Microsoft FY18 Q1 earnings: $24.5 billion in revenue on continued cloud growth

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Microsoft logo (Image credit: Windows Central)

The earnings report for FY18 Q1 shows a total of $24.5 billion in revenue and $6.6 billion in net income. That's up from the same period a year ago, during which Microsoft brought in $21.9 billion in revenue and $5.7 billion in net income.

Here are the highlights from this quarter's release:

  • Revenue was $24.5 billion and increased 12%
  • Operating income was $7.7 billion and increased 15%
  • Net income was $6.6 billion and increased 16%
  • Diluted earnings per share was $0.84 and increased 17%

Microsoft beat analyst expectations, which predicted $23.56 billion in revenues. That's in large part to the continued growth of Microsoft's cloud business. Intelligent Cloud revenues in particular were up 14 percent to $6.9 billion, driven by a 17 percent increase in server products and cloud services, along with Azure revenue growth of 90 percent. Office products were also a highlight of the quarter, with commercial Office and consumer Office revenues up by 10 percent and 12 percent, respectively. LinkedIn revenue came in at $1.1 billion.

Revenue in Microsoft's "More Personal Computing" category, made up of Windows OEM revenue, Surface, gaming and more, was relatively static at $9.4 billion. Most interestingly, Surface revenue was up by 12 percent, an increase Microsoft pins on sales of the new Surface Laptop. Gaming revenue was also up slightly, increasing by one percent due to 21 percent Xbox software and services revenue growth, but lower hardware revenue. Here's a look at the highlights:

  • Windows OEM revenue increased 4% (up 4% in constant currency), ahead of the overall PC market
  • Windows commercial products and cloud services revenue increased 7% (up 6% in constant currency) driven by annuity revenue growth
  • Search advertising revenue excluding traffic acquisition costs increased 15% (up 15% in constant currency) driven by higher revenue per search and search volume
  • Surface revenue increased 12% (up 11% in constant currency) driven by sales of the new Surface Laptop
  • Gaming revenue increased 1% (0% in constant currency) with Xbox software and services revenue growth of 21% (up 20% in constant currency) offset by lower hardware revenue

As usual, Microsoft will hold a conference call and webcast at 2:30 p.m. PT / 5:30 p.m. ET on its investor site to discuss the earnings.

Dan Thorp-Lancaster

Dan Thorp-Lancaster is the former Editor-in-Chief of Windows Central. He began working with Windows Central, Android Central, and iMore as a news writer in 2014 and is obsessed with tech of all sorts. You can follow Dan on Twitter @DthorpL and Instagram @heyitsdtl