          <blockquote><em><a href="#555953">In reply to pecosbob04:</a></em></blockquote><p>It must have been wishful thinking on my part. </p>

  • saint4eva

    23 July, 2020 - 7:00 am

    <p>Woow, impressive performance Microsoft. </p>

  • saint4eva

    23 July, 2020 - 7:01 am

    <p> Surface did fantastically well.</p>

  • overseer

    24 July, 2020 - 9:02 am

    <p>Great to see Microsoft continue to rake it in while spending nothing on QA and support. </p>

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