Microsoft FY19 Q4 earnings

What you need to know

  • Microsoft reported its fourth quarter earnings for its 2019 fiscal year today.
  • Revenues were up to $33.7 billion while net income increased to $13.2 billion.
  • Revenues and net income were up year over year by 12 percent and 49 percent, respectively.

Microsoft today announced its earnings for FY19 Q4, showing revenues of $33.7 billion and $13.2 billion in net income. That's an increase from the same period a year ago, in which Microsoft took in $30.79 billion in revenue and $8.8 billion in net income.

Here are the highlights from this quarter's release:

  • Revenue was $33.7 billion and increased 12%
  • Operating income was $12.4 billion and increased 20%
  • Net income was $13.2 billion GAAP and $10.6 billion non-GAAP, and increased 49% and 21%, respectively
  • Diluted earnings per share was $1.71 GAAP and $1.37 non-GAAP, and increased 50% and 21%, respectively
  • GAAP results include a $2.6 billion net income tax benefit explained in the Non-GAAP Definition section below

"It was a record fiscal year for Microsoft, a result of our deep partnerships with leading companies in every industry," Microsoft CEO Satya Nadella said in the earnings release. "Every day we work alongside our customers to help them build their own digital capability - innovating with them, creating new businesses with them, and earning their trust. This commitment to our customers' success is resulting in larger, multi-year commercial cloud agreements and growing momentum across every layer of our technology stack."

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Highlights for the full 2019 fiscal year include:

  • Revenue was $125.8 billion and increased 14%
  • Operating income was $43.0 billion and increased 23%
  • Net income was $39.2 billion GAAP and $36.8 billion non-GAAP, and increased 137% and 22%, respectively
  • Diluted earnings per share was $5.06 GAAP and $4.75 non-GAAP, and increased 138% and 22%, respectively
  • GAAP results include a $2.6 billion net income tax benefit explained in the Non-GAAP Definition section below

Windows, Surface, and gaming

Overall, Microsoft's "More Personal Computing" category, which includes Windows, Surface, and gaming revenue was up four percent to $11.3 billion. Most notably, dragging that number down was Microsoft's gaming revenue, which declined 10 percent overall. Xbox software and services revenue, specifically, was down three percent.

Keeping the category afloat were Windows and Surface revenues. Windows OEM revenue was up nin percent, while Windows commercial products and cloud services went up by 13 percent. Meanwhile, Surface revenue increased 14 percent, while search advertising revenue increased by nine percent.

Updated July 18, 2019: The drop in Microsoft's gaming revenue could be related to an overall decline in gaming hardware sales across the industry. According to the latest numbers from NPD, hardware spending dropped 33 percent this quarter with the Nintendo Switch being the only platform to show growth.

Cloud and Office

Microsoft's cloud and Office businesses continued to shine in this quarter's results. Commercial cloud revenue saw its strongest quarter ever, increasing by 14 percent to $11 billion. That was powered by Office 365 commercial revenue growth of 31 percent, Office commercial products and cloud services growth of 14 percent, and and Office consumer and cloud services revenue growth of six percent.

Office 365 consumer subscribers are no up to 34.8 million. LinkedIn, meanwhile, saw revenues jump by 25 percent. Microsoft's Dynamics products increased in revenue by 12 percent as well.

The overall "Intelligent Cloud" category saw revenues of $11.4 billion, up 19 percent over the same period a year ago. That includes Azure revenue growth of 64 percent and enterprise services growth of four percent.

"Microsoft has repeatedly beaten Wall Street's expectations this year – its share price is up by one-third – and its latest results only reinforce this trend," said Ryan Duguid, Chief Evangelist at Nintex, a global SharePoint partner and a Microsoft partner of the year, in a statement. "Azure is a powerful differentiator, and it continues to gain market share. One key to Microsoft's success with the cloud platform has been its embrace of openness and customer choice in tech stacks, and creating a common data model underneath everything."

Once again, Microsoft will conduct a conference call and webcast to provide further insight into this quarter's numbers, along with a look forward, at 2:30 p.m. PT (5:30 p.m. ET). You can follow along at Microsoft's investor site.

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