Microsoft FY18 Q4 earnings: $30.1 billion in revenue propelled by more cloud growth
Microsoft's revenue again shows year-over-year growth, largely propelled by the strength of its cloud and Office businesses.
Microsoft today released its earnings report for FY18 Q4 (opens in new tab), showing revenues of $30.1 billion and $8.9 billion in net income. That's up from the same period a year ago, during which Microsoft brought in $25.6 billion in revenue and $8.1 billion in net income.
Here are the highlights from this quarter's release:
- Revenue was $30.1 billion and increased 17%
- Operating income was $10.4 billion and increased 35%
- Net income was $8.9 billion GAAP and $8.8 billion non-GAAP
- Diluted earnings per share was $1.14 GAAP and $1.13 non-GAAP
Cloud and Office
Microsoft's results for Q4 outperformed analyst expectations, which were pegging revenue to fall somewhere in the $29 billion range. A large reason for that is the continued strength of Microsoft's cloud and Office efforts, which have been exceptional performers for the company for some time.
In particular, the fourth quarter saw Microsoft's Office commercial products and cloud services increase revenue by 10 percent, mostly driven by 38 percent growth in Office 365 commercial revenue. Meanwhile, Office consumer products and cloud services revenue was up by eight percent, with Office 365 consumer subscribers increasing to 31.4 million.
LinkedIn also saw a relatively large increase in revenue, posting 37 percent growth over the same period a year ago. Meanwhile, Microsoft's Intelligent Cloud business, which includes its server products and cloud services, rose by 23 percent.
Surface, Windows, and gaming
Switching gears to the More Personal Computing category, revenue increased by 17 percent, moving up to $10.8 billion. That's on the back of a seven percent increase in Windows OEM revenue and a 23 percent jump in Windows commercial products and cloud services revenue.
Meanwhile, gaming revenue was up by 39 percent, including a 36 percent jump for Xbox software and services. Microsoft's Surface business also saw significant growth for the quarter, posting a 25 percent gain over the same time last year.
Finally, in addition to its Q4 release, Microsoft provided a look at how it performed for the entirety of the 2018 fiscal year. For the 12 months ending on June 30, Microsoft totalled revenues of $110.36 billion, which is a 14 percent jump over its total 2017 performance ($96.57 billion).
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 (opens in new tab) to discuss the earnings.
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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.
By Jez Corden
But imagine the numbers if they also had a healthy mobile platform.
MS is making plenty of money from their iOS and Android sales without the massive capital expense of supporting an entire supply chain and manufacturing base for a product that has plateaued and is on a downward trajectory now (only Apple, via their walled-garden lock-in and ridiculous prices, and Samsung via their massive vertical integration are making any money in the Mobile market now.)
The Chinese Phone manufacturers are going to destroy everyone but Apple and Samsung in the market soon and MS was smart to get out while the getting was good (and remember, the Chinese market is the ONLY segment growing at this time and is 8 times the size of the American/EU market.)
Also, MS has a co-marketing agreement with Apple (signed in 1996) that guarantees them access to Apple products (and vice-versa) and they own lots of Apple stock (purchased dirt-cheap in 1995) so when Apple does well, so does MS.
MS also makes $5-$8 on every single Android phone sold due to their IP licensing agreements, so they have ZERO incentive to upset that cash cow.
Nadella has stated he wants MS to be the "network computer" that everybody else uses for their back-end, and they are making tons of money doing it.
"Meanwhile, gaming revenue was up by 39 percent, including a 36 percent jump for Xbox software and services."
...butbutbut everyone tells me that Microsoft is no longer in the consumer business! How can this be? /s
Let's not bounce from an opinion to another. To me, it's very simple: if we decide a tech giant like Microsoft should no more try anything in the mobile, one of the current technological key sectors, it's fine. Otherwise, that's my position too, we have to separate the analysis. Cloud and services have been managed wonderfully while the mobile division in particular has 0 earnings, therefore it is a disaster. It's not just for economic reasons, but also for the terrible idea behind the abrupt cancellation of a decade of developments in windows phones, that was contributing to the unification concept of windows. I think this is slowly hurting the whole platform, if compared to much more fitted competitors.
So, my conclusion is that Nadella is a genius of cloud, but as a CEO I'd probably prefer somebody else. As Kennedy once said: GNP does not measure everything!