Microsoft FY18 Q4 earnings: $30.1 billion in revenue propelled by more cloud growth

By Dan Thorp-Lancaster
published

Microsoft's revenue again shows year-over-year growth, largely propelled by the strength of its cloud and Office businesses.

Microsoft logo
Microsoft logo (Image credit: Windows Central)

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.

Dan Thorp-Lancaster
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. 

43 Comments
  • And they've made all this money without a mobile device to sell. Whether or not people agree with their strategy, it's working - the company is making tons of money
  • Yeah. Being a backbone is a lot better than meddling in the stagnant phone-market.
  • In that sense, maybe. But you need a mobile end point with direct integration with your own o/s and infrastructure regardless. As that is the only way to fully optimise and capitalise on the possibilities and potential of the infrastructure.
  • That's so true and sad at the same time.
  • can't argue your point, as the numbers are very impressive even without mobile.
    But imagine the numbers if they also had a healthy mobile platform.
  • Well, look at it this way... Google isn't making money off their mobile OS. They are making money on the data they can steal. Apple aren't making a lot of money off of their software platform either, most of it is from their ludicrous hardware prices. Microsoft isn't the kind of company that steal user data for profit and looking at how stagnant the mobile market is there isn't really anyone making money on mobile hardware (except apple)... So no matter how good their mobile platform would become it would probably never be a very profitable platform.
  • Yes but a mobile device could help their cloud business.
  • Really? Why not just work to become the go-to backbone for mobile users?
  • That is one way of looking at it. But business is not linear, it's multifaceted. It's chess not checkers.
  • How boring is that? A future of not buying Microsoft products directly and not knowing if the product or service you use is powered by Microsoft technology? That is the future you want for Microsoft?
  • I disagree.
    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.
  • Since Windows is a closed source OS, they can make money from mobile device end just like Apple. Moreover MSFT has Surface to back Windows 10.
  • It's not the source code that counts. But the API end-points to which you can attach your software.
  • Yeah, I would love to go that kind of broke.
  • I am eagerly awating all the twitter analysts to deconstruct the numbers and tell me that xbox is doomed and failing , as is tradition .
  • Destroying them with facts: like the Xbox One s was the best selling console on prime day👀😁.
  • Being the cheapest had a lot to do with that.
  • Cheap and very good probably matters to people, yes.
  • "Office consumer products and cloud services revenue was up by eight percent, with Office 365 consumer subscribers increasing to 31.4 million."
    "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
  • The trolls usually disappear around earnings call and then reappear about a week later like nothing happened, so don't expect to get any of them on here.
  • So you are talking about the "trolls" inside the company and in leading position? This is an official Microsoft strategy.
  • Xbox is doing well 👍🏼👍🏼👏🏼
  • Growing is always good, more reason to keep Surface going. Still hope for Andromeda/phonish mobile device.
  • And this is why they delayed Andromeda. Nadella looked at those revenue numbers and was like, "Naw, we can wait another year."
  • LOL
  • And he's right. Just imagine it's called Surface whatever and is trash on release? Surface is now a premium brand.
  • Microsoft isn't investing in Mobile, we know they will cancel Andromeda until ecosystem issue is fixed, but in the meantime, I would like to know what is Microsoft doing for Internet of Things (IoT). Looks like Amazon Echo and Google Home are doing great but Microsoft, isn't selling any smart home speaker that can interact with your home lights, electric doors, refrigerators, etc.
  • Odd you would say that. I think the transcript states that Outlook is being used on 100 milliion iPhones and Android devices. Sounds like they are investing in mobile, just not in an OS and hardware. They are investing in apps that they hope will bring more and more consumers into the MSFT ecosystem of services.
  • Yeah, they are focusing on getting the consumers where it matters.
  • The invoke can interact with these products, the only flaw is it seems to work best with a separate hub like SmartThings. If Microsoft released it's own z wave hub, it would be in competition a lot quicker cause Cortana has great device recognition.
  • @Gabriel Hernandez5. You cannot fix an ecosystem without a key end point (mobile). IoT devices are usually headless and these devices mostly rely on mobile devices to manage and interact with suchas your examples - home lights, electric doors and refrigerators, etc all need a smartphone to utilise fully. It's all when and good when you have a smart speaker. But that doesn't follow you or carry with you - you do carry a smartphone.
  • Damn ... That's solid AF..
  • Microsoft definitely is in the consumer business along with Enterprise. Sure, mobile doesn't exist...but the company is showing that it isn't needed to secure healthy growth and earnings year after year. The company certainly is doing something right. :)
  • Here in Vegas I've been told by people in the know...... surface phone will be Android based if ever released. Sad to hear, but not totally unexpected.
  • It will not be Android-based, but it could be based on AOSP. But then again, maybe you should tell the "people in the know" there isn't, and hasn't ever been a planned Surface Phone.
  • It won't be aosp based either. Doing so nullifies everything they have done in terms UWP, NT Kernal and making Windows modular (Core OS). So many years of work.
  • Bartenders and topless dancers aren't "people in the know" 😉
  • Lol they had the Microsoft event there this week. It was two separate employees I spoke with during the trip. I don't know how much they knew but both were engineers.
  • Mmm, revenue up 20% and profit up < 10%. How's that work for you Nadella?
  • Clueless much. Rise in revenue and profit aren't linear. Revenue is sales and profit is margins. Factoring in issues like currency exchange rates and tax issues that a company has little control over will lead to vastly different increases in revenue or profit. I'm pretty sure Nadella had a good day yesterday, they blew all expectations out of the water.
  • Now in the blog, it's mainly a matter of Nadella yes or not. Of course, these good financial news give strength to his diehard defenders, while news of dramatic cut in strategic divisions push opinions to the other side.
    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!
  • People can hate on Nadella all they want. When he took the reins MS stock was in the $26 range. Today it was $106. 'Nuff said.
  • People can hate on Nadella all they want. When he took the reins MS stock was in the $26 range. Today it was $106. 'Nuff said.