What you need to know
- Microsoft reported $36.9 billion in revenue for the second quarter of its fiscal year.
- That's up 14 percent over the same period in 2019.
- Every business saw growth with the exception of a decrease in Xbox content and services revenue.
Microsoft reported its Q2 earnings for its 2020 fiscal year (opens in new tab) today, reporting revenue of $36.9 billion, which beat analyst estimates and marks a 14 percent increase year-over-year. All of Microsoft's major businesses saw growth, aside from gaming, which was down 21 percent. The cloud was a continued strength for Microsoft, as Azure saw revenue growth of 62 percent.
Here's a look at the major highlights from this quarter:
- Revenue was $36.9 billion and increased 14%
- Operating income was $13.9 billion and increased 35%
- Net income was $11.6 billion and increased 38% GAAP and 36% non-GAAP
- Diluted earnings per share was $1.51 and increased 40% GAAP and 37% non-GAAP
Once again, Microsoft's cloud business showed its strength on the quarter. Microsoft reported revenue in its Intelligent Cloud business was up 27 percent year-over-year, clocking in at $11.9 billion. That's bolstered by a 30 percent gain in server products and cloud services, along with a 62 percent increase in Azure revenue.
"Microsoft's growth is rooted in squarely shifting their focus to cloud computing under Satya Nadella's leadership with the company's stock price growing more than 50 percent the past 12 months," said Dustin Grosse, Chief Marketing & Strategy Officer at Nintex. "It's clear that Microsoft is deeply invested in winning the cloud war through a steady drumbeat of cloud first technology enhancements driving strong increases in Azure consumption across public and private sectors."
In Productivity and Business Processes, Microsoft showed growth of 17 percent, up to revenues of $11.8 billion. LinkedIn revenue was up 24 percent, while Office Commercial products and cloud services revenue went up 16 percent. Likewise, Office Consumer products and cloud services revenue jumped 19 percent year over year, while Office 365 Consumer subscribers increased to 37.2 million.
Finally, in the More Personal Computing category, which encompasses Windows, Surface, and gaming, overall revenues increase 2 percent to $13.2 billion. Windows OEM revenue grew 18 percent overall, with Windows OEM Pro revenue increasing 26 percent on the back of the end of support for Windows 7. Surface revenue saw an increase of 6 percent to $2 billion, largely pushed along by Microsoft's launch of new Surface devices during the holiday season.
The only major downslide in this quarter's results was gaming revenue, which sank by 21 percent overall. Xbox content and services revenue, specifically, decreased by 11 percent. It's likely we'll see this continue as this generation of consoles reaches its end, and ahead of the launch of Xbox Series X.
Microsoft will hold an earnings call to go into more detail on this quarter's results at 5:30 p.m. ET (2:30 p.m. PT).
Dan Thorp-Lancaster is the Editor in Chief for Windows Central. He began working with Windows Central as a news writer in 2014 and is obsessed with tech of all sorts. You can follow Dan on Twitter @DthorpL and Instagram @heyitsdtl. Got a hot tip? Send it to firstname.lastname@example.org.
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