Q4 FY2018 — Microsoft earnings

Q4 FY2018 — Microsoft earnings

Q4 FY2018 — Microsoft earnings

Shares of Microsoft Corp were set to open at a record high on Friday, after the company reported another blockbuster quarter, backed by growth in its legacy software business and Azure cloud computing services.

"We had an incredible year, surpassing $100 billion in revenue as a result of our teams' relentless focus on customer success", said Satya Nadella, CEO, Microsoft.

"I don't see anything that should raise an eyebrow of concern", said Daniel Morgan, a portfolio manager at Synovus Trust who holds 418,716 Microsoft shares. The hit from the ongoing migration to cloud subscriptions continues; perpetually licensed commercial Office revenue was down 19 percent. Meanwhile, Microsoft's Intelligent Cloud business, which includes its server products and cloud services, rose by 23 percent. 'Our early investments in the intelligent cloud and intelligent edge are paying off, and we will continue to expand our reach in large and growing markets with differentiated innovation.

Notably, Azure - considered the leading rival to the dominant Amazon Web Services - saw revenue growth of 89% from the same period in 2017, though Microsoft doesn't disclose specific financials for the service. Part of Nadella's plans to retool Microsoft included pivoting its resources from its Windows operating system software to its newer Azure cloud computing business.

Wall Street was looking for fourth quarter earnings of $1.08 a share on revenue of $29.2 billion.

Q4 FY2018 — Microsoft earnings
Q4 FY2018 — Microsoft earnings

As Deutsche Bank analyst Karl Keirstead said in a research note, "That magnitude of acceleration at Microsoft's scale speaks to strong execution and cloud traction as well as a very healthy overall corporate IT spending backdrop".

Surface revenue was up 25 percent to $1.2 billion, a reflection of the stronger product lineup today as compared to a year ago.

The numbers boded well for Microsoft's biggest acquisition in recent years, of professional networking site LinkedIn.

Switching gears to the More Personal Computing category, revenue increased by 17 percent, moving up to $10.8 billion.

Meanwhile, gaming revenue was up by 39 percent, including a 36 percent jump for Xbox software and services. Meanwhile, Office consumer products and cloud services revenue was up by eight percent, with Office 365 consumer subscribers increasing to 31.4 million.




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