Microsoft Q4 2020 earnings: $38 billion in revenue, beating expectations

Microsoft logo
Microsoft logo (Image credit: Daniel Rubino / Windows Central)

What you need to know

  • Microsoft brought in $38 billion in revenue during Q4 2020.
  • That's up 13 percent over the same period last year.
  • Microsoft's commercial cloud business surpassed $50 billion in annual revenue for the first time.

Microsoft today reported its earnings results for the fourth quarter of its 2020 fiscal year (opens in new tab). In all, Microsoft says it brought in $38 billion in revenue, which is up 13 percent over the same period last year. That beat analyst expectations, which averaged (opens in new tab) around $36.5 billion going into today's results.

The surge comes as companies continue to deal with the impacts of the COVID-19 pandemic. With more people working from home, Microsoft saw demand for its cloud segments increase. "In the Productivity and Business Processes and Intelligent Cloud segments, cloud usage and demand increased as customers continued to work and learn from home," the company said in its earnings release.

However, Microsoft took hits in its licensing and LinkedIn businesses. "Transactional license purchasing continued to slow, particularly in small and medium businesses, and LinkedIn was negatively impacted by the weak job market and reductions in advertising spend," Microsoft said.

Here are some of the highlights from this quarter:

  • Revenue was $38.0 billion and increased 13%
  • Operating income was $13.4 billion and increased 8%
  • Net income was $11.2 billion and decreased 15% GAAP (up 5% non-GAAP)
  • Diluted earnings per share was $1.46 and decreased 15% GAAP (up 7% non-GAAP)

In Microsoft's "More Personal Computing" segment, which encompasses Windows, Surface, and Xbox, it saw solid growth as demand increased from people looking to work, play, and learn from home. Of note is that Xbox content and services revenue jumped 65 percent, while Surface revenue increased 28 percent. Windows OEM and Windows commercial products and services revenues were also up by 7 percent and 9 percent, respectively.

Search advertising revenue saw a decrease of 18 percent year-over-year. In total, More Personal Computing brought in $12.9 billion in revenue, a 14 percent increase.

Source: Microsoft (Image credit: Source: Microsoft)

For the "Productivity and Business Processes" segment, revenue was up six percent to $11.8 billion. This was driven by an increase in Office cloud services on the commercial and consumer sides of five percent and six percent, respectively. LinkedIn saw a revenue increase of 10 percent, while Dynamics products and cloud services grew 13 percent.

Finally, the "Intelligent Cloud" segment jumped 17 percent to $13.4 billion in revenue. Server products and cloud services saw an increase of 19 percent, while enterprise services revenue remained "relatively unchanged."

For the full 2020 fiscal year, Microsoft reports a total of 143 billion in revenue, which is an increase of 14 percent of its 2019 fiscal year. Operating income increased 23 percent to $53 billion, while net income grew 13 percent to $44.3 billion.

Microsoft will hold a webcast at 5:30 pm ET / 2:30 pm PT to go over the numbers and its guidance for next quarter. You can listen in at Microsoft's investor relations site (opens in new tab).

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

  • Microsoft, my retirement accounts thank you.
  • Weird how revenue keeps going up despite having such a "terrible" CEO.
  • In all fairness, people aren't saying he's a terrible CEO for no reason. They say he's a terrible CEO for consumers. Microsoft's shift to focus on the cloud and business segments definitely helped increase their overall share price and profits, but it's left a bad taste in the mouths of individual consumers everywhere, essentially giving their long-time fans the middle finger. This could hurt Microsoft in the long run if they ever decide to focus more on consumer products. Hard to say.
  • Yeah this is kind of a hard one as Microsoft have always been the king of business side but never got the customer side. Alot to do with them self's as if you look back at some of products they have had zune, windows Mobile/phone ms band of recent times they have been better or ahead of the competition but they were never pushed like other products of rivals products. I also don't see Microsoft entering this market again out side of Xbox and pc. For me the surface duo and neo are not aimed at general public but tec fans and businesses users. If you look at how people use phones the general public like them as they can use 1 app at a time and works for them well. A business user often needs more than 1 app open and let's be honest multi-tasking on alot of devices with split screen is poor and dose not work well. This is where Microsoft look to build. The not is really the only business phone out at the moment and it's targeted audience. (real note uers though not people who have one and don't really use it) I personally think Microsoft are trying to give business users another way to work. For me as someone who works in it the surface neo and duo would work well. Especially when I am on site and I am using Teams and reading email/looking at work. It can't replace my laptop for big work I do but definitely help when on site and doing small bits. It will definitely be interesting to see how Microsoft market the duo and neo when they are out and if its pushed on all networks and if its pushed outside the USA.