Microsoft Q4 2019 Earnings Show Growth in Surface As Azure Growth Slows Down

Posted on July 18, 2019 by Mehedi Hassan in Cloud, Microsoft, Microsoft Consumer Services, Microsoft Surface, Office 365 with 19 Comments

Microsoft is today reporting its FYQ4 earnings for 2019. The company is reporting a revenue of $33.7 billion, net income of $12.4 billion, and an operating income of $12.4 billion.

There are a couple of interesting points from the earnings report, here’s a quick breakdown:

  • Surface revenue has grown by 14%, totalling $1.3 billion. Microsoft says the growth is driven by strong growth in its commercial segment, and it’s pretty impressive considering we haven’t seen the launch of a major new Surface device in recent times.
  • Azure revenue grew by 64%, with Microsoft’s entire Intelligent Cloud business bringing in $11.4 billion in revenue, seeing a 19% increase. Azure’s 64% growth this quarter is still the lowest in recent times, declining from the 73% growth it experienced in FYQ3.
  • Gaming revenue declined by 10%, with Xbox software and services revenue also declining by 3%. Microsoft says the 48% decline in Xbox hardware revenue was primarily due to a decrease in volume of consoles said. Xbox Live monthly active users still saw an increase of 14%, bringing the active user count up to 65 million.
  • Windows OEM Pro revenue grew by 18%, driven by “healthy Windows 10 demand” and partly because of Windows 7 reaching end of support. Windows OEM non-Pro revenue, however, declined by 8%, apparently because of “continued pressure” in the entry-level category.
  • Office Commercial products and cloud services revenue increased by 14%, with Office 365 Commercial revenue growing by 31%. Revenue generated by Office Commercial products, however, declined by 17% as more customers are switching to the cloud-based services.
  • Revenue generated by Office Consumer products and cloud services grew by 6%, with Office 365 Consumer subscribers growing to 34.8 million. LinkedIn also saw a strong growth of 25% in revenue, and Dynamics 365 revenue grew by 45%.
  • Last but not least, Microsoft’s Search advertising business saw an increase of 9% in revenue.

Overall, Microsoft’s had a really good quarter, with growth across the board for almost all its businesses. Although performance in its gaming business may disappoint some, that’s likely because of the lack of any new hardware from Microsoft as it’s getting ready to unveil the future of Xbox. The growth in Surface, Azure, Windows, and Office continues to bring in lots of money for Redmond, keeping up its market cap of $1 trillion.

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