Microsoft closes fiscal 2019 with revenue spikes driven by cloud services

Satya Nadella, CEO of Microsoft, speaks at the Microsoft Annual Shareholders Meeting in Bellevue, Washington, on November 30, 2016.
Enlarge / Satya Nadella, CEO of Microsoft, speaks at the Microsoft Annual Shareholders Meeting in Bellevue, Washington, on November 30, 2016.

Microsoft has reported its financial results for the final quarter of the 2019 fiscal year. The tech giant saw notable gains in sales for Azure in its Intelligent Cloud division and for Surface in the More Personal Computing unit.

Revenue for the the company reached $33.7 billion, an increase of 12% from the last quarter of 2018. Microsoft’s operating income rose 20% to $12.4 billion while net income jumped 49% to $13.2 billion, with earnings of $1.71 per share.

Each of Microsoft’s three reporting segments saw its revenue grow compared with the fourth quarter of the previous year. The Intelligent Cloud group saw the biggest jump, rising 19% to $11.4 billion.

A 64% spike in revenue from Azure helped secure that leap, with overall revenue from server products and cloud services up 22%. Despite continuing to grow, Microsoft continued its trend of silence around any further details on Azure’s performance. This was the lowest rate of on-year revenue growth for the cloud computing platform.

GitHub, which Microsoft purchased last year, is also included under this server products umbrella, but the company has not shared any financials yet related to that deal.

The hardware side was more of a mixed bag. More Personal Computing, which also includes the teams for Windows and search advertising revenue, reported revenue of $11.3 billion, just a 4% increase. Surface sales grew 15% to $1.35 billion. The quarter includes just a few weeks’ worth of results for the pricey new Surface Hub 2 conference-room computer, which began shipping in June.

Gaming revenue dipped 10 percent. Xbox software and services saw revenue drop 3%, but Xbox hardware revenue plummeted 48 percent on lower sale volume. Microsoft is still working on a new version of its Xbox hardware, although it did share some technical insights into the ongoing effort during its E3 press conference last month.

Productivity and Business Processes reported revenue of $11 billion, showing 14% growth on-year. Both the enterprise and personal versions of Microsoft’s signature software suite had good news to share. Office 365 Commercial posted 31% revenue growth, and Office 365 Consumer reported having 34.8 million subscribers. This division also includes professional social media network LinkedIn, which saw revenue grow 25%.

In addition to the quarterly details, Microsoft also reported its results for the full 2019 fiscal year ending June 30. Revenue increased 14% to $125.8 billion. Net income was $39.2 billion on earnings of $5.06 per share, up 137% and 138%, respectively.

The overall performance shows Microsoft continuing to move ahead with the cloud-focused vision that CEO Satya Nadella implemented when he took the helm back in 2014. Its fourth-quarter report back in 2018 had similar successes for Azure and Office 365, and for as long as the critical divisions and brands continue to post ever-bigger numbers, it’s safe to assume that Microsoft will be staying the course.

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